With the current government’s focus on defence programme, the ministry has awarded battlefield management system (BMS) development contracts worth Rs 50,000 crore to two consortiums. One comprises of BEL and Rolta India and the other consortium includes the Tata Power SED and Larsen and Toubro Defence.According to KK Singh, CMD of Rolta India, the government is moving really fast and for finalising the specifications the first meeting has been called on March 4, he said. After which the company will prepare a detailed report within a couple of months and post that prototype will be done, he added.Singh said the company is already ready with the products, so the prototypes for them would take less than a year and post that the testing by government will be done in another year. Singh is hopeful that in two years from now the company would be able to deploy the system, post which the company is hopeful of getting Rs 2000-2500 crore incremental orders.Currently, 20% of revenues of the company come in from defenceIn the Rolta-BEL consortium, the company is responsible for the complete battlefield management software, which constitutes the major portion of the project, said Singh.
Below is the transcript of KK Singh's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Sonia: I understand you have to first make a prototype. Can you indicate to us what will the cost of this prototype be and what is the exact revenue generation potential that you will have from this project?A: This prototype has to be developed now. The government now is moving very fast. One thing I would like to say is that there is a difference which we are seeing in this government and the previous government, for example in previous government there was first ‘Make India’ project which was awarded, which was called Tactical Communication Systems. It has been over two-and-a-half years and nothing has moved there whereas in this, this thing has been notified this yesterday and the first meeting has been called on 4th for finalisation of specifications.
As soon as the specifications are finalised, the first thing is to do a detailed project report which will specify all the specifications. Once the specifications and detailed project report is ready, which should be in next couple of months then thereafter the prototype will be done.The beauty is the prototype will depend upon the Development Agencies (DAs) as to how much time they take. There are two Development Agencies – (1) our consortium, which is BEL and Rolta and (2) is Larsen and Toubro (L&T) and Tata Power. However, now both consortiums will be asked how much time we will take.
We are ready with the products, so we are not going to start developing it. So, our answer would be that it will be minimal type, so we will not require more than six-eight-nine months to be able to give the prototype.
The other agency may require much more time and if they require much more time, I do not know whether the government will allow that. So that will depend on the government.
Latha: Is this an either or win. After you all present your prototypes, does the government retain the option to choose one of you or will it give it to both of you asking you to probably upgrade your prototype or whatever they want. What is the step after you give the prototype?A: It is not one of the two, so it is going to be both and that is but for sure. There is no exact guideline as to how much percentage somebody will share but what has been talked, indicated is that it will depend on L1 and technical that who is better priced and who is better technically suited and based on that the major share, more than 70 percent share will go to that party and the remaining share will go to other party and other party will be told that you should meet the specifications and you should meet the price.
However, unfortunately if the other party is not able to meet the specifications, is not able to continue then government cannot help it then only one party will remain. Sonia: How much cost has your consortium incurred into building this prototype?A: As far as I am concerned I can talk about Rolta. In our consortium we are fully responsible for complete software. The whole battlefield management software, which is a major portion of this project because this is an IT project and 14 companies were shortlisted to call for that and most of them were IT companies including Wipro, Infosys, Tata Consultancy Services (TCS).
Therefore, this being very software oriented project. We have been working over this for last six-seven years and we have invested few Rs 100 crore as our investment for creating this software. Similarly BEL, which is our partner for this, has been working very cautiously for tactical communications system, so they have been able to produce good software defend radios, which are required.Latha: Can you give us idea therefore when you will start making and when will the first revenue show up in your profit and loss (P&L)?A: I would say as far as prototype etc is concerned, I believe that it should not take more than a year for it to be ready and once it is ready then it is a question of testing. The testing also will be done by the Ministry of Defence (MoD) in various terrains, fields, from mountain and sand everywhere, so it should be another one year process. I believe that two years from now we should be in a position to deploy the system and orders should start kicking in. Latha: FY18 is when you may get your first rupee on this?A: I believe so.Sonia: Can you give us a sense of how much your contribution from defence will increase. I understand 20 percent of your revenues come from defence now, say about three-four years later how much will the percentage increase to?A: As I mentioned I am expecting it after two years and this is my best expectation but after two years we believe that we should be able to get almost Rs 2,000 crore-2,500 crore incrementally coming to us from this kind of project and of course what is coming to BEL is separate. I am talking of what is possible to us.
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