Turning Around: BEML CMD
speaks to The Directorial
BEML Limited, incorporated in 1964, is a Mini-Ratna (Category-1) Public
Sector Undertaking, under the Ministry of Defence engaged in the Design ,Development,
Manufacturing and After-sales –service of a wide range of products for core sectors
of economy such as Coal, Mining, Steel, Cement, Power, Irrigation, Construction,
Road Building, Defence, Railway and Metro transportation system &
Aerospace. BEML is a listed Company and Government of India holds about
54% of the total paid up capital of the Company, and the rest being with
private investors, institutions and banks . BEML has undertaken many transformations
in order to remain competitive and to grow. The Company has strengthened itself
financially and re-established itself as a major player in a domain that is
dominated by the likes of Caterpillar, Komatsu, Telcon, Mitsubishi, Alstom,
Siemens and Bombardier.
In this interview, BEML CMD
Shri P. Dwarakanath speaks to The Directorial, about the vision and values that
have stood the company in good stead through difficult times, as well as about
the opportunities that 'Make in India' offers, particularly for Defence sector
manufacturing.
TD: How is BEML translating
Make in India into a reality?
PD: Today’s largest business
opportunities area aligned to the core strength of BEML. Our vision is to
emerge as one of the strongest players in Defence manufacturing. 'Make in India'
is the major driving factor in our Company’s growth plans. Over the next 3
years, BEML plans to increase the share of defence equipment from the current
6% to around 30% of our sales portfolio.
'Make in India' offers a
tremendous impetus to us. The timing of this national strategy makes it a
perfect match for BEML.
Our three business verticals
are – Mining & Construction, Defence, Railways & Metro. BEML under its
Defence vertical offers High Mobility & Recovery vehicles, Bridge Systems,
vehicles for Missile projects, Tank Transportation Trailers, Milrail Wagons,
Mine Ploughs, Crash Fire Tenders, Aircraft Towing Tractors, Aircraft Weapon
Loading Trolley etc.. Defence systems of the future will be missile-based. Thus
there is a huge demand for missile production capability – be it surface-air,
surface-surface, etc.
TD: Describe your journey in
import-substitution. Is it low-cost local production, or does it include design
and innovation?
PD: Our emphasis is on Indigenisation to take
advantage of lower costs and encourage MSMEs as we intent to be only a System
Integrator based on Outsourcing model. We at BEML lay lot of emphasis on 'Design in India' and 'Make in India'.
Some of the outcomes are our 180 Ton Electrical Excavator – BE1800E( Country's
largest Excavator), 150 Ton Dumper – BH150E, 205 Ton Electrical Drive Dumper –
BH205E, Designed in BEML and Made in BEML. Similarly our foray into Design in
Rolling Stock translated into Metro Rolling Stock, Catenary Maintenance
Vehicles ( CMVs). In Defence we have
Designed, Developed and Productionised High Mobility Vehicles such as, 8x8,
10x10 with Rear wheeled Coupled Steering for one of the Missile Projects. Similarly Design & Development of Armoured
Repair and Recovery Vehicle for Arjun Tank is on. Around 50% of our annual sales turnover achieved is from
in-house R&D developed products.
TD: What is BEML doing to
ensure that technology and trained manpower do not become bottlenecks in your
growth plans?
PD: From the outset, BEML has
had a focus on technology and we have pursued technology collaborations with
both MNCs and with DRDO – the national defence science establishment. Our
three-pronged strategy for technology has been: Base on existing R&D,
Acquisition, and Development. In this regard, BEML has had technology collaboration
with Komatsu since inception. We are also building up our own
Intellectual Property assets.
One of the biggest challenges
for BEML has been the question of how to catch up with the global technology
leaders. We should introspect on this important factor. The only option is to
leap-frog. We need to bridge the gap in technical know-why.
