BEML on expansion mode

BANGALORE: Well known as a defence and heavy machinery manufacturer-Bharat Earth Movers is spreading its wings. The Bangalore-based PSU which had net profit of Rs 52.97 crore(Rs 55.78 crore) for the three-month period ended December 31, 2006 plans to launch lubrication oil brand ���BEML Oil���. The company had a topline of Rs 589.82 crore(Rs 555.12 crore).

The lubrication oil will target institutions and contractors who use BEML���s range of heavy machinery, according to a press statement. The oil will be produced by Nandan Petrochem which operates an oil packaging plant at Silvassa.

The other expansion is to foray into trading of mineral ores for which BEML has inked an MoU with State Trading Corporation(STC). The trading would be carried on by BEML Trading division.

Another area of interest for BEML is contract mining with the company taking a 45% stake in a joint-venture with Hyderabad-based Midwest Granite and SMJ of Indonesia holding the balance. BEML believes that entry into contract mining is a logical extension as it already produces equipment for this segment. Current regulations permit entry of the private sector into coal, non-coal and metal mining. The initial paid-up capital of the JV company is pegged at Rs 30 crore.

Another venture for BEML is manufacturing tyres for big mining equipments and trucks. For this segment BEML is working with Coal India. There is a huge scarcity of these big-sized tyres and lead time for procurement of these tyres is over 18 months.

BEML which currently has an order book of Rs 2,053 crore(as of December 31, 2006) expects to close the current fiscal with an order book of Rs 2,600 crore.