Defence public sector unit, Bharat Electronics Ltd (BEL), on Thursday said that long-range surface-to-air missile system (LRSAM) order worth Rs 9,200 crore is a big boost for the company.

In an interview to CNBC-TV18, MV Gowtama, chief managing director, expects the finalisation of Akash missile system in third quarter

and will be receiving 15 percent of the order value as advance over next few months, which will used to enhance the capacity.

Watch:

Bharat Electronics raises order inflow target to over Rs 17,000 crore for FY19

Gowtama said Bharat Electronics expect revenue from LRSAM project to start from FY20.

Edited excerpts:

Q: Can you give us some more details – timeline, what margins you will get, and will it be within your guidance range of 17-19 percent?

The 19 percent profitability comes with mix of products and services. Margins will be getting in that particular equipment. So, we are exempted being a defence company, segment wise listing. We would not like to give such details.

However, I assure you that we will certainly be maintaining our margin position. This is a great order for BEL. This is for the first time we are getting Rs 9,000 crore plus single order on BEL.

Q: What about the timeline, should we expect the revenues to reflect in this year itself i.e. FY19 or will it be back-ended?

It will not start in FY19 or FY20, but thereafter the revenues are going to start and we will be delivering as per ships progress, the equipment as well as the installation material, etc.

Q: What about your revenue guidance, do you maintain the FY19 guidance of 12-15 percent? Would you want to up it and also if you can give us a sense for FY20 revenues?

Long-range surface-to-air missile system (LRSAM) is not going to give us any revenue growth this year and if possible, we will try to bring visibility from FY20 onwards. By that time, the ship progress will also be there and probably we can start delivering the installation kits and etc.

Q: With this order, the order inflow for the year has already reached over Rs 12,500 crore versus the initial guidance of Rs 15,000 crore. Is it safe to assume that you could be revising your guidance as well?

A: We will have the annual order acquisition now. Another Rs 5,000 crore plus of Akash also I expect this year. Hence, I certainly say the guidance, we will be touching Rs 17,000 crore plus.

Q: Akash, when is that order expected?

A: I am expecting Akash order also in Q3. From our side, we have completed the complete negotiation.

Q: We understand you will get a 15 percent advance against this order and that may come in over the next couple of months itself. What will that be used for?

We will be investing it, enhancing our capacity and also establishing stages that are required for producing this equipment. So, this advance comes in handy for the capex program what we have for LRSAM within the company.