Navratna defence PSU, Bharat Electronics Limited (BEL) has recently won the coveted All India Management Association (AIMA) Managing India Award for the ‘Outstanding PSU of the Year’. In an exclusive conversation, M.V. Gowtama, CMD, BEL, talks to Baishakhi Dutta, senior business journalist, Electronics Bazaar, about how the company is set to achieve a healthy growth, based on a robust order book and good business inflow projections.
EB: What are the major projects that have helped BEL reach this important milestone?
Bharat Electronics Ltd (BEL) has achieved the landmark turnover of more than ₹ 100 billion (provisional and unaudited) during the financial year 2017-18, sustaining double-digit growth over the previous year’s turnover of ₹ 88.25 billion. Some of the flagship projects executed during the year include the integrated air command and control system (IACCS), weapon locating radar (WLR), handheld thermal imager (HHTI) and its variants, the Akash weapon system (Army), the naval fire control system, an integrated communication system, the 3D tactical control radar (TCR), electronic warfare systems, the L-70 gun upgrade, electronic voting machines (EVM) and voter verifiable paper audit trail (VVPAT), the Schilka upgrade, etc.
EB: What key business strategies have you employed?
With the opening of the defence segment to private sector participation, BEL is being exposed to increasing competition. However, it has been continuously undertaking several initiatives with a thrust on in-house R&D and indigenisation. These include increased outsourcing to Indian private industries including MSMEs, public-private partnerships, partnerships with foreign OEMs, capacity expansion and modernisation, and new business initiatives.
We are continuously exploring other opportunities in defence and allied non-defence areas for enhanced growth, leveraging the strengths and capabilities acquired in the defence electronics domain, as a diversification strategy. Though the defence segment continues to be BEL’s main business and provides close to 80 per cent of its revenues, this PSU has been using its knowledge and experience acquired in this field to offer spin-off technology products for non-defence applications too.
EB: How do you plan to go forward from here, and what is the next milestone that you are targeting?
We will continue to focus on indigenisation for self-reliance, perhaps with more vigour. Besides that, capacity building, expansion and enhanced outsourcing to the SME/MSME sector are other areas we plan to move forward on. Also, BEL has been able to maintain good order acquisitions this year. These will help BEL sustain its growth and consolidate its market leadership in the defence business. With a healthy order book and good business inflow projections, we are targeting a healthy growth of 10-12 per cent during 2018-19.
EB: What are the business benefits of the multiple ongoing collaborations and ventures, such as those with BHEL and GE?
BEL has two joint venture companies – one with General Electric, USA, and the other with Thales, France – as well as one 100 per cent owned subsidiary called BELOP, in Pune.
Of these, GE BE Pvt Limited (GEBEL) was set up in 1997 as a joint venture between Bharat Electronics Limited and General Electric Medical Systems. The facility manufactures CT Max and other state-of-art X-ray tubes. The products are exported worldwide, and meet international safety and regulatory standards. The GE-BE joint venture company is performing well, and BEL is supplying some parts required for the products manufactured by this JV. However, the JV is continuously exploring new markets and product variants.
BEL-Thales Systems Limited is engaged in the design, development, marketing, supply and support of civilian and select defence radars for the Indian and global markets. The JV presently has taken up the upgrading and AMC activities of ATM radars for the Indian Navy. It has also entered into a strategic collaboration agreement with Thales to jointly develop multi-target tracking and fire control radars for both gun and missile systems.
Regarding BELOP, BEL formed a JV with defence major Delft, Netherlands, in the 1990s for manufacturing image intensifier (II) tubes, which are used in the night vision devices being supplied to the Army, central paramilitary forces and other security agencies. This JV has been converted into a 100 per cent subsidiary of BEL called BELOP and is currently involved in manufacturing state-of-art II tubes with transfer of technology (ToT) from Photonis, France.
BEL is looking for similar joint venture partnerships with reputed companies that have complementary strengths in technology, to address emerging new business.
EB: How do you see the Indian A&D sector growing, and what would your advice be to help it improve faster?
