4 Introduction to Beml Modified]

A STUDY ON H.R. AUDIT AT BEML 68

Chapter – 4

INTRODUCTION TO BEML

BEML Limited is a premier ISO 9001-2000 Company in India and

the second largest manufacturer of earthmoving equipment in Asia. A

four- decade-old multi-locational and multi-product company, BEML has

vital applications in diverse sectors of economy such as coal, mining,

steel, cement, power, irrigation, construction, road building and railway.

It has expanded its product range to cover high-quality hydraulics, heavy-

duty diesel engines, Welding robots and undertaking of heavy fabrication

jobs. Bharath Earth Movers Limited (BEML) was incorporated in May

1964 which is an off shoot of HAL commenced its commercial operation

on 1st Jan 1965 under the administrative control of Department of

Defence Production and Supplies, Ministry of Defence, with

headquarters’ at Bangalore in Karnataka. It commenced operations at

Bangalore with the transfer of railway coach manufacturing facilities

from Hindustan Aeronautics Ltd. with land, building, plant and

machinery for a consideration of Rs. 600 lakhs. It started manufacturing

broad gauge first class and second class railway coaches at Bangalore

unit. Under section 43 of the companies’ act of 1956, all the directors are

appointed by the President of India himself. In the very first year of


starting operations, BEML started manufacturing wide range of wheeled

mining and construction equipment under technical collaboration with a

U.S. company.

In 1976-1968, Heavy Earthmoving Equipment Division was

commissioned at Kolar Gold Fields. During the same year, it entered into

collaboration agreement with a Japanese company for technical know-

how in a wide range of mining and construction equipment

In 1985 BEML established the Dump Truck Division at Mysore.

In 1987 established the Dump Truck Division at Mysore

In 1987 an exclusive Hydraulics and Power line Division and a

full-fledged R&D center was set up in the Kolar Gold Field (KGF)

Facility.

In 1991 BEML set up the engine division at Mysore for

manufacture of heavy duty diesel engines

In 1992 received a major boost for export business, when was

recognized as an Export House with Star Export Status. BEML’s first

mammoth equipment, the Walking Dragline was rolled out in 1994. It

also completed initial public issue of debentures in India in the 1994-95.

In fiscal 1995, annual sales turnover crossed the Rs. 100000 lakh

mark. In 2003-2004, BEML entered the Metro Railway business with the


manufacture and supply of Hi- Tec stainless steel metro coaches to the

Delhi Metro Rail Corporation. To support expanding production

activities in Defence and Railway sectors, it acquired over 1100 acres of

land and 2 workshops a lease basis from the now-defunct Public Sector

undertaking Bharath Gold Mines Ltd. (BGML) in Kolar Gold Fields

in204 & in the same year opened a new railway Fabrication Unit at KGF

Complex

BEML has zoomed past 400000 lakh annual sales turnover in

fiscal 2006. From 1st April 2006, BEML underwent organizational

restructuring to improve competitiveness in the global market and boost

its revenue and profitability. Consequently to this Company’s operations

will now be run as three business groups, viz. Mining & Construction,

Defence and Railway & Metro Business; each headed by a Director.

A public sector undertaking, BEML commands 70% market share

in domestic earthmover industry. Nearly 40% of its equity has been

divested to financial institutions and public. BEML has its corporate

headquarters and central marketing division in Bangalore.


NATURE OF BUSINESS

BEML is one of the major manufacturers of mining and

construction equipment in India. BEML is a multi-locational and multi-

product company. It primarily deals in three product segments which are

1. Mining and Construction Equipments

2. Defence Products

3. Railway & Metro Products

Through these it cater to vital applications in diverse sectors of the

economy such as Mining, Steel, Cement, Power, Irrigation, Construction,

Road Building, Defence, Railway and Metro Transit System

Recently BEML have expanded its product range to cover high-

quality hydraulics, heavy-duty diesel engines, welding robots and heavy

fabrication jobs. In the beginning of fiscal 2007, it decided to foray into

two more new business areas-

1. Technology. Providing engineering design software solutions and

2. Trading, for marketing non company products, components,

aggregates and commodities for domestic and international markets.


