aerospace and defence sector diversification | acma

Glossary

OEM Original Equipment ManufacturerJV J i V

CAGR Compound Annual Growth Rate

SEZ Special Economic ZoneJV Joint VentureCIS Commonwealth of Independent States MRO Maintenance Repair Overhaul

SEZ Special Economic Zone

HAL Hindustan Aeronautics Limited

NAL National Aerospace Laboratories R&T Research & TechnologyUSD United States DollarUAV Unmanned Aerial Vehicle

MDL Mazagon Dock Limited

BEL Bharat Electronics Limited

DGCA Directorate General of Civil AviationUAV Unmanned Aerial VehicleAS Aerospace StandardISO International Organization for StandardizationMoU Memorandum of Understanding

DGCA Directorate General of Civil Aviation

MSME Micro Small and Medium Enterprises

MoCA Ministry of Civil Aviation MoU Memorandum of Understanding

DRDODefence Research and Development Organization

MoD Ministry of Defence

MRMRMedium Range Maritime ReconnaissanceDPSU Defence Public Sector Unit

ISRO Indian Space Research Organization UTC United Technologies Corporation

MRMR Reconnaissance

MMRCA Medium Multi-Role Combat Aircraft

DG Director General

GE General ElectricFDI Foreign Direct InvestmentIP International Protection

VAT Value Added Tax

NCR National Capital Region

DAC Defence Acquisition Council

1© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

IP International Protection DAC Defence Acquisition Council

Glossary

RFI Request For InformationRFP Request For ProposalRFP Request For ProposalATGM Anti Tank Guided Missile BRD Base Repair DepotsTEC Technical Evaluation Committee DIPP Department of Industrial Policy and Promotion CAD Computer Aided Design CAM Computer Aided manufacturing CNC Computer Numerical ControlESD Electro Static Discharge gToT Transfer of TechnologyB2B Business to BusinessPBT Profit Before TaxPBT Profit Before TaxPAT Profit After TaxEBITDA Earnings Before Interest, Taxes, Depreciation and AmortizationNADCAP N ti l A d D f C t t A dit ti PNADCAP National Aerospace and Defense Contractors Accreditation ProgramDGAQA Directorate General of Aeronautical Quality Assurance NSIC National Small Industries Corporation


LRU Line Replaceable Units

Foreword

Over the years the Indian auto component players have strongly integrated themselves into the global automotive supply chainOver the years, the Indian auto component players have strongly integrated themselves into the global automotive supply chainprimarily through their established manufacturing processes and world-class quality. They have been the torchbearers of Indianauto industry’s success story and a case study for our frugal manufacturing skills. The auto component sector has been the faceof “Make in India” drive for more than a decade.

Indian defence and aerospace sector is fast emerging as the sunrise sector and will take the centre stage in government’s “Makein India” drive. The government’s push for indigenization in defence and growing interest from global commercial aerospaceplayers to source from Indian suppliers, have opened up multiple supply chain opportunities for Indian private players.

W t l f l ACMA b b t iti d t b th t iti i th t d t th i f t iWe strongly feel, ACMA members are best positioned to grab these opportunities in the sector due to their proven manufacturingcapabilities. The Indian auto component players have all the right ingredients in place to repeat the success story of automotivein aerospace & defence sector. This is the right time for the ACMA member companies to devise a clear strategy and come outwith an action plan for the sector.

In this context, KPMG had been appointed by ACMA to assist them in their endeavour towards diversification into aerospace &defence. Our efforts have received overwhelming support from the global aerospace & defence companies and have beensuccessful in positioning ACMA as the right partner for the global OEMs and Tier1s who are looking at sourcing from India.

We are glad to jointly release the Aerospace & Defence sector diversification report with KPMG. The report captures the sector’slandscape, opportunities, challenges and outlines the road map for the ACMA members who are aspiring to be a part of thesector. We hope you will find this document useful and informative in planning your next steps.

F. R. SinghviChairman


ChairmanAerospace, Defence & Railways, Committee, ACMA

Executive Summary

Government’s defence modernization push and “Make in India” drive have renewed thef & d f t1 focus on aerospace & defence sector1

Global aerospace majors have started focusing on India to source components for theirI di d l b l i t2

Indian companies are now looking at aerospace and defence sector as a long term

Indian and global requirements

3sustainable opportunity

ACMA members, with their proven global manufacturing capabilities make ideal candidates

3

4

ACMA members may focus on commercial aerospace supply chain through globalt hi d t k t i ti h t d d f

as supply chain partners in aerospace and defence

5

4

partnerships and take an opportunistic approach towards defence 5

ACMA should play a proactive role with central and state governments for policy reformsrelated to aerospace and defence manufacturing in India6

There are significant regulatory, commercial and financial risks associated with aerospaceand defence that ACMA members must be aware of before taking the plunge7

related to aerospace and defence manufacturing in India


and defence that ACMA members must be aware of, before taking the plunge

Contents

M k t O i C i l & D fMarket Overview – Commercial aerospace & Defence

Opportunity Landscape for ACMA Players – Aerospace & Defence

Key considerations by aerospace OEMs & Tier1s when evaluating suppliers

Automotive Vs Aerospace

Key considerations by aerospace OEMs & Tier1s when evaluating suppliers

Sector specific challenges

Key activities by ADR committee & Outcome

Road Map & challenges during the journey

y y

Broad policy measures: To support aerospace component manufacturing

C di f l I di lCase studies of select Indian players

Overview of key India based Joint ventures in the sector


1. Market Overview(Commercial aerospace & Defence)


Emerging Economies Set to Drive Future Growth

Today

28%of worldwide

GDP

69%of worldwide population (4 9 billion

39%of world

passenger

39%of world

fleet in serviceGDP (4.9 billion people) trips fleet-in-service

2032

40%67% 54% 51%40%

of worldwide GDPof worldwide population

(5.7 billion people)

54%of world

passenger trips

51%of world

fleet-in-service

Emerging economies (54 countries)g g ( )

All other countries (150 countries)

Emerging economies represents 50% of new aircraft demand over the next 20 years


Source: Airbus report, Global Market Forecast 2013-2032

Global fleet Size to grow at a CAGR of ~ 4% during 2015-2034

Single-aisle airplanes around Asia-pacific region will continue to dominate the world’s fleet

Region Wise Increase in aircraft deliveries during 2014-2034

2580 2660

38,050 New Aircraft Deliveries Globally during2015-2034

4356021600

100001500020000

[VALUE] [VALUE]

2580

05000

2520 5800

[VALUE]

740 6701620 38002520 5800

2014 2034Fleet Size

Source – Boeing Current Market Outlook 2015-2034Note- The figures includes both passenger and freight aircrafts

2014 2034Large Widebody Medium WidebodySmall Widebody Single Asile

Around 41% of the existing aircrafts will be replaced and 15% will be retained by 2034providing significant scope for new component manufacturing players. As per recentindustry estimates, India & other emerging markets would generate aircraft demand

i d USD illi i 208© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

estimated at USD 5 trillion in next 20 years

A significant pipeline of new models and production ramp up of existing models offers significant opportunitiesg pp

Product lifecycle

R&T R&D OE Manufacturing AftermarketVa

lue

Manufacturing

Product lifecycleV Manufacturing peak

R&D definitionExtended support

‘tail’R&D definition tail

approx. 15 approx. 30 approx. 50

Platforms: A350 XWB

B787 A380 B777 A320 B747 B737 MaxB777X

Years

A320 Neo

XWB

C SeriesC919 B747-8

B767A330

B737 Classics A300/A310

B757B717

Max

JSF Typhoon

B777X

A340A330Neo

Many aircraft models are either entering the manufacturing stage or undergoing a production ramp up. This would provide significant opportunitiesfor Indian companies to become part of the global supply chain


for Indian companies to become part of the global supply chain

Major aerospace global players and their position in the supply chain

Aircraft ownersCommercial airlines and

Freight carriers

Maintenance, Repair and OverhaulAircraft Leasors and/or

M t C iAircraft owners

OEMsEngine manufacturers Aircraft manufacturersNew build

only

Freight carriersTransDigm, AAR Corp, Heico, Aviation Technical Services,

Timco Aviation Services, StandardAero

Management Companies

Civil Aircraft and Major Component Manufacturers

Rolls-Royce, GE, P&W, CFMI, IAE, Honeywell

Boeing, Airbus, Bombardier, Embraer, Gulfstream, Cessna, Dassault

only

Tier 1Systems Integration

Engines/Actuators

Aero-structures

Wheels, brakes, and landing gear

Flight control

and avionics

Interiors

GKN, Spirit, Messier-Dowty, B tti M itt

Goodrich, SafranRock ell Esterline

Zodiac, AIM, Cobham DiehlAvio (now GE)