Aerospace and defence (A&D) is a high-technology business requiring huge expenditure in R&D and some critical technologies to be painstakingly developed indigenously. This sector requires state-of-art infrastructure and resources such as labs, simulation tools, test setups and facilities for qualification. The A&D sector in India has been undergoing major changes, and the industry needs to address the following:
- Indigenous development of core sensor technologies
- Increased investment in R&D for the development of cutting-edge technologies
- Supply chain management/development of a quality vendor base
- Competency development of manpower in specialised areas
- Maintaining stringent quality and reliability standards, and adhering to complex manufacturing processes
- Ensuring components and raw material availability in the country
EB: Apart from setting up a customer co-ordination cell, what other customer engagement strategies are you implementing?
BEL always looks forward to working closely with its customers to address their requirements. Some of its many initiatives in this respect include the following:
- BEL has created product support groups, headed by a GM to focus on customer support activities and product life cycle management. BEL is expanding its product support network by adding new regional product support centres on a pan-India basis to extend the reach and service to its customers.
- BEL has implemented an online inventory management system for the Indian Navy and is in the process of establishing it for other agencies. We have added the customer relationship management (CRM) module to our SAP ERP system, which monitors all the CRM activities – from the management of leads to product support.
- We also conduct regular institutional meetings at the highest level with the customer and user agencies for the exchange of information and feedback. BEL even conducts regular training programmes for its customers, on operating and maintaining equipment.
Apart from these, we are opening new international marketing offices to promote exports. BEL strives to work closely with the customer, right from the conceptualisation of the solution to commissioning and life cycle support.
EB: Do you have any business engagements with private organisations?
We recognise outsourcing as one of the strategic routes to achieve cost benefits, and also to complement the strengths of the private sector for building a strong industrial base. This initiative helps BEL to focus more on core areas and on R&D.
BEL has been taking several steps to broaden the domestic vendor base by formulating a long term outsourcing and vendor development policy, implementing online vendor registration and e-procurement processes, etc. Nodal officers are nominated specifically for outsourcing and vendor development in all our nine manufacturing units. BEL outsources its activities to the private sector to a considerable extent – which includes a procurement level of around 30 per cent from MSMEs.
A collaborative R&D process has been put in place to further augment BEL’s R&D and product design efforts, and to bridge the technology gaps with the involvement of academia and the private sector, including MSMEs and startups. BEL also participates in annual conferences and workshops to identify products for development and procurement from MSMEs.
One of BEL’s policies is to allow private entities – including startups, MSMEs and other private firms – from across the country to use our testing facilities. We also extend a lot of other support to startup initiatives. We have relaxed the eligibility criteria such as turnover, experience, etc, for startups to supply their products to BEL. We have also partnered with large private sector companies under the consortium mode and through the PPP model to execute turnkey projects. BEL also partners with OEMs for the transfer of technology for critical items.
EB: Can you cite a recent example that highlights the success of BEL’s PPP model?
The indigenous design, development and manufacture of the Akash missile system is a great success story and the best example of a successful defence-related public-private partnership model in India. More than 90 per cent of the total inputs have been sourced from within India. Akash is the first indigenously developed air defence missile system in our country, realised by DRDO with support from BEL, Bharat Dynamics Limited (BDL) and private firms like Tata and L&T. Many of the sub-systems are sourced from Indian private companies for projects related to radar, electronic warfare, sonar systems, etc.
EB: What more should the government do to promote ESDM, A&D and other tech industries in India?
The Indian strategic electronics sector still lags behind in several critical technologies, which are only available with foreign OEMs. The government of India has initiated several schemes to promote innovation in the sector and is proposing plans to offer financial support to companies for the development of these critical technologies. The government is also planning to create the framework for establishing common research centres, with the required funding, considering the core technology requirements of the country.
Industry must invest in developing the critical technologies required for the strategic sector. Skills development plays a critical role and is a major contributor towards the progress of the sector. There is a need for better training, infrastructure and skills development to create technically sound and industry-ready personnel.
Industry should focus on increased industry-academia collaboration with suitable funding models, and there should be increased synergy between sectors like space, information technology, defence and telecom.
