BEML puts in place ‘catch-up’ plan to make up for production backlog due to COVID impact

Team Udayavani, Oct 4, 2020, 3:02 PM IST

Bengaluru: BEML has put in place a “catch-up plan” to make up for the production backlog induced by COVID- 19”s adverse consequences, with manufacturing plants now operating near normal, its Chairman and Managing Director Deepak Kumar Hota said.

The spread of the pandemic and subsequent lockdown from March last week had impacted BEML’s turnover and production due to the closure of manufacturing facilities, disruption in spares and service business, non-receipt of items on account of supply chain disruptions, restrictive movements and non- availability of required trailers among others, he said.

In addition to loss of revenue, due to distressed cash flow operations, inflows from customers have stopped or slowed down significantly while outflows especially to MSME and other vendors are continuing resulting in serious liquidity crunch, Hota told PTI. The Bengaluru-headquartered company under the Ministry of Defence has set a revenue target of over Rs.4,000 crore for 2020-21, up from Rs 3,029 crore in the previous fiscal.

“There was a shortfall of revenue vis-a-vis our plan in the first quarter. We are making our best efforts to make up this shortfall from the second quarter onwards. We are also trying to reduce cost through various cost optimisation strategy and austerity measures so as to minimise impact on the bottomline”, he said.

Hota, however, added that the manufacturing operations to achieve full scale would depend upon the customers” capital investment decisions and their cash flow issues keeping in view disruptions in their sales stream due to uncertainties in their customers demand.

“And as such it will be difficult to accurately assess the projected business in FY 2021 till full normalcy in both supply chain and sales stream are restored”, Hota said.
According to him, Working from home and resorting to virtual meetings did bring in some semblance of business continuity during the lockdown period, which was also used for structured intellectual activities such as obtaining feedback and inputs on various business-related issues.

“Once the lockdown was eased, we have put in place a ”catch up plan” to make up for the production backlog. Presently, the manufacturing plants are operating near normal with suitable precautions adopted such as thermal screening and social distancing”, Hota said.

The lockdown did impact deliveries and by operating various clauses in the contracts, the company has been able to restructure delivery schedules. “We are closely looking at our supply chain to bring in redundancy. Drive for localisation and finding alternate sources are being done on a war footing”, he said.

The company has taken measures to reduce operating costs and is implementing strategies to conserve cash.

“Cybersecurity has been a key area of attention since the volume and speed of business-critical functions being accessed from home has gone up”, he said. “Regardless of how the situation develops further, steps have been taken to help mitigate the impact of COVID-19 on the company”, Hota said.

BEML, he said, has expanded its product range in higher capacity mining equipment by indigenously developing and manufacturing, which is in line with Make in India policy of the union government and a step towards Aatmanirbharta.

The company expects to get additional orders valued at about Rs 3,000 crore by this financial year-end, Hota said. “We have orders on hand over Rs 10,000 crore and further orders of around Rs 3,000 crore are expected by FY 20-21″, he said. He said BEML is working towards ”zero import” policy and has invited ”expression of interest” for indigenous development of items being imported.

“Development orders have already been placed for 292 items and efforts are on for indigenous development of balance items”, Hota said. According to BEML officials, the company has achieved indigenisation levels of over 90 per cent in the mainline mining and construction products and rail coaches and EMUs, over 80 per cent in high mobility vehicles and over 65 per cent in Metro cars.