R&D spend pays off
New Delhi   08-Nov-2010

R&D spend by India’s PSUs grew slower last year compared to the year earlier. As a percentage of net sales, R&D expenditure of 26 major public sector undertakings showed a marginal improvement in the last three years. In 2009-10, the R& D to net sales ratio of these PSUs was 0.29, up from 0.19 in ’07-08.

But in absolute terms, aggregate net sales income of 26 PSUs increased by 21.2% to Rs 7.25 lakh crore in 2008-09 and fell thereafter by 8% to Rs 6.67 lakh crore during 2009-10, while spending on R&D rose by 34.2% to Rs 1,495.18 crore in 2008-09 and by 27.5% to Rs 1,906.18 crore in 2009-10.

Companies in the capital goods sector like Bharat Electronics Ltd and Bharat Heavy Electricals Ltd (Bhel) are the major spenders towards R&D among the PSUs. Bhel led the pack spending Rs 829.27 crore on R&D in 2009-10, an increase of 78.7% over the 2007-08 figure of Rs 464 crore. The focus on R&D has helped the company expand the load on its power equipment to generate more power. It has, for instance, introduced rating sets of 600 MW in the sub-critical league that match Chinese 660 MW super-critical sets in efficiency without escalating the equipment cost.

The R&D expenditure of Bharat Electronics Ltd (BEL) rose by 16.3% to Rs 243.33 crore in 2008-09 and by 29.8% to Rs 315.95 crore in 2009-10. R&D divisions of BEL have completed more than 30 projects each in the areas of equipment and components.

After Bhel and BEL, those in the top five were IOC, ONGC and BEML. The R&D expenditure of IOC went up by 42.7% to Rs 174.23 crore in 2008-09 and by 39.7% to Rs 243.34 crore in 2009-10. The company’s R&D centre developed 181 products formulations during the year 2009-10. The R&D centre of IOC filed for 18 patents, out of which, eight patents were granted. With this, IOC now has a portfolio of 215 active patents.

As expected, companies in engineering sectors—electric equipment, electronics, heavy engineering and mining spent the largest share of their net sales on R&D.

Top five of the 26 PSUs with the highest R&D to net sales ratio are Bharat Electronics, BEML, Bhel, Kiocl and ITI. They have made allocations of 6.10, 3.43, 2.50, 2.30 and 0.53% of their sales to R&D.

Out of 26 PSUs, a steady increase in the net sales to R&D expenditure was seen in the case of nine PSUs, key among them being Bharat Electronics, ONGC, BEML, OIL and HOCL. The R&D expenditure to net sales ratio of ONGC steadily went up from 0.31 in 2007-08 to 0.37 in 2009-10.

A reverse trend was seen in the case of ITI and FACT. The ratio of R&D expenditure to net sales of ITI steadily decreased from 2.27 in 2007-08 to 0.53 during 2009-10.