BEML is a Mini- Ratna (Category 1) Company under the Ministry

of Defence and ranked as the first among the Fastest Growing

Construction Equipment Companies in India (Construction world-

NICMAR survey 2005)

BEML have been at the forefront of delivering robust, high quality

products to our customers resulting in low cost of ownership. To this

extent, it incorporated state-of-the-art technology in all products through

market-driven R&D, and collaboration with international companies for

imbibing the latest technology. As part of its diversification strategy. It

also plans to enter the contract mining business, and has tied up with an

Indian Mining Company. BEML has a subsidiary- Vignyan Industries

Limited located at Tarikere, Karnataka, which manufactures steel

castings, bulk of which is supplied to BEML. It has manpower strength

of 11784 as on March 31st, 2007

BEML Mission

To achieve and retain a dominant position in the manufacture and

supply of Earthmoving, Mining, Construction, Railway and Defence

Equipment by establishing high standards of quality, capability and

reliability.


To pursue state-of-the-art and environment friendly technologies

as well as develop cost effective and value-added products.

To be competitive, responsive and continuously improve services

so as to ensure total customer satisfaction.

To grow into global company guided by a keen sense of vision and

business ethics as well as to maximize forex earnings.

To conserve resources and eliminate waste through optimum

utilization of men, money, materials and machinery.

BEML MARKETING

A nationwide network of 33 marketing offices provides customers

with immediate access to BEML's range of products and services.

Marketing activities include field operations and intensive training of

customer personnel in operation and maintenance of equipment.

BEML offers application services encompassing pre and post

sales. Preparation of Pre-feasibility reports, equipment selection studies,

total fleet optimization solutions and customization of equipment form

part of the application engineering activities

Recommendation-for-User-Profit (RUP) studies enable customers

to improve machine productivity and reduce operating costs.


BEML's marketing strength and reach has enabled it to achieve a share of

over 70%.

BEML EXPORTS

Over the years, BEML has built up a reputation as a top quality

supplier of Surface Mining Equipment. BEML exports machines to over

25 countries in Europe, Africa and the Middle East. BEML is a

recognized export house.

BEML PEOPLE AND ENVIRONMENT

At BEML, people are the prime movers. Concern for human values

finds expression in the work environment that fosters team spirit and

rewards achievement.

Motivation, training and welfare are accorded top priority in

developing human resources. Employees are trained in multi-skills to

upgrade their potential, to achieve targets. Investment in manufacturing

facilities has been accompanied by development of safe work practices.

Facilities for housing, healthcare, canteen, education and sports have

been provided to increase motivation and performance.

As a corporate citizen, BEML is conscious of its responsibilities to

society and environment. The Company extends a helping hand to

community development, environment preservation, social forestry,


education and medical extension programmes for backward villages

around its divisions.

CUSTOMER SERVICES

Maximizing customer delight is the key objective guiding BEML's

customer service activities. Apart from timely supply of spare parts,

training, rehabilitation of equipment, maintenance assistance and

servicing of equipment are also provided.

Spare parts depots have been set up at marketing offices and at

major project sites to provide spare parts at short notice to customer. A

wide area network comprising of leased lines, virtual private network and

satellites has been established to connect Head Quarters to Regional

Offices, District Offices and depots to facilitate faster response to

customer needs relating to spare parts operations.

BEML site engineers take services to the doorsteps of customers.

Service centers have been set up at various parts of the country to take up

large repair and rehabilitation tasks that cannot be performed in the field.

Periodic monitoring of equipment performance is carried out to detect


trouble spots and take preventive action, thereby ensuring higher

availability of the equipment.

R&D

BEML R&D achieved a record 85% average indigenization in the

collaborated products. As many as 30 value added products have been

developed in-house. Rs. 300 million R&D centre with sophisticated

laboratories in fluid power, material science, power line testing, structural

engineering, Proto manufacturing shops , Proto Assembly shops and state

of the art "CAD Centre" forms the nerve centre of BEML.

The centre is partly funded under United Nations Development

Program (UNDP) and has joined hands with several user organizations

like DGBR, DRDO, DST and Railway board for development of new

products. R&D AIMS

OBJECTIVES OF R& D DEPT

Some of the main objectives of R&D division are to

Build total self reliance in earthmover and related technology


Adapt technology to suit national requirements particularly in vital

sectors such as construction, mining, irrigation, railways, transportation

and automation.

Update current products for higher performance and reliability

Generate know-why through applied research

Design and develop products in identified technology areas

Set up test facilities for evaluation of performance and reliability of

vehicles and systems

Generate design data and increase reliability to design.

MANUFACTURING UNITS

The company’s units at Kolar Gold Fields, Mysore and Bangalore

incorporate hi-tech manufacturing facilities with sophisticated CNC

machines, arc-welding robots & FMS. A multi-million rupee heavy

equipment shop turns out critical structures for industry.