Supply chain management and tooling manufacturer

Tier 2 Sub-assembly manufacture Trac, Gardner, MB Aerospace, Shimtech,

Aernnova,Triumph,

Latecoere, Alenia Aernautica

Bugatti, Meggitt Rockwell, Esterline Cobham, DiehlAvio (now GE),Volvo (now GKN)

MTU, MHI, Eaton, Moog, Nexcelle,

AVIC Principal component manufacturers

Pattonair, Wesco, MB Aerospace

Tier 3 Make-to-print components Sub-component and parts manufacture

pMonogram, Panasonic, Parker, PFW,

Mitsubishi, Kidde, PPG, FujiHamilton Sundstrand,

Doncasters, Firth Rixson,

PCC

MB AerospaceBrookhouse

Tier 4 Materials and Raw materials suppliers, casting and foundry

Target area for ACMA Companies


Materials and processes Manufacturers - Alcoa, Kaiser, Aubert & Duval. Distributors - Thyssenkrupp

Indian aerospace and defence sector stakeholders and their objectives

■ Domestic players

■ Public: DPSUs Ordnance■ Foreign players

■ Public: DPSUs, Ordnance Factories, DRDO, HAL, NAL, ISRO

■ Private : Tata, Mahindra, Samtel, L&T etc

■ Boeing, Airbus, Goodrich, Honeywell, UTC, Thales, Rolls Royce, GE, Dassault etc

■ Capture opportunities arising out of ■ Capture rapidly emerging market t itiincreased push for indigenization including

offsets and in domestic market

■ Technology acquisition and capability development

opportunities

■ Leverage domestic industry competencies

■ Preserve competitive advantageIndustry

de e op e

Stakeholders

User Government

■ Ministry of Defence■ Defence, paramilitary and police forces y

■ Ministry of Civil Aviation■ Defence, paramilitary and police forces

■ Civil aircraft operators/airlines

■ Private users ■ Development of competent domestic industry

■ Defence Forces■ Socio-economic benefits such as industrial

growth, employment generation, and export growth

■ Growth of civil aviation and development

■ Defence Forces

– Increase Forces capabilities; Rapid replenishment of depleting equipment

■ Civil aircraft operators/airlines


■ Growth of civil aviation and development related infrastructure

p- Leverage the high growth in air travel

Currently presence of Indian private players is primarily limited to Tier-3 manufacturing, Engineering and R&D services domaing, g g

Aircraft and subsystem design

Avionics, critical components design

Simulation and testing services

Component design, IT solutions

Design Engineering and IT solutions

P l t i Ai ft i t iC t Castings, forgings

Power, electronic components, cables, wiring

Sheet metal components

Aircraft interior: seats, windows, upholstery

Component manufacture(Tier-3)

Avionics & flightComponent Hydraulic systems

Electrical systems

Avionics & flight system components

Component manufacture(Tier-2)

E i A i i & fli ht Wi & l diSubsystems Engine manufacture

Avionics & flight control systems

Wing & landing gear assembly

ymanufacture(Tier-1)

Full aircraft Aircraft testing Fuselage empenAircraft Full aircraft assembly

Aircraft testing and validation

Fuselage, empennage assembly

Aircraft assembly

Presence of private playersp p y


Existing & upcoming Aerospace & Defence SEZs/parks across the country

Upcoming major manufacturing clusters - India• Air India MRO, Delhi

Air works Avionics repair • Maharashtra Airport• Air works Avionics repair shop at Gurgaon

• Proposal to develop Aerospace park & MRO hub at Hisar

• Maharashtra Airport Development Company (MADC) SEZ at Nagpur

• 50 Acres Air India MRO

New Delhi

at Hisar• NCR Region: Small

component manufacturing facilities

Nagpur

Gujarat• 3,500 Acre SEZ at Dholera• Adani Specialized A&D SEZ

at Mundra• MRO Facilities: Upcoming

• Aerospace SEZ at Adibatla• New defence SEZs & Clusters

planned at AP & Telangana

Belgaum

gp

Hyderabad

• MRO Facilities: Upcoming

Q t SEZ t B l (300

planned at AP & Telangana• DRDO & ISRO facilities

Bangalore

KochiChennai

• Quest SEZ at Belgaum (300 Acres)

• 1000 acres Aero park near BIAL• Several small medium & largeSeveral small, medium & large

aerospace manufacturers • 250 acres Cochin International Airport industry park for aerospace manufacturing D f k i P l kk d

• Aerospace & defence SEZ at Sriperumbudur


Source – Secondary research, KPMG analysis• Defence park in Palakkad

p

Global aerospace & defence majors and their activities in India (1/2)

S. No Company Country YearRevenue

& PAT Sales -

Defence Vs Activities in Indiap y y(USD bn) Commercial

1 B i USA 1916 87 5 35 65

Recently won Naval & Airforce helicopter orders

& &1 Boeing USA 1916 87, 5 35:65 R&D center in Bangalore & supplierrelationship with HAL, BEL, Dynamaticsand Tata

Sources over USD 400 million worth of

2 Airbus Group Europe 1969 79, 1.5 20:80

Sources over USD 400 million worth of components & services from India andplans to increase it to USD 2 billionStrong presence in civil aviation and g pparticipating key military programs

3 UTCAerospace USA 1975 63, 6 19:81

Manufactures commercial aerospacecomponents in India (Bangalore). R&D Aerospace p ( g )centre in Bangalore

4 Lockheed M ti USA 1995 45, 3 78:22

JV with Tata for mfg aero structuresParticipating in rocket launchers4 Martin USA 1995 45, 3 78:22 Participating in rocket launchers, missiles, UAVs & radars programs

5 General Dynamics USA 1899 31, 2.5 60:40 Won its first contract in India in 2011 for

HAL - Hawk jet Trainer aircrafts


y jSource: SIPRI, media reports, company financials

Global aerospace & defence majors and their activities in India (2/2)

S. No Company Country Year Revenue & Sales -Defence Vs Activities in IndiaS. No Company Country Year PAT Defence Vs Commercial

Activities in India

6 BAE Systems UK 1999 28, 0.20 94:6 JV with HAL & participating in Indianartillery and howitzer programsy g

7 Northrop Grumman USA 1994 25, 2.0 82:18 MoU with Bharat Electronics Limited

(BEL) and Pipavav Shipyard

8 Raytheon USA 1922 24, 2 93:07Supplies radar systems for Indian P8I Aircraft & thermal imaging fire control system for T-72 tank upgrade

9 Finmeccanica Italy 1948 21, (-)0.6 50:50 Major defence deals like MRMR and Multi Role Helicoptersy ( ) Role Helicopters

10 Thales France 2000 19, 0.8 55:45

Supplies sensors and electronic systems for transportable radar systems order (IAF) d S b i (I di0 a es a ce 000 9, 0 8 55 5 (IAF) and Scorpene submarines (Indian Navy)


Source: SIPRI, media reports, company financials

Large number of Indian private players have entered the aerospace & defence supply chain (1/2) pp y ( )

Private Players in A&D Products/Services offered

Aequs (Civil aero) Precision Machining, sheet metal fabrication, assembly, special processing and forging for aero structures

Alpha Design Technologies (Defence)

Develops and manufactures radar systems, electronic warfare equipment, mobile ATCs, Test stations, microwave components and related software development

Astra Microwave Products Ltd (Defence)

Develops and manufactures sub systems for RF and microwave systems for defense, space and telecommunication industries

Avasarala Technologies Ltd (Defence)

Manufactures products such as heat pipes, wave guides and mechanisms for space sector

Bharat Forge

(Civil aero and defence)Supplier of airframe, structural and engine parts

Dynamatic Technologies

(Civil aero & defence) Design and build highly engineered products for defense and security applications


Large number of Indian private players have entered the aerospace & defence supply chain (2/2) pp y ( )

Private Players in A&D Products/Services offered

Larsen & Toubro

(Defence)Control Systems, Servo drives, Embedded systems, Custom-built electronic products for aerospace & defence applications

