BEL to enter civilian market

Pradeep Rane
21 June 2004

The company is making efforts to achieve a prudent sales mix by reducing dependence on defence sales. The management is seeking to develop civilian markets with avenues opening up in the form of supply of electronic components, supply of electronic voting machines (EVMs), launching of indigenous set-top boxes, etc.

BEL is also trying to tie-up with its technology partners to supply various components. Currently around 70 to 75 per cent of BEL''s revenues comprise of sales to the Indian armed forces. The company is seeking to reduce its dependence on defence sector to widen its market mix, even though it is believed that defence expenditure by the government will remain stable with emphasis on continuous modernisation and upgradation of warfare technology.

The country has maintained defence expenditure at 2 to 2.5 per cent of its GDP. For financial year 2002-03, the budgetary allocation has been hiked by 14 per cent to Rs650 billion to specially meet the armed forces' modernisation needs.

According to analysts with CLSA, a leading foreign broking firm, "BEL has steady growth prospects and is a strong cash generator." The company is virtually debt free and net cash positive.

The company was set up in 1954 to develop, manufacture and supply high-end electronic equipment to the Indian defence forces. The major products are radars and sonars, communication equipment, electronic warfare equipment, opto electronics, tank electronics and specialised components.

The Company''s strong order book position, currently at Rs66.5 billion, is expected to be maintained in the near future. The order backlog is marginally lower in March 2004 as compared to the previous year (Rs69.4 billion). However, this is not a cause for concern since bunching of orders may present a skewed picture at the year end. In April, the company received an order of Rs5.5 billion for supply of short range radar equipment.