The Hinduja Group has drawn up big plans to enter the aerospace business. The group is in talks with a couple of American and European aerospace companies to assemble fixed wing aircraft and helicopters in India for both civilian and military applications.

Speaking to Business Line, Dr V. Sumantran, Chairman, Ashok Leyland Defence Systems Ltd. and Executive Vice-Chairman, Hinduja Automotive Ltd, said a new company will be created for the business in which Ashok Leyland Ltd will hold equity along with other Group outfits.

Dr Sumantran, who is leading the charge into new businesses for Ashok Leyland, said: “By the second half of this year, say June/July, we will be in a position to specifically announce our plan. We would have tied up our partner by then and also identified the first set of products.”

Group outfit, Defiance Technologies, already does some work on testing and validation for aerospace systems while Ashok Leyland Defence Systems is doing basic design and engineering for some sub-systems in India.

Asked whether there would be multiple foreign partners, Dr Sumantran said: “We are talking to some and hopefully we'll end up with at least one. If there are two partners, they will be for separate products and obviously non-conflicting.” He said that the partner would be offered equity in the company.

Investment

Talking on the likely investment, he said that it would be difficult to talk about it now because they were still in the process of deciding the scale of the business. “It depends on how much work share we will end up with, how much will be done in India and how much overseas; and how much will be done through perhaps a third partner.”

Unlike the automobile business where the bulk investment is in the plant, in the aerospace business, the major spending is on product development, testing and validation. “If the investment on the product side is mitigated, then the investment in the plant itself can be managed by an automotive company,” he said.

Military orders

The strategy to enter the Defence business, particularly aerospace, is based on the huge offsets available for domestic manufacturers. The Hindujas hope to turn this to their advantage by assembling systems or sub-systems for military aircraft orders bagged by foreign companies.

Speaking on the potential in the military aviation business, Dr Sumantran said: “All the global manufacturers are salivating over the MMRCA (medium multi-role combat aircraft) order. Where do you get an order for 126 expensive topline aircraft? Plus may be 560 helicopters… nobody in the world can see the line of sight to such an order for the next five years.”

Asked why a Lockheed Martin or a Boeing would want to even share a part of the work with the new company, Dr Sumantran pointed out they have to manage their offsets and with the private sector just entering the aerospace business, all new domestic players stood an equal chance. “Nobody has a head-start. We are all running off the starting blocks more or less at the same time,” he said.

(This article was published on March 8, 2011)
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