Mahindra Aerospace

(Civil aero)Aircraft and sheet metal, surface treatment and assembly manufacturing capabilities

MKU (Defence) Manufacture ballistic protection products, night sight devices and platform protection for aircrafts, ships and land vehicles

Punj Lloyd (Defence) Defence land systems, aerospace, electronics and MRO

Sansera Aerospace

(Civil aero)Ready to fit aerospace precision machined parts, seating systems, Cargo systems, cargo system parts, lighting system parts, sensors and structures( )

Tata Advanced systems Limited (TASL) Aerospace and aerostructure components


(Civil aero & defence)

Strategic collaborations & JVs by Indian private companies to foray and expand in aerospace & defence sector

Company Partnership Details/Investment Key clients

p p

Tata Sikorsky JV - Aero structure assemblies for S-92 helicopters; Investment : ~ INR 250 cr

Sikorsky and clients in US/Indian market

Tata Lockheed Martin

JV - Aero structures for C-130J aircrafts Investment: ~ 200 cr

Lockheed and its clients in US market

DynamaticsSpirit

Aerosystem, Boeing

MoU - Manufacture aero structure assemblies Boeing, Airbus, Bell HelicoptersBoeing p

AequsSAAB,

Magellan, S tf

JV - Aerospace surface treatment solutions and manufacturing aero structures

GE, Magellan Aerospace, Rolls Royce, Honeywell,

G d i h d E tSetforge and manufacturing aero structures Goodrich and Eaton

Mahindra Aerospace

Gipps Aero, Aerostaff

Acquisition - Aero structure components to global aerospace GE (Aerostructures) Aerospace Australia Expects USD 300 mn in revenue in 3-4 years

Bharat Forge Safran MoU - Forged and machined components Expects to generate USD 100 mn in 4 5 years

Safran affiliates and clients


Expects to generate USD 100 mn in 4-5 years clients

2a Opportunity landscape for ACMA2a. Opportunity landscape for ACMA players

(Aerospace - Commercial)(Aerospace - Commercial)


Current Indian aerospace landscape & growing opportunities

Aerospace and defence is one of the focus sectors underpcentral govt’s “Make in India” initiative

Following the state of Karnataka, the state governments ofAP Telangana Tamil Nadu Punjab Maharashtra MP &

Increasing focus by the government

AP, Telangana, Tamil Nadu, Punjab, Maharashtra, MP &Gujarat are coming out with similar aerospace and defencepolicies

Global majors such as UTC, Sirkosky, Lockheed Martin,Rolls Royce Moog etc have set up manufacturing facilitiesInvestments by global Rolls Royce, Moog etc have set up manufacturing facilitiesand developing the supply chain in India for their globalrequirements

y gOEMs and Tier 1 players in India

& fAerospace & defence majors such as Airbus, Boeing, BellHelicopters, Sirkosky, GKN, Rolls Royce etc. have significantplans to increase their sourcing volume from India

India gradually being seen as a favourable

sourcing base


Commercial Aerospace – Emerging opportunity for auto component playersplayers

Global aerospace OEMs and Tier 1s are increasingly looking at India to source for their global aircraft programsglobal aircraft programs

Risk mitigation• OEMs and Tier1s source more than 70% of their systems from US &

European suppliersRisk mitigation of supply chain

p pp• The system integrators and Tier1s are keen to de-risk and diversify by

developing their suppliers in Asian regions (Especially India and China)

Driving cost effectiveness in

• India is perceived globally as a low cost yet high quality base for manufacturing productseffectiveness in

the supply chain

manufacturing products • Global OEMs and Tier1s are increasingly looking at India to drive down

costs

Offsets • Offset opportunities arise from commercial as well as military aircraft

purchases by the government(Defence &

Commercial)

purchases by the government• Defence offsets can be discharged both by defence and commercial

aerospace sourcing


Aerospace OEMs want to focus more on system integration and hence actively looking for credible partners to build the sub assemblies y g p

TodayPast The “New Aggregators”

L l

Platform Assembly Aggregators

like Airbus, System Integrators

Large-scale Integration

Value-added Parts

TIER 1RSP*

Boeing etc.

Make-to-print Parts and Assemblies

and Assemblies

Positioning of Indian Suppliers

Positioning of Indian Suppliers

Raw Materials

Suppliers

1.Fewer, but still many direct partners2 Limited role for

1.Many direct partners2.No real role for “integrators”3 Design to print of parts and

1. More of Large direct risk sharing partners • Strong ties • Sharing capital expenditure2.Limited role for

“integrators”3.Design to print of parts and sub-assemblies

Sharing capital expenditure, development costs and risk with aggregators

2.A real global extended enterprise3.Extensive role for “integrators”


g* Risk Sharing Partners

Opportunity for ACMA members – Select facts

Airbus is planning to increase its cumulative sourcing from India to USD 2 bn by 2020. 85% of thi ill b i l

a.this will be commercial aerospace

Airbus is planning to add new suppliers from India this year and looking at developing a supplier base to support its recent win with Indian Airforce for supplying transport aircrafts

b.supplier base to support its recent win with Indian Airforce for supplying transport aircrafts

Boeing is looking at fulfilling their offset obligations (more than USD 1 bn) through commercial aerospace sourcing

c.aerospace sourcing

Bell Helicopters has recently signed an order with Dynamatics for supplying major aero structures for its civil helicopters and keen to repeat this success with other capable players

d.structures for its civil helicopters and keen to repeat this success with other capable players

UTC Aerospace is looking at increasing their supplier base from India for their global programs

e.programs

GKN Aerospace is planning to increase its sourcing from the low cost countries to USD 450 mn from 150 mn by 2019

f.

mn from 150 mn by 2019

Other tier1 suppliers of Boeing & Airbus are actively evaluating alternate sourcing destinations such as India for their global supply chain

g.


g pp y

2b. Opportunity landscape for ACMA2b. Opportunity landscape for ACMA players (Defence)


India will witness a significant spend across Army, Navy and Airforce to modernize its Soviet era equipments (1/2)q p ( )

Capital Outlay split under Indian Navy, 2014-15

1%7%4%

46%

Capital Outlay split under Air force, 2014-15

1% 3%

14% 0%

18%53%

7%

49%

46%

4%53%

Land Construction

1%ConstructionAircraft & Aero enginesH d M di V hi l

Capital Outlay split under Indian Army, 2014-15

Aircraft & Aero engines Heavy and Medium VehiclesOther Equipment Joint staffNaval fleet Naval Dockyard

Heavy and Medium VehiclesOther Equipment

y

Other equipments includes avionics, missileguiding systems radars precision weapons

1%

17% 8%

1% 1%

guiding systems, radars, precision weapons,simulators, electronic warfare, control systemsthat supports these aircrafts, high technologyweapons, artillery systems, unmanned vehicles, advancedsystems and munitions other electronics systems training

11%61%

systems and munitions, other electronics systems, trainingship, polar and hydrographic survey vessel etc.Land Construction

Aircraft & Aero engines Heavy and Medium VehiclesOther Equipment Rolling Stock


Rashtriya Rifles

India will witness a significant spend across Army, Navy and Airforce to modernize its Soviet era equipments (2/2)q p

Aerospace- Market Potential Aerospace and naval systems domain presents a huge market opportunity with dual market potential i e defence and commercial

Major Contracts

Rafale Fighter JetC

Naval - Market Potential

L d S t M k t P t ti l

opportunity with dual market potential i.e. defence and commercial

Avro Replacement ProgramMajor Contracts

Submarines (Project-75I) Major Contracts Future Infantry Soldier As a

Land Systems - Market Potential

Pilatus Basic Trainer Aircraft

Light Utility Helicopter (LUH)

Indigenous Aircraft Carrier (INS-Vishal)

Future-Infantry Soldier As a System Program

Future Infantry Combat Vehicle

Sukhoi Fighter JetMulti Role Frigates(Project 17A)

y

M777 Ultra Light Howitzers

Tejas- Light Combat Aircraft

Kamov helicopters

Landing Platform Docks

Corvettes (Warships)

Light Armored Multipurpose Vehicle

(Project 28A) Thermal imaging sights for T-72 tanksUSD 30 Bn +

USD 22 Bn +


USD 16 Bn +

Current Market Players in Defence: DPSUs - The dominant force

Hi d t A ti Ltd (HAL) I di ’ l t i t t h i bl f b ildi

Aircrafts and Aerospace systemsAircrafts and Aerospace systems

Hindustan Aeronautics Ltd (HAL) – India’s only aerospace system integrator who is capable of building fixed wing and rotary systems for the Indian defence forces

