Bharat Earth Movers Ltd (BEML), the public sector undertaking (PSU) active in mining, defence, railway and construction equipment manufacturing, believes it has a good chance of cornering a significant share of orders in the next three years for coaches to be operated on metro rail networks in various cities in the country.
“We are the only company in India as of now who have acquired technology to manufacture these coaches,” said N.K. Sreenivasan, director (metro and railways), BEML, on the sidelines of the company’s press meet to announce its share offering.
BEML is entering the capital market with a follow-on public offer of 49 lakh equity shares of Rs10 each. The bid issue opens on 27 June and closes on 3 July. The company has announced a price band of Rs1,020-1,090 for the issue, through which it hopes to raise up to Rs534 crore.
The BEML share gained 2.17% on the Bombay Stock Exchange on Tuesday, even as the benchmark Sensex finished with a gain of 0.09%.
For the year ended 31 March, the company recorded a net profit of Rs204.93 crore compared with Rs186.93 crore in the previous year; turnover rose to Rs2,601 crore for fiscal 2006 from Rs2,126.92 crore a year earlier. Senior company executives hope revenues earned from upcoming metro projects alone will take the company’s turnover to Rs5,000 crore in 2013-14.
According to Sreenivasan, these orders are expected to come through once the orders for rolling stock for the Mumbai, Bangalore, Chennai and Hyderabad metro projects are put up for tendering. The company estimates that these projects together would need around 800 new coaches.
But BEML is not alone in eyeing this potential. Alstom, Bombardier, Siemens and other international coach and locomotive manufacturers have all stepped up their presence in India in anticipation of the orders.
However, according to Sreenivasan, even these multinational firms will have to tie up with a local partner who would manufacture the coaches as per their design.
Importing coaches would inflate the price of coaches, which is why the Delhi Metro Rail Corp. (DMRC) awarded its contract to BEML in 2004, said Sreenivasan.
Senior executives with the company also said that BEML had already invested around Rs180 crore in setting up a manufacturing unit to manufacture metro coaches at Bangalore in order to accommodate large orders.
But it’s not a given that BEML will land the contracts. Moreover, its cost advantage too could be negated.
Alstom country president Sunand Sharma said that if the Indian market were to prove lucrative enough, the company may even think in terms of setting up a production unit in the country, which would enable them to supply coaches without a local partner.