BEL PBT up 6.69%; says profits under pressure

The company’s sales turnover too increased to Rs 5,550 crore in 2010-11 (provisional) from Rs 5,220 crore in 2009-10, registering a growth of 6.3 per cent.The target for the current year is Rs 6,200 crore.

Briefing reporters, Chairman & Managing Director Ashwani Kumar Datt said, though the profit has seen a revival of sorts compared to last two fiscals when it had slumped to Rs 1,045 crore in 2009-10 and Rs 1,097 crore in 2008-09 as against Rs 1,171 crore in 2006-07, it has been a cause for concern for the company.

Datt said this fiscal too it was not as healthy as they would have liked it to be as there was extraordinary expenditure due to wage revision. Also, he said the profits have been under pressure over a period of time now due to enhanced competition in the market as also company taking to product mix to capture newer markets.

Though margins were under pressure due to competition, the company’s R&D spend has  been increasing substantially. It was Rs 350 crore during the fiscal ended March 31, 2011 as against Rs 315 crore in the previous fiscal, as the company’s core strength and capability was in R&D. R&D spend was raised because BEL could not solely depend on manufactur ing based on licensed production but needed more innovation-driven R&D products in order to buttress its business and keep up with competition.

Datt also pointed out that the company’s exports clocked a robust 77 per cent at $41.89 million during the fiscal as against $23.65 million in the previous fiscal. The export target for 2011-12 was at $47 million. Likewise, he said, the company’s order book too swelled to Rs 23,600 crore during the year from Rs 11,350 crore. The company’s turnover from indigenously developed products was 78 per cent, he added, observing that 80 per cent of the turnover was contributed by defence sector.