Bharat Electronics Ltd (BEL) - India’s leading defence electronics manufacturer supplying critical ( ) g pp y gsystems to Indian aircraft and missile programs

Bharat Dynamics Ltd (BDL) - Leading manufacturer of missile systems for our defence forces. DRDO designs and develops these missiles. MIDHANI - Manufacturing aerospace & missile grade materials

Naval SystemsNaval Systems

Indian defence shipbuilding sector is dominated by 5 Govt shipyards each specializing in certain type of naval vessels

Goa ship yard – Patrol vessels, interceptors | Cochin shipyard – Aircraft carriers| Mazagon Dock Ltd –Submarines, Destroyers | Hindustan shipyard - Cargo liners, barges | GRSE – Frigates, Corvettes

I di O d F B d (OFB) h d 41 f i I di f i d

Land SystemsLand Systems

Indian Ordnance Factory Boards (OFB) has around 41 factories across India manufacturing armoured vehicles, artillery systems, guns, ammunitions , chemicals and other support systems for the armed forces

Bharat Electronics Ltd (BEL) - India’s leading defence electronics manufacturer supplying critical


systems to Indian aircraft and missile programs

Options for industry to participate in Indian defence sector & opportunities for ACMA members

Manufacture and supply of complete equipmentsIndian Production Bid directly to Ministry proposals coming under Buy

& Make India, Buy (India) & Make categories underthe Defence Procurement Procedure (DPP 2013)

Indian Production Agency (IPA)

(Buy & Make India & Make Categories) ( )g )

Sub-systems such as structural assemblies, engines,electrical, electronics & communication systems,

Systems supplier (Tier1) to system

electromechanical and hydraulics systemsintegrators (IPA)

Military grade materials, castings, forgings, smallstructural assemblies electronics parts wire harness

Tier 2/3 components li t Ti 1 & structural assemblies, electronics parts, wire harness

etc to the Tier 1 players or OEMssuppliers to Tier1s & system integrators


Revenue procurement by MoDRevenue expenses present a large opportunity for Indian component players

Revenue Budget covers procurement of items and equipments to maintain and operate already sanctioned assets in the service

Misc. charges5%

Revenue works

9%

Breakup of Revenue Expenditure Stores and equipment expenditure vs Revenue expenditure

Pay & allowances

Transportation3%

9%

7794 96 108 116 117

allowances54%

Stores & eqpt29%

13 16 16 8 20 20

• 70 80% of the equipment costs are in maintenance and upkeep of the equipment It is an INR

Revenue Expenditure Stores and Equipment Expenditure Values in INR ‘000 Cr

• 70-80% of the equipment costs are in maintenance and upkeep of the equipment. It is an INR~ 20,000 Cr opportunity which is increasing at a CAGR of 9%

• 15-20% is spent on Airforce MRO activities covering sub assemblies, components, spare partsetc.

IAF’s BRD has an indigenization cell which encourages private players to develop andsupply the spare parts required for maintenance of the aircrafts in its fleet


Source: IDSA, KPMG analysis

Defence – Challenges need to addressed for successful participation of ACMA members in “Make in India” for defence

Current purchase system makes it difficult for auto components players to actively participate in Indian defence programs*participate in Indian defence programs*

A wait & watch approach

Auto component SMEs should understand the defence sector and analyze the low hanging opportunities before committing large investmentsg g pp g g

ACMA ADR committee will be meeting the defence ministry officials to advocate right policy changes to enable the contribution of its members

While defence is definitely a lucrative sector to invest, government need to come out with ground level policy changes to encourage SMEs in the sector

The capabilities built around commercial aerospace sector can be leveraged to tap the opportunities in defence once the business environment improves

There are few bright spots in defence such as supplying spare parts & MRO services to the defence forces and these will be explored further


* Please refer the challenges section

3. Automotive Vs Aerospace


Auto companies to diversify into aerospace & defence sector, it becomes utmost important to realize the similarities and severities between the twop

Key parameters are similar in both but more demanding in aerospace & defenceKey parameters are similar in both but more demanding in aerospace & defenceAspect Aerospace & Defence Sector Automotive Sector

P d ti• Production volumes for most of the

components is comparatively lowAuto sector caters to much broader customer segment andProduction

quantitycomponents is comparatively low

• Most items would be manufactured using batch production techniques

broader customer segment and larger volumes

Selection Criteria

• Involves rigorous assessment by OEMs on various parameters with zero tolerance levels

Strict assessment by OEMs but number of parameters & tolerance limits areCriteria tolerance limits are comparatively less stringent

• Requires highly skilled resources High production volume can be Resources • High component varieties and low volume

demands high manpower requirementmanaged with a mix of skilled and semi skilled resources

M i l V d di d t i tl it d C ti l l d diMaterial Handling

Very demanding and strictly monitored Comparatively less demanding


Auto companies to diversify into aerospace & defence sector, it becomes utmost important to realize the similarities and severities between the twop

Key parameters are similar in both but more demanding in aerospace & defenceKey parameters are similar in both but more demanding in aerospace & defenceAspect Aerospace & Defence Sector Automotive Sector

• One machine can be configured to • This might be difficult due to highl & t ti t i t

Product produce multiple parts due to low volumes

• More product varieties and

volumes & set up times constraints

• Product varieties are relatively lesser and standardized across p

specifications models in a platform

P b k• Long as it may take 4-5 years for a

li t t t kiComparatively shorter

Pay back period

new supplier to start making revenues after passing the assessments

Penalties and risk

Suppliers need to pay huge penalties in case of product failures

Penalties are comparatively less stringent

Globalized yet India centric due toSupply chain Complex, globalized supply chain

Globalized yet India centric due to large local demand & increased local sourcing by OEMs


4. Key considerations by Aerospace OEMs & Tier1s while evaluating their suppliers


Key considerations by global OEMs for selecting their suppliersNine core parameters that govern the supplier selection

Aerospace & Defence experience

Training and Human

Resource

IT System and Process

experience

Quality

Resource

Broad supplier Selection



Management Intent

and strong vision

Quality systems/

certifications

SelectionparametersSelection

parametersSelection

parameters

Efficient

vision

Efficient production processes Change

control system

PurchaseMaterialHandling Capability

Purchase & Vendor

Managementtechniques


5. Sector specific challenges


Risks/Challenges - Aerospace

Nascent stage of domestic production1

Lack of focus: Aerospace OEMs and Suppliers - Until recently, there was an absence of a focused sourcing strategy for India

a.

Attracting private aircraft manufacturers & Tier1s - Challenges still exist in attracting anchor units of global OEMs & Tier1s

b.focused sourcing strategy for India

Limited Indian players as large suppliers- Limited Indian players at the Tier 1 & 2 level c.

Delays in indigenous aircraft programs - Programs such as Regional Transport Aircraft development are yet to take shape

d.

Western domination in aerospace supply chain - Global sourcing volumes still dominated bya.

Global competition2

Western domination in aerospace supply chain Global sourcing volumes still dominated by clusters in Europe and North America

Assertive Middle East, China and other Asian Countries - Stiff competition for component b.


level sourcing from low cost countries such as China, South Korea, Thailand and the Middle East

Risks/Challenges - Aerospace

High entry barriers and low initial volumes 3

Stringent Quality standards, Long realization times - New entrants may take 2-3 years to perfect production methods, achieve certifications and qualify the stringent qualification process

a.

Material unavailability, Dependence on Imports - Unavailability of Aerospace grade materials in India with a heavy dependence on imports

b.

Lack of trained manpower, High attrition rate - Lack of skilled manpower, skill development programs & demand driven attrition

c.

Production volume, Pay back period - Pay back period is long term with initial low production volume

d.

Ecosystem & Infrastructure - Nascent aerospace manufacturing ecosystem and supportinga.

Other challenges4

Ecosystem & Infrastructure Nascent aerospace manufacturing ecosystem and supporting infrastructure in the country

Material handling challenges, Lack of supporting facilities - Demanding process control b.


and material handling procedures, Inadequate supporting facilities for testing, certification etc.

Risks/Challenges - Defence

Private sector at a disadvantage 1

Uncertainty around India’s procurement programs • Long delays and uncertainties in defence procurement programs

a.

g y p p g• Examples are India’s artillery procurement programs, Helicopter programs, Future Infantry

Combat Vehicle (FICV) program, Submarine acquisitions etc.