1. BANGALORE

BEML started in 1964 with the railway equipment division at

Bangalore. The first rail coach factory in the Indian subcontinent. This

unit has consolidated its status as a major supplier of integral rail


coaches, meeting about 25% of the country's demand. It has a production

capacity of over 800 coaches per annum.

To meet the growing requirements of rail sector, BEML has

diversified in manufacture of Overhead Equipment Inspection Cars and

Track Laying Equipment. These have been developed in-house and

supplied to Indian Railways. Recently this unit has taken up production

of Electric Multiple Units and Rail Bus. Development of specialized

equipment like Treasury Vans and Spoil Disposal wagons has been

successfully completed.

2. MYSORE

The biggest dump truck factory in India is located here. Apart

from the popular 35 ton and 50 ton rear Dumpers, BEML also

manufactures 60 ton, 70 ton, 85 ton, 100 ton, 120 ton and 160 ton

dumpers here. Plans are afoot to take up manufacture of giant 170 ton

dumpers on the production line.

In this plant, 28,000 liter and 35,000 liter Water Sprinklers, 165

and 325 HP Motor Graders, and Bheema Loading Equipment are


manufactured. BEML also manufactures 10Ton capacity Aircraft

Towing Tractors.

BEML has installed an arc welding robotic system for

fabrication of giant structures with consistent quality. The integration

of robotized manufacture on the shop floor has accelerated the pace of

activity and provided a flexible and powerful facility.

Engine division has been established to manufacture diesel

engines of 100-1000 HP rating at Mysore. These are used not only for

captive consumption but also for applications Diesel Generators and

Compressors. The company has installed flexible manufacturing

Systems for component manufacturing.

The flow of state-of-the-art technologies from global partners

like Bucyrus, Komatsu, Omnipol, Voest Alpine, IGM and Bumar

labedy has enabled BEML to achieve high standards in product

engineering and gain international competence.

3. KOLAR GOLD FIELDS (K.G.F)

At Kolar Gold Fields, located about 100 kms from Bangalore,

BEML has established an extensive manufacturing base. Skilled


workforce of over 6000 turns out state-of-the-art Bulldozers,

Hydraulic Excavators, Wheel Dozers, Rope Shovels and Walking

Draglines for the Mining and Construction industry. Sophisticated

CNC machines and latest technology welding equipment are installed.

Multi-million rupee heavy equipment shop has been set up for

major fabrication with a capacity of 5000 MT. This shop turns out

heavy structures.

The exclusive Hydraulics and Power line Division,

manufactures precision assemblies and aggregates, not only for

captive consumption but also for meeting customer requirements.

State-of-the-art Gear Pumps, Control Valves, Suspension Cylinders,

heavy duty Planetary Axles and Automatic Transmissions are

productionised here.

AWARDS

MINI RATNA CATEGORY-I STATUS

BEML under the Ministry of Defence has been granted "MINI

RATNA CATEGORY-I STATUS" by the Ministry of Defence, Govt. of

India with effect from 29th August 2006.


The Government grants autonomy and delegation of power to

consistently profit-making PSUs by conferring the Mini Ratna Status on

them, to make them turn more efficient and competitive. To acquire the

Mini Ratna Status, a PSU should make profit continuously for the past

three years, pre-tax profit should have been Rs 30 cores or more in at

least one of the three years and a positive net worth.

The status has been given recognizing BEML's Leadership

Position in the Industry, Consistent Performance, Growing Profitability

and Rapid Absorption of changing technologies. With this status, BEML

has got enhanced powers from the Ministry of Defence to incur capital

expenditure up to Rs 500 cores or 30 percent of its net worth for starting

new Projects/Subsidiaries and Technology Joint Ventures, as well as

Strategic Alliances. The "Mini Ratna Status" with more Delegation of

Powers will help the company in its growth and development.


BEML PRODUCTS

BEML manufactures a wide range of products to meet the needs of

Mining, Construction, Power, Irrigation, Fertilizer, Cement, Steel and

Rail Sectors.

The Earthmoving Equipment include Bulldozers, Dump Trucks,

Hydraulic Excavators, Wheel Loaders, Wheel Dozers , Tier Handlers,

Pipe Layers, Rope Shovels, Walking Draglines, Motor Graders ,


Scrapers, Water Sprinklers, Aircraft Towing Tractors and Backhoe

loaders. BEML has recently introduced Road Headers and Side

Discharge Loaders for underground mining applications.

Railway products include Integral Rail coaches, Electric Multiple

Units, Rail Buses, Track Laying Equipment and Overhead Equipment

Inspection Cars. BEML manufactures Heavy Duty Trucks and Trailers

and hydraulic aggregates for transportation sector.

