Tata unit eyes defence sector opportunities

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  1. AVERAGE INDIAN

    AVERAGE INDIAN EXORCIST Senior Member

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    Tata Advanced Systems Ltd scales up operations across its seven lines of manufacturing as it prepares to bid for building full aircraft in the next 3-5 years

    Mumbai: The $100 billion Tata group’s strategic aerospace and defence arm, Tata Advanced Systems Ltd (TASL), has scaled up operations across its seven lines of manufacturing and is preparing to bid for building full aircraft in the next three to five years.
    To start with, TASL is eyeing a defence ministry contract to manufacture 56 military transport planes to replace an ageing fleet of Avro jets with the Indian Air Force (IAF) at an estimated cost of Rs.11,900 crore ($1.9 billion).

    The ministry issued the tender in May last year to eight foreign vendors including US-based Lockheed Martin Corp., Saab AB of Sweden, Russian weapons trader Rosoboronexport, Spain-based Airbus Military, Alenia Aeronautica SpA of Italy, and Brazil’s Embraer SA, specifying that they will have to find an Indian partner to manufacture 40 aircraft within India.

    “The Avro aircraft tender should be out soon and that is one place where someone from the private sector will surely win,” Sukaran Singh, vice-president (chairman’s office) at TASL, said in a 19 May interview. “We have tied up everything but the date for submission has been extended.”

    TASL will compete to build full radars, unmanned aerial vehicles (UAVs) and aircraft in India in the next 3-5 years if the request for proposals (RFPs) put out by the government allow for it, Singh said.

    TASL has a business spread across aerospace, missiles, UAVs, optronics, command and control systems, homeland security and radars. It is seeking to take on rivals such as Larsen and Toubro Ltd (L&T), the Godrej group and the Mahindra group.

    It’s out to grab a bigger share of the expanding defence market in India which, according to KPMG, offers a $180 billion opportunity in 2013-2020. In the period between 2014 and 2020, the defence ministry’s budget is expected to witness a compounded annual growth rate of 8% to touch $64 billion, according to KPMG.

    “Essentially from our perspective, the opportunity is very large but the sector faces many structural issues,” said Singh. “In 2013-14, we had revenue of around Rs.400 crore and in 2014-15 we will grow more than 50%.” TASL was set up in 2007 as a vehicle for the Tata group to move into the national security and defence sector. The unit started production at its 10 facilities spread across Delhi, Hyderabad and Bangalore only three years ago, starting by building structures and critical sections of the body of aircraft and helicopters.

    “The Tata group has been selective in businesses to enter, but once it has entered, it has tried to make its presence meaningful. The same is true for its presence in the defence businesses,” said Rahul Gangal, principal, Roland Berger Strategy Consultants.
    With more defence programmes being led by Indian companies, TASL is well positioned to develop into a system integrator for select product categories, he said.

    Private Indian defence firms like TASL, which currently only deliver non-critical vehicles and supply parts for defence projects, have been trying to gather critical mass to bid for large defence contracts.

    “If any company can do it in India, it is the Tata group. The group has the financial clout as well as diverse capabilities across the supply chain to do it. There are very few companies including L&T, Mahindras, Pipavav Defence and Offshore Engineering that can develop such capabilities,” said Dhiraj Mathur, executive director and India leader for aerospace and defence at PricewaterhouseCoopers’ India unit.

    Mathur cautioned that there are enormous challenges ahead for Indian companies entering the sector, including a very long gestation period, high capital intensity, uncertainty over securing orders, technological challenges and extending a commitment to investors about return on investment. “You need much greater policy support from the government. I wish the new government will lay down clearer and transparent policy guidelines to support the domestic industry. The world over, this industry has developed with solid government support. For instance, a large amount of the research and development (R&D) activities of US companies are funded by the government,” Mathur said.

    Singh adds that India needs a model like the Defense Advanced Research Projects Agency in the US. Under the model, a government agency funds private companies for research and development.

    Given the complexities involved in the domestic defence business, TASL has also been seeking business overseas.
    In aerospace for instance, the company has three plants in Hyderabad exporting to original equipment manufacturers (OEMs) in the US such as Sikorsky Aircraft Corp., through its joint venture (JV) Tara Aerospace Systems Ltd, and Lockheed Martin Aeroframe Corp. through its JV Tata Lockheed Martin Aerostructures Ltd, Singh said.

    TASL has been audited by leading manufacturers who found that the company has the capabilities in place to bid for assembling full aircraft and radars, with the support of these OEMs, according to Singh. The company is also expanding its partnership with the likes of Sikorsky and Lockheed Martin.

    “In the last five years, the company has become the global single source for the fuselage for Sikorsky S-92, the 4,000 different parts that go into it most of them are being built in India by the Tata Sikorsky JV. And from 2015, we will become the single source for Lockheed Martin to build parts for C-130 super Hercules globally,” Singh said.

    Tata unit eyes defence sector opportunities - Livemint
     
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  3. abhi_the _gr8_maratha

    abhi_the _gr8_maratha Senior Member Senior Member

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    good news about transport aircraft , we really need them
     
  4. debasree

    debasree Regular Member

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    then what abt mta which hal tie up with a russian consortium..?
     
  5. abhi_the _gr8_maratha

    abhi_the _gr8_maratha Senior Member Senior Member

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    this TATA product is more like avro , its a passenger aircraft can be used for crew transport
    .
    MTA is like C130J super hercules , and used for transport of weapons
    .
    and this TATA product can be exported to airlines
     
  6. Ray

    Ray The Chairman Defence Professionals Moderator

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    This is a great window of opportunity and Indian companies must seize it.

    The Govt should lay out transparent guidelines and also fund it under its supervision.

    DRDO will object very vociferously no doubt.
     

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