Lack of level playing field for Private players • Current FDI cap of 49% discourages global OEMs to share IP with Indian players

I di P i t t l k R&D d f t i bilit t ti i t t i t t

b.

• Indian Private sector lacks R&D and manufacturing capability to participate as system integrators

Technology intensive A&D f t i i hi hl t h l i t i i ll i OEM d Ti 1 l l

c.• A&D manufacturing is highly technology intensive especially in OEM and Tier 1 levels • Average R&D time of 8-10 required to develop products and compete globally

d.Domination by Indian Defence Public Sector Units (DSPUs)*

d.


* Explained in the next slide


Domination by DPSUs2

R&D and manufacturing infrastructure - Domination by DPSUs such as HAL, BEL, BDL and Shipyards, Ordinance Factory Board (OFB) and DRDO

a.

System development capabilities - Private players lack the system development capabilities to compete with DPSUs

b.

py , y ( )

to compete with DPSUs

Tax/Duty Structure • Structure benefits DPSUs rather than private players

c.

C t l I di C t ll d b DPSU ith ti i ti fd.

• Structure benefits DPSUs rather than private players • Govt. has recently taken few steps to address this issue

Control on Indigenous aerospace programs - Controlled by DPSUs with participation from private sector limited to components level

Challenges for private players working with DPSUsChallenges for private players working with DPSUs • L1 system of selection & Long pay back period • Limited order quantity & Uncertainty of orders

Delay in procurement programs

e.


• Delay in procurement programs


Regulatory challenges3

Incentives and supporting Infra - Delays in creating word class infrastructure and supporting incentives to promote manufacturing

a.

MSMEs - Lack of support for MSMEs in A&D sector b.

FDI cap of 49% - Discourages global OEMs and Tier 1s in setting up facilities in India c.

dExport restrictions, Practical hurdles in offset policy - Restrictions hurting Tier 1 and OEM Investments, Offset policy limitations holding back A&D investments

d.

Process hurdles - Sharing of IP and product development knowledge between the DPSUsa.

Lack of Coordination between DPSUs and Industry 4

Process hurdles Sharing of IP and product development knowledge between the DPSUs and the Private sector

Procurement process by DPSUs Discourages competent players from participatingb.


Procurement process by DPSUs - Discourages competent players from participating

6. Roadmap & challenges during the journey


Roadmap for the aerospace sector forayA five step approach to TransformationA five step approach to Transformation

Phase 3: Implementation

GlobalGlobal Aerospace

SupplierDiversification into Aerospace

2 – 4 years

4 – 6 years

Diversification into Aerospace

Stage 4: Certifications

Stage 5: Moving up the Value Chain3 – 12 Months

12 Months –2 years

2 4 years

Stage 2: Building the

Stage 3:Securing the initial order

Certifications & Expansion

Chain0 – 3 Months

3 – 12 Months

Stage 1: Taking the right step forward

Building the Infrastructure

forwardThe journey to evolve as a preferred partner for global aerospace players will be tough withchallenges. Indian auto component players have the required capabilities and need to adoptth i ht h t h th il t

© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

43

the right approach to reach the milestone

Way forward for commercial aerospaceTaking the right step forward – Stage 1Taking the right step forward Stage 1

Stage 1 (0- 3 Months)Pl it i htPlan it right

Understand your key

strengths & Preliminary interaction with Tier 1

Develop robust vision

d bj ti

Identify key product

segments tod core competencies

with Tier 1 and OEMs and objective segments to

focus on

forw

ard

ght s

tep

Map criticalIdentify key

focal Create Devise entry

ke th

e rig

Map critical gaps and ways to

address them

focal person(s) to spearhead sectorial initiatives

Create dedicated business vertical

Devise entry strategy and investment

plan

Tak initiatives


Way forward for commercial aerospaceBuild partnerships & infrastructure – Stage 2Build partnerships & infrastructure Stage 2

Stage 2 ( 3 - 12 Months)Build the Infrastructure

Focus on Participate in

Build the Infrastructure

catering to global supply chain through focus products

Participate in aerospace events and

forums

Build a focused team for

aerospace

Identify anchor customers and build rapport

ure

p

Train core team on key Create

dedicatedProduction strategy to Initiate process ra

stru

ctu

yexpectations of

aerospace players

dedicated line/facility for

aerospace

gymanufacture in

house & outsource

pto purchase

right machines

right

infr

Establish process and

controls as perFocus on customer

Discuss with sourcing teams

of OEMs such as Airbus Boeingea

te th

e r

controls as per aerospace standards

customer requirements

Airbus, Boeing UTC etc. to sync with their India

plans

Cre


Way forward for commercial aerospaceApprovals and Certifications – Stage 3Approvals and Certifications Stage 3

Stage 3 ( 12 Months – 2 Years)Win the initial orderWin the initial order

orde

r Identify & reach out to right customers Prepare facility Choose the

e in

itial

o customers based on identified

component t i

Conduct B2B meetings and plan site visits

Prepare facility for formal

assessment by customers

Choose the right

components to pilot

o w

in th

e types, sourcing needs etc

The component Conduct pilot

step

s to The component

should align the company’s

capabilities and involve simpler

Set up special process & material

sourcing tie ups

Conduct pilot trials and

reviews by the customer till

achieving first

Secure order or assurance from

customer

he ri

ght involve simpler

processes sourcing tie ups achieving first

right part

Prepare facility

Take

th Prepare facility for AS9100 and other quality audits


Way forward for commercial aerospaceSecuring the first order and scaling up – Stage 4Securing the first order and scaling up Stage 4

Stage 4 ( 2 – 4 Years)Certification and ExpansionCertification and Expansion

Scale up

scal

e up

Get the required

certifications and other

Scale up facility and

processes to meet the

i d

Win confidence of the first

t

Discuss on other

opportunities ( t )

ns a

nd s and other

customer approvals

required volume and

quality

customer (components) with customer

tific

atio

n

Gradually add new Plan for

btai

n ce

rt Develop healthy

portfolio of components

Expand customer base

components and customers

without compromising

Plan for additional

approvals, audits, quality

requirements

Ob p p g

quality and reputation

requirements


Way forward for commercial aerospaceMoving up the value chain – Stage 5Moving up the value chain Stage 5

Stage 5 ( 4 – 6 Years)Move up the value chainMove up the value chain

Develop clear vision and strategy to

move up fromBuild capability

by working ith t

Look for global players (JVs, A i iti ) t

Target Indian and other

global players h hmove up from

component to sub assembly manufacturer (Tier 2 level)

with customers to identify right

assemblies

Acquisition) to propel the

transformation

who have defence

manufacturing bases in Indiach

ain

(Tier 2 level)

he v

alue

Develop capability and

ove

up th capability and

approvals to supply sub

assemblies to k l b l

Mo key global

aircraft programs


Way forward for DefenceBuild the capability and wait for the right opportunity and timeBuild the capability and wait for the right opportunity and time

Preparatory Stage ( 1 - 3 Years)Build Capability and Look for the right opportunities

Understand the D l t

Build Capability and Look for the right opportunities

time

Understand the sector, regulatory processes & pipeline opportunities;

Develop connects with key

stakeholders: DPSUs, Defence

Scout for low hanging opportunities with ahe

righ

t t

Build your complimentary capabilities from commercial aero

private sector OEMs, Indian business

groups bidding for programs

opportunities with a low risk factor

ait f

or th

ty a

nd w

capa

bilit

Look for any defence offset opportunities that can be catered

Empanel your company with

Defence HQ DPSUsApply for industrial license required for

Bui

ld c through investments

in commercial aerospace

Defence HQ, DPSUs to keep track of

opportunities identified defence

products


Key Challenges during the journey (1/3)

Nascent supply chain & Lack of sectorial understanding

Choosing the right business segment

Long gestation time & B i f t k h ld

Plan (Stage 1)

g guncertainties Buy in from stakeholders

Skepticism amongst OEMs and Reluctance of global suppliers to Tier 1 players on Indian suppliers

g pppartner with Indian component

playersBuilding the Infra (Stage 2)

Investment in machines & infra without order security

Talent identification and training on global processes


g p


Adapting to high quality expectations consistently

Preparing and training the team on aerospace manufacturing approach

Winning the

Successfully clearing pilot trials, getting Identifying right components to

initial order (Stage 3)

y g p , g gthe OEM approvals and securing order

Identifying right components to start with

Adhering to strict processes Strict audit process by certifying Adhering to strict processes St ct aud t p ocess by ce t y gagencies Certification &

Scaling Up (Stage 4)

Adhering to timelines & choosing the right component to scale up

Building scalable production, material handling &

lit t

( g )


quality set ups


Maintaining traceability & Production setup with higher tolerances, higher product variety, low

Handling logistics & supply chain

material handling variety, volume etc.