The company also manufactures high power Diesel Engines and

heavy duty Hydraulic Aggregates to meet specific customer

requirements. The company plans to diversify into varied activities

including underground mining equipment, underground storage for petro-

products, leasing and financial services and joint ventures abroad.

BEML ENERGY


BEML RAILWAY TRANSPORT


MINING & CONSTRUCTION

Crawler Equipment


Wheeled Equipment


Powers and duties of BEML Officers and employees

BEML Limited is a Public Sector Undertaking under the Ministry

of Defence. The powers of Company official are well defined at all levels

in the Organization. Duties are assigned to its officers and employees

from time to time.

Procedure followed in decision making process (Organization Chart)

BEML has a well-defined system of decision making with

adequate channels of supervision and accountability. Proposals requiring

decisions of any nature are initiated at appropriate Executive level at the

Divisions/Offices and at the corporate level. Proposals generally pass

through Directors and CMD for approval. All proposals having financial

implications are routed through respective Finance

Departments/Divisions. Powers delegated to various approving

authorities are clearly spelled out in BEML’s “Delegation of Powers”

document.

Where required, Departmental/Divisional committees are formed

to facilitate decision making.

Major policy decisions and decisions going beyond the delegation

of powers up to CMD level are put up to the Board for approval. An

Organizational Chart of BEML is appended below:


COMPETITORS INFORMATION

After the New Economic Policy of the economy opened its

floodgate to foreign companies to start their business in India which had

its impact on many of the Domestic Industries. BEML too faces serious

competition from various Private, Public, Domestic, International

Companies in various lines of its business

1. Earth Moving Equipment

The Mining and Construction Equipment Business in India is

highly competitive with several international and domestic players,

both large and small


Hindustan Motors, India

Caterpillar, Russia

Larsen and Turbo, Japan

Telco-Wabco

Volvo, Terex Vectra, Libebherr, Ashok

Leyland, Voltas, etc

2. Defence

In the Defence business, BEML is the nodal production agency

for BHIM T-6 Project, SAVATRA BRIGE SYSTEM and Ground

Support Vehicles for the Army. Competition is expected in the

wagons business from the private sector and recently government is

allowing private players.

3. Rail Coaches

The Railway Board issues tenders for EMU coaches only if the

quantity requirements are huge. The main competitor other than the

Railway production units is JESSOP and COMPANY Ltd, Kolkata

who is in the line of manufacture of EMU coaches

Integral Coach Factory- Perambur, Chennai

Rail Coach Factory- Kapurtala, Punjab


After being faced lot of challenges and competition, BEML finally

came out of new plans and dimensions to over come competition. BEML

is trying to acquire the RCF and Integral Coach Factory which left

BEML long back

4. Wagons

The Railway Board also floats tenders for their requirements of

wagons, of which apart from BEML, other participants include

TEXMACO Limited, TITAGARH Wagons Ltd, BESCO Ltd.,

Braithwaite and Co. Ltd., Jessop and Co Ltd., Modern Industries Ltd.,

etc…..

FUTURE GROWTH AND PROSPECTS

BEML has been participating in the Expression of Interest against

the tenders floated by various Metro Corporation and are trying to submit

a competitive quote to win the orders. The State Government of

Karnataka has agreed to reimburse the CST/VAT and with this, it views

the price to be competitive even against global competitors.

A new Metro Fabrication Hangar is to come up at the company’s

Bangalore unit for manufacturing Metro Cars to be supplied to the Metro


Rail Corporation, and also to cater the upcoming Metro Projects in the

country.

BEML has signed MoUs with international players to jointly work

on the modernization of T72 tanks and armored recovery vehicles, to

promote multi-utility armored vehicles and mine-laying vehicles; to

manufacture light- rail vehicles and mining & tunneling equipment, mine

ploughs and heavy-duty trucks.

BEML is also looking forward acquiring an assembly plant in

Victoria, Australia. The company will be focusing on North and West

Africa, Indonesia, Australia and Latin America for inorganic growth

options. The company intends to invest around Rs. 900 core on

expansions and diversifications.

BEML is in talks with eastern power utility major Damodar Valley

Corporation (DVC) for 50:50 joint venture for manufacturing of the latest

equipment for Underground mines. BEML is keen to partner with DVC

for foray into production of underground mining equipment. The

proposal is currently awaiting the nod of BEML board.

The company has signed an agreement with an international player

to manufacture and market electric dump truck with design in the range

of 120 tones to 360 tones. Company continues to scale up the capacities

of its products to match the requirements

Documents

4 Introduction to Beml Modified]