At BEML, we are focused on
leveraging technology & capability building of our engineers. We have a
strong Industry Academia interface up with reputed academic and research
institutions such as IIT Madras, IIT Kharagpur, National Institute
of Design in the areas of Fabrication, Power train and Hydraulics, Rolling Stock,
Propulsion Systems, Train Information Management (TIMs), Bogie design, etc. Our
R&D engineers are being trained in these areas. Towards continuous skill development of employees and executives, ‘Schools’
in the areas of Hydraulics and
Structural Welding, Electrical and Electronics, Stainless Steel Welding and
Metro Cable Harness System Assembly have been established in the Manufacturing
Complexes.
TD: Does the share of
technical manpower in your workforce and the training investments reflect your
commitment to being a leader in a high-tech business?
PD: We have requisite
Technical Manpower both in R&D and Production to take care of emerging
challenges. We are also constantly imparting training on modern work practices,
contract management, business negotiations, Legal, commercial tax matters and
have put in place a competence framework for BEML for creating a leadership
pipeline.
TD: What challenges do you
face as you try to move up the value chain in this highly competitive, high-tech
industry domain?
PD: Market demand is on High End
Specifications for which we have geared up ourselves from R&D side to meet
emergent highly demanding technical specifications which keeps increasing by
the day. Let me give an example from the metro business, where each city is
coming up with its own specifications.
TD: Recently, BEML was in the
news having successfully bagged the Rs.900 crore Kolkata Metro deal. What value
propositions make BEML successful in such a competitive environment?
PD: Pricing, Quality and Timely
delivery are our primary focus. In the present market condition, BEML has got
the requisite strength to compete with the MNCs in all our three business
verticals to ensure fair price in market, which is otherwise not possible without
BEML being there.
BEML has got Spares & Service
Centres spread all over India very near to Customers to ensure service &
spare parts support and for future upgradation.
TD: Moving on to a different
topic of prime interest to our readers, can you tell us something about the
nature of your Board meetings and the topics that pre-occupy your Board? Given
the diversity of your shareholders, how do you manage expectations?
PD: As you know, Board
meetings are held once in a Quarter. We
mainly focus on growth of Company, Compliance and Administrative matters. In
terms of developmental topics, we usually discuss our R&D collaborations,
the business potential of various competing markets, products and ideas,
diversification and so on.
In terms of our business
vision and values, ours is a commercial set-up. Around 85 to 90% of our sales
is through obtaining orders through competition mode. In BEML, we ‘earn’ rather than ‘take’ salaries. Therefore we
maintain a business-like atmosphere integrating the voice of the customer and
align with the stakeholders expectations.
TD: As you prepare to retire
from your post as CMD of BEML, what are your thoughts? What has the journey of
40 years, from management trainee to CMD, been like?
PD: Well, it has been exciting
– at the same time suspenseful, with tremendous pressure and even sometimes
bordering on what is called survival anxiety. I would say, we pulled it off: we
have set ourselves on a path of sustainability. I am happy that I was able to
give my Company what we thought we could not do. Today, our financial
fundamentals are strong. Our inventories are down. We have got the Defence
business back and our future in Defence is exciting. We are on track with the Rail
and Mining business. We have a solid foundation in R&D. We can meet the market
demand. We have reduced manpower from 11,500 to 8800 and re-invented our
business model as a system integrator with maximum outsourcing. We have
rationalised costs and undertaken cost-cutting, setting the tone from the top. This
is a part of our company values – which is to lead from the front.
I believe there are two
paradigms of management -- lead by Trust, or lead by Threat. The latter bursts
soon, the former goes a long way. There is a proverb that says, “Trust, but
check!” and that is sound advice!
As long as the CEO finds
enjoyment and takes pride in the success of his team, it is possible to keep
the ‘talking versus delivering’ gap small. I am glad that we have a very
pleasant and enjoyable workplace. I think this is the result of ‘detached
attachment’ which is the credo I follow in my workplace.
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