Handling different grades ofProduction Handling logistics & supply chain issues pertaining to special processes

Handling different grades of aerospace raw materials & inventory

Production (Stage 4)

Retain & train talent; Strict adherence to additional audits from OEMs & Tier1s

To Build capability to position as a sub assembly player (Tier 2)

Competition from established players in Europe & North America

Moving up the value chain

(Stage 5)Uncertainties & delays in Indian

defence programsDeveloping R&D & technical

capability( g ) p g capability

Cautious approach from global Managing supply chain ; Export


pp gplayers

g g pp y ; prestrictions, ITAR & IP controls

7. Key activities by ADR committee & Outcome


Activities & Outcome (1/2)

Reached out to ACMA 38 companies Exercise to collate the A capabilityACMA

members to identify Interested companies

38 companies had expressed

interestcapability

details of the 38 companies

A capability database of 38

companies

Interactions with Profiles of I t ti ith Efforts to

select OEMs & Tier 1s*

ACMA members

shared

Interactions with Trade organizations

& embassies**

Facilitate global

partnerships

Airbus has shortlisted 14 companies for visit & assessment

GKN, UTC, Rolls Royce are in the process of shortlisting & selectionselection

* Airbus UTC GKN aerospace Rolls Royce Sirkosky Lockheed Martin Bell Helicopters Boeing


** Business France (French Embassy), UKTI, US embassy commercial servicesAirbus, UTC, GKN aerospace, Rolls Royce, Sirkosky, Lockheed Martin, Bell Helicopters, Boeing

Activities & Outcome (2/2)Aircraft OEMs & ACMA – Partnering to build the Indian aerospace supply chainAircraft OEMs & ACMA Partnering to build the Indian aerospace supply chain

OEMs & Tier1s want to develop new suppliers from the current Indian manufacturing and services supply base to support their global aerospace suppliermanufacturing and services supply base to support their global aerospace supplier chain A Collaborative Model

ACMAPotential Companies shortlisted by the OEMs & Tier1s and other interested players

Building a robust s ppl chain in Indiasupply chain in India

with ACMA members as the preferred partners

Aerospace OEMs & Trade

Organizations Airbus, Boeing, GKN, UTC etc.Business France, IFCCI, UKTI, ADS US trade bodies etc Tier1sOrganizations

The planned approach is to jointly work with the OEMs & Tier1s to establish a joint task

, g, ,ADS, US trade bodies etc..

e p a ed app oac s to jo t y o t t e O s & e s to estab s a jo t tasforce with Trade organizations of key supply bases in USA & EuropeThe Trade organizations will work with potential ACMA companies to identify right Joint Venture partners and investment targets with support of the OEMs


Venture partners and investment targets with support of the OEMs

Going Forward

Interaction with other stakeholders as and when required1 q

ACMA’s 2nd A&D conference in 2016 -172

Submit a note to defence minister (expectations to support “Make in India” for defence &aerospace)3 aerospace)

Arrange meetings with senior officials on Ministry of Defence & Ministry of Civil Aviation4

Interaction with Airforce HQ officials to explore opportunities in supplying spare parts& MRO5 & MRO

Study visits for ACMA members to the Indian facilities of global and Indian aerospaceplayers6 players

Coordinate with Airbus and organize visits to aerospace clusters in France & UK7


8. Broad policy measures p yrequired to support aerospace component manufacturingp g


Key policy measures to boost component manufacturing eco system (1/3)

Developing aerospace clusters1

(1/3)

Developing aerospace

Clusters unlocks value through synergies Need to develop 3 to 4

Role of central

Govt. needs to work in tandem with States and global OEMs for aerospace

clusters synergies. Need to develop 3 to 4 focused clusters for aero structures, landing gear, engine components etc. to attract global investments

central government

gconceptualizing and developing such clusters

Plug & Play infra2

Common Infra

Govt. should develop common infra to support component

f i l i h

Plug & Play Infra

Focus should be to create plug and play infra where power, water, water

g y

manufacturing players in the sector

ytreatment, constructed factory, office and housing premises/complexes would be present

Includes special process and testing facilities, warehouse for inventory storage, training centers etc

Provision of hassle free land banks for future expansion should be considered/provided


etc considered/provided

Key policy measures to boost component manufacturing eco system(2/3)

Fostering skill development

(2/3)

3

Structured Govt. with the support of global Creation of cross

A cross functional team comprising of industry bodies such as ACMA,

g p

skill development program

aerospace & defecne players should spearhead structured skill development program for SMEs

functional skill development t

OEMs, NSIC, Ministry of MSME, MoD, MoCA should be formed to create an action plan for developing aerospace skill developmentteams aerospace skill development centers across India

Government: Govt should consider according ‘Infrastructure’ status to the A&D industry and provide

Reduction & simplification of taxes4

Government: Tax Structure

Govt. should consider according Infrastructure status to the A&D industry and provide concessions/benefits in the form of tax incentives (indirect and direct tax) so as to augment domestic production


Key policy measures to boost component manufacturing eco system (3/3)

Financial support

( )

5

SME Funding Govt. should encourage public and private banks and other financial institutions to provide funds for SMEs in aerospace manufacturing

SME funding is a challenging issue even for advanced aerospace ecosystems such as Toulouse aerospace cluster in France

Govt corpus combined with support from banks and financial institutions would make forGovt. corpus combined with support from banks and financial institutions would make for a healthier component eco system in India

Defence Offsets6

Joint Ventures Provide offset multipliers to defence OEMs and Tier 1s for commercial aerospace sourcing and investments through JVs by their suppliers in India Support Indian JV companies to produce defence components and systems for global pp p p p y gmarkets


9 Case Study of select Indian9. Case-Study of select Indian players in the sector


1) Aequs (earlier Quest Global) ) q ( )

About Aequs Key Financial InformationCompany Info 2006 as an offshoot of Quest

GlobalRebranded to form Aequs in 2014

■ Group Turnover FY14 – ~ INR 155 Crores■ Aerospace and Defense revenues – About 50%

comes from aerospace2014Head Quartered : Belgaum, India

Key Industriesserved

Automotive, Oil & Gas, Aerospace Key Partnerships and AlliancesPartner Details

Additional Info:

servedManufacturing Plants

Belgaum, Bangalore, Houston

Key Product Precision machined aero engines

Partner Details

Aerospace Processing India Pvt Ltd

API is a JV of Aequs and Magellan Aerospace for providing aerospace surface treatment solutions in IndiaKey Product

CategoriesPrecision machined aero engines and aero structure componentsAluminium machined parts for A 380 floor assembly

India Pvt Ltd surface treatment solutions in India

Aerostructures AssembliesIndia Pvt Ltd

JV between Aequs and SaaB AB of Sweden. Company specializes in build-to-print assemblies for

Steel machined parts for Boeing 777 and Boeing 767 landing gearTitanium machined parts for Boeing 777 wing

d a d bu d o p asse b es ocommercial and defense aircraft

SQuADForging India

JV between Aequs, Aubert &Duval SA and Setforge SocieteBoeing 777 wing

Key Customers Airbus, UTAS, Honeywell, Eaton Aerospace, GE, Magellan Aerospace, Rolls Royce

Forging India Pvt Ltd

Duval SA and Setforge Societe Nouvelle SAS for developing aerostructural parts, landing gear, and braking system components


Source : Company Wesbite, Annual reports, KPMG Analysis

Aerospace, Rolls Royce

2) Astra Microwave Products Ltd.)

