The orders for the supply of components and integration services for the Akash Missile System will provide a sheet anchor role to the growth of Bharat Electronics Ltd as the company executes its Rs 27,000-crore order book over the coming years.
As much as 55 per cent of the order book comprises orders for Akash weapon systems and radars, say analysts of Edelweiss Securities, who met the BEL management recently.
BEL, which is a public sector undertaking under the Ministry of Defence, has two large orders from the Akash Missile System programme. For the Rs 3,600-crore order from the Air Force, BEL is the ‘lead integrator’. Half of this contract is outsouced to L&T, Tata Power and the other Defence PSU, Bharat Dynamics Ltd.
These companies will produce launchers and missiles, while BEL will make ground equipment, radars and control systems and will integrate the project by 2014-15 or the following year.
For the Rs 3,100-crore army order, BEL is a sub-contractor, Bharat Dynamics being the lead integrator.
Higher R&D spend
BEL intends to hike its R&D spend, from the 8.21 per cent of sales last years, to 10 per cent, which will also ensure that the company’s effective tax rate remains at 23-24 per cent in 2013-14 and 2014-15, the report says.
“Thrust on R&D across the company will continue with roadmaps being drawn for the future for products and key technology acquisition and filing of patents,” BEL’s Annual Report for 2011-12, released last week, says.
For 2011-12, BEL reported turnover of Rs 5,767 crore and net profit of Rs 830 crore. For the first quarter of the current year, the company’s turnover was Rs 797 crore and net profit Rs 19 crore.