About Astra Microwave Products Ltd. Key Financial InformationCompany Info Head Quartered :Hyderabad,

IndiaFounded in 1991A division of Godrej & Boyce

■ Group Turnover FY15 – INR 644 Crores■ Aerospace and Defense revenues – ~ INR 580

CroresA division of Godrej & Boyce Limited


Defense, Space, Telecom, Meteorology, Satcom, Security

Key ContractsAdditional Info:

served Meteorology, Satcom, Security

Manufacturing Plants

Medak, Rangareddy (Telangana)

Key Product Radar

AMPL won a major order from Israel-based ELTAsystems, the execution of which saw exports risesix-fold and revenue more than double in FY2014

Key Product Categories

RadarData and video telemetry transmitter systems Ground based and surveillance

Bagged offset related export order worth more thanINR 3500 million by the end of FY12

ReceiversCoherent frequency generatorsLow power microwave sub-systemssystems

Key Customers DRDL, DEAL, LRDE, HindustanAeronautics, ISRO, Defense Avionics Research Establishment


o cs esea c s ab s eSource : Company Wesbite, Annual reports, KPMG Analysis

3) Bharat Forge) g

About Bharat Forge Key Financial InformationCompany Info Head Quartered : Pune , India

Established in 1961,Flagship company of the Kalyani Group

■ Group Turnover FY15 – INR 7,625 Crores■ Aerospace and Defense revenues –Expected to

reach USD 100 million in 5 yearsGroup.


Automotive, Power, Oil & Gas, Locomotive, Marine, Aerospace, Construction & Mining

Key Partnerships and AlliancesPartner Details

Additional Info:

Construction & Mining


Pune, Baramati, Mundhwa

Key Product Wheel lever forging

Partner Details

Rafael advanced systems (JV)

Missile technology, remote weapon systems and advanced armour solutionsKey Product

CategoriesWheel lever forgingFan forgingMain leg forging

systems (JV) solutions

Elbit Systems, Israel (JV)

Advanced artillery and mortar systems to the Indian military

Key Customers DRDO, Indian Ordinance Factories, HAL, ISRO, L&T, Walchandagar

( )

SAAB (JV) Land and air defence systems

SafranForged and machined components for commercial aircraft applicationsSafran for commercial aircraft applications to Safran's global affiliates



4) Dynamatic Technologies) y g

About Dynamatic Technologies Key Financial InformationCompany Info Head Quartered : Bangalore,

IndiaEntered Aerospace Market in 1995

■ Group Turnover FY15 – INR 1611 Crores■ Aerospace and Defense revenues – INR 261.7

Crores1995


Aeronautic, Automotive, Hydraulic and Security applications


Additional Info:

applications


Bangalore, Chennai, Nasik in India, Swindon, Bristol in UK,Erla in Germany

Partner Details

Spirit Aero MOU for the production of aero structures (Airbus A320, A330)

y


Airframe Structural assembliesPrecision Aerospace Components

Bluebird Aero System (Israel)

Technical collaboration for the assembly, marketing and manufacturing of Mini and Micro Tactical UAV

Key Customers Honeywell, Boeing, Airbus, GKNAerospace, Magellan Aerospace,GE Aviation, Lockheed Martin,A t W tl d DRDO HAL

(Israel)

Bell Helicopter

MoU to become sub-contractor for Bell 407

B i M U d M d l P h C t t tAugusta Westland, DRDO, HAL, Bell

Boeing MoU and a Model Purchase Contract to manufacture assemblies for CH-47F Chinook



5) Godrej Aerospace

About Godrej Aerospace Key Financial InformationCompany Info Head Quartered :Mumbai, India

Founded in 1985A division of Godrej & Boyce Limited

■ Group Turnover FY15 – INR 9,324 Crores■ Aerospace and Defense revenues – Less than

10% of groupLimited


Aerospace

Man fact ring M mbai

Key ContractsM d t d b ISRO t d i i

Additional Info:


Mumbai


Spacecraft components - made of exotic alloys

1 Mandated by ISRO to produce semi-cryogenicengines for its products

2 Supplied the Vikas engines for ISRO’s rocketsGSLV Mk IIICategories of exotic alloys

Adaptor assemblyAntennaSpace engines

GSLV Mk III

3 Supplier of BrahMos missile air‐frameassemblies in batches since 2009 till date

D l t l d lif l t fEngines tubing and accessoriesAir frame

Key Customers GE, ISRO, Brahmos, DRDO, B i Ai b R f l I di

4Development, supply and life cycle support ofMobile Autonomous Launchers (MAL) for theBrahMos missile

Contributed to Chandrayan 1 through itsBoeing, Airbus, Rafael, Indian defense forces

5 Contributed to Chandrayan-1 through itspartnership with ISRO



6) Investment & Precision Castings Ltd (IPCL)) g ( )

About Investment & Precision Castings Ltd (IPCL)

Key Financial Information(IPCL)

Company Info Head Quartered : Bhavnagar, Gujarat, IndiaEstablished in 1975

■ Group Turnover FY15 – INR 74.1 Crores■ Aerospace and Defense revenues – About

3% of groupEstablished in 1975


Automobile, Defence, Power Generation, Dairy & Food Processing, Earthmoving Machinery Air-conditioning

Key Highlights

Additional Info:

Earthmoving Machinery, Air-conditioning & Refrigeration, Printing, Textile Machinery, Atomic Energy

Manufacturing Nari Road, Bhavnagar, Gujarat, India

Accreditations & Certifications: ISO 9001:2008,ISO 14001:2004, EN 9100, TS/16949 : 2009,OHSAS 18001


Nari Road, Bhavnagar, Gujarat, India


Gimbal Box & Pedestal Unit for Multi Mode Radar for Light Combat g gAircraft "Tejas“Various components for Space Shuttle - GSLV D5Parts for radars & navigationalParts for radars & navigational instruments for aerospace

Key Customers

Honeywell, Boeing, L&T, HAL,RAFAEL MBDA ISRO


Customers RAFAEL, MBDA, ISROSource : Company Wesbite, Annual reports, KPMG Analysis

7) Lakshmi Precision Screws Ltd.

About Lakshmi Precision Systems Ltd. Key Financial InformationCompany Info Head Quartered : Rohtak

,Haryana, IndiaEstablished in 1972

f

■ Group Turnover FY14 – INR 351.3 Crores■ Aerospace & Defence revenues : Not Available


Wind Energy, Automotive, Defense, Electronic & Communication, Construction, Agriculture, Tool & Die, Oil & Gas


Additional Info:

Oil & Gas


Manesar and Rohtak (Haryana)

Key Product Aerospace and Defense fasteners

Partner Details

Bossard AG,Switzerland

State of art fastening solutions and latest inventory management system technique through logistic supportKey Product

CategoriesAerospace and Defense fasteners and machining components

Key Customers GE, Airbus, Honeywell, Bombardier, DRDL TBRL Bharat Dynamics Ltd

q g g pp

Global Fastener Alliance

The alliance helps the company in improving competitiveness via cooperation in manufacturing, DRDL, TBRL, Bharat Dynamics Ltd.,

ISRO technical capabilities



8) Larsen & Toubro

About Larsen and Toubro Key Financial InformationCompany Info Head Quartered :Mumbai, India

Key Industries Shipbuilding, Defense Systems,

■ Group Turnover FY15 – INR 92,000 Crores■ Aerospace & Defence revenues : Not Available

served Aerospace


Kattupalli, Hazira (Shipbuilding)Powai, Hazira, Ranoli, Coimbatore, T l (H E i i )


Additional Info:

Talegaon (Heavy Engineering)


Missiles & Radar systemsElectronic Warfare & C4I systems

Partner Details

ERDE,DRDO Build radars for the Army and IAF

TATA Modernize the 155mm Bofors Howitzers and produce the Multisystems

Precision EngineeringHeavy & Civil Engineering constructions like warships,

Howitzers and produce the Multi-barrel rocket launcher

Airbus defence

Focus on components used in electronics warfare radars avionicssubmarine ships

Key Customers DRDO, Indian armed forces

defence (Cassidian)

electronics warfare, radars, avionics and mobile systems

Thales Software

AvionicsSoftwareIndia



9) Mahindra Aerospace) p

About Mahindra Aerospace Key Financial InformationCompany Info Formed in 2008

Part of Mahindra GroupHead Quartered : Kolar Taluk Karnataka India

■ Mahindra Group Turnover FY15 – INR 76,015 Crores■ Aerospace and Defense revenues: Expects ~ INR 1800

crores in 3-4 yearsTaluk, Karnataka, India


Aerospace

M f t i K l T l k (K t k )Key Partnerships and Alliances

crores in 3 4 yearsAdditional Info:


Kolar Taluk (Karnataka)Australia – Morwell, Port Melbourne

Key Product Manufacture of Aircrafts

Partner Details

GippsAero,Australia

Mahindra bought a 75.1% share in Gipps AerospaceKey Product

CategoriesManufacture of AircraftsAero structurecomponents

Key Customers GE (Aero structures)

Aerostaff, Australia Acquired Aerostaff in 2009

Boeing Aerostructure

Company acquired machineries from Boeing’s Aerostructures plant inKey Customers GE (Aero structures) Aerostructure

FactoryBoeing s Aerostructures plant in Australia during 2011

Aernnova, Spain & Premium Aerotech,

MoU with Aeronova MoU with Premium AerotechPremium Aerotech,

GermanyMoU with Premium Aerotech

National Aerospace Laboratories (NAL)

MoU with NAL – 5 seater aircraft production


( ) pSource : Company Wesbite, Annual reports, KPMG Analysis

10) Mahindra Defense Systems ) y

About Mahindra Defense Systems Key Financial InformationCompany Info Head Quartered :New Delhi,

India

Key Industries Defense Land & Naval systems,

■ Group Turnover FY15 – INR 76,015 Crores■ Aerospace and Defense revenues – INR 77.3

Croresserved Aviation simulators


Chakan Pune, Palwal and Prithala in Faridabad near Delhi NCR Key Partnerships and Alliances

Additional Info:


Armoring solutions for Light Combat Vehicles, Multi-UtilityVehicles, Sport Utility VehiclesTorpedo launchers and decoy

Partner Details

Saab (Through Tech Mahindra)

Battlefield Management System (BMS) for the Torpedo launchers and decoy

launchers, State of the art training simulators for land forcesMobile surveillance platforms for

(Through Tech Mahindra) Indian Army

BAE Systems (Currently JV is suspended)

Futuristic Infantry Combat Vehicles

the Army and BSF, Weapons and ammunitions for the Army and Navy

K C t I di N I di AKey Customers Indian Navy, Indian Army, Paramilitary and State police forces



11) MKU Private Ltd.

About MKU Key Financial InformationCompany Info Head Quartered :Kanpur, India

Founded in 1985

Key Industries Military (Protection & Armoring)

■ Group Turnover FY14 (approx) – INR 350 Crores■ Their revenues are primarily from defence

served Made forays into other business avenues such as aviation aerodynamics and technology

Man fact ring Kanp r

Key Partnerships, Alliances and Contracts

Additional Info:


Kanpur


Personal protectionPlatform Protection

Partners Details

EIS Electronics GMBH

The $5 million USD JV will focus on cable harness productsCategories Platform Protection

Electro Optics

Key Customers NATO, Indian Armed Forces, Ministry of Home Affairs Republic of

GMBH on cable harness products

Concord Safety Solutions (Pvt) Ltd

Partnership to create a new company to produce lightweight armoured vehiclesMinistry of Home Affairs, Republic of

EcuadorLtd armoured vehicles



12) PYN Precision Components

About PYN Precision Components Key Financial InformationCompany Info Head Quartered :Faridabad,

Haryana, IndiaEstablished in 1961Now part of Northern Tools and

■ Group Turnover FY14 – INR 40 Crores■ Aerospace and Defense revenues – INR 4.2

CroresNow part of Northern Tools and Gauges Pvt Ltd


Automobiles Components, Aerospace

Key ProductsA C

Additional Info:

served Aerospace


Faridabad and Bangalore

Key Product Satellite/ Payload Parts

Aerospace Components:Structural, Payload, System, avionics and controlparts for Aerospace, Precision parts for defensesector Radars, Microwave, CommunicationKey Product

CategoriesSatellite/ Payload PartsPropulsion Components Avionics Composts

Key Customers Aerospace & Defence:

sector Radars, Microwave, CommunicationHardware

Key Customers Aerospace & Defence: Bharat Electronic Ltd., ISRO, Hindustan Aeronautics Ltd.Automotive: CCarraro, American Axle, Daimler India Commercial Vehicles, Mahindra CIE, Forbes Marshall Group


GroupSource : Company Wesbite, Annual reports, KPMG Analysis

13) Rane Group) p

About Rane Group Key Financial InformationCompany Info Head Quartered : Chennai,

IndiaEstablished in 1959

■ Group Turnover FY15 – INR 3200 Crore■ Aerospace and Defense Revenues are around

2% of company revenueKey Industriesserved

Auto components, Aerospace and Defense products, Trading of auto components Key Partnerships and Alliances

Partner Details

Additional Info:


Hyderabad, Rudrapur, Chennai, Puducherry, Tiruchirapalli, Mysore, Bangalore, Bawal

K P d t Wi i h

Partner Details

SasMos Wiring harness for space applications and Echo simulator used for testing RadarKey Product

CategoriesWiring harnessElectro-mechanical assemblies and Unit Integration products in

Radar

g paerospace, defence & maritime

K C t H ll B i L&T HALKey Customers Honeywell, Boeing, L&T, HAL,RAFAEL, MBDA, ISRO



14) Samtel Group- Samtel Avionics & Defense System

About Samtel Group- Samtel Avionics & Defense S stem

Key Financial InformationDefense System

Company Info Head Quartered :New Delhi, IndiaFounded in 1983

■ Group Turnover FY14 – INR 150 Crores■ Aerospace and Defense Revenues: Not

AvailableFounded in 1983


Avionics and military

M f t i G t N idKey Partnerships and Alliances

Additional Info:


Greater Noida

Key Product C t i

Multi-Function Displays (MFDs),SMFD C l A i i T b

Partner Details

HindustanAeronautics

Developing indigenous next-generation avionic display systems

Categories SMFDs, Color Avionics Tubes (CAT) for commercial aircraftHead Up Displays (HUDs),Helmet Mounted Sight Displays

Ltd.g p y yfor HAL's star programs

Thales Local development, production, sale and maintenance of HMSD,g p y

(HMSDs)Operator Consoles, OptronicsBuilt-to-print (BTP)/Built-to-Specs (BTS) parts

IRST

DRDO Signed an MoU with Defense Avionics Research Establishment

(BTS) parts

Key Customers Honeywell, Thales, SAAB, Hindustan Aeronautics Limited (HAL) DRDO

(DARE) to indigenize cockpit displays under the aegis of DRDO Lab's DARE


(HAL), DRDOSource : Company Wesbite, Annual reports, KPMG Analysis

15) Sansera Engineering Pvt Ltd.

About Sansera Engineering Key Financial InformationCompany Info Head Quartered : Bangalore,

IndiaEstablished in 1987

■ Group Turnover FY15– INR 800 Crores■ Aerospace and Defense revenues – INR 20

CroresKey Industriesserved

Aerospace, Automotive, Heavy Commercial Vehicles, Two Wheelers

Manufacturing Pl t

Bangalore, Pune, Pantnagar, M (7 l t )

Key HighlightsAdditional Info:

Plants Manesar (7 plants)


Precision forged and machined componentsSeating systems

Sansera has been recently approved byAirbus for supplies of machining parts

Accreditations & Certifications: AS 9100CSeating systemsCargo systems and cargo system partsLighting system parts

Accreditations & Certifications: AS 9100C,NABL, ISO / TS 16949: 2009, ISO 14001:2004, OHSAS 18001: 2007, ISO 17025: 2005

SensorsStructures

Key Customers UTC, GKN, Airbus, Magellan, M itMeggit



16) Tata Advanced Systems Ltd. (TASL)

About TASL Key Financial Information Company Info Head Quartered :

Hyderabad, IndiaFounded in 2007A wholly owned subsidiary

■ Tata Group Turnover FY15 – INR 665,185 Crores■ Aerospace and Defense revenues FY 15 -

INR 2500 CroresA wholly owned subsidiary of Tata Sons


Aerospace and Defense Key Partnerships and AlliancesPartner Details

Additional Info:

servedManufacturing Plants

Hyderabad

Key Product Missile Systems and sub

Partner Details

Sikorsky Manufacturing 4000 parts for the S92 helicopter cabins


Missile Systems and sub-systemsRadar Systems and sub-systems

LockheedMartin

Assembly of aero-structures

ELTA MoU - Radar, Electronic Warfare, Aero structuresUnmanned Ariel SystemsOptronic SystemsHomeland Security

Systems Homeland and surveillance systems.

Cobham MoU - Air-to-air refueling equipment

RUAG Critical aero-structure assemblies for Homeland Security Solutions

Key Customers Sikorsky, Lockheed, Indian armed forces

RUAG Germany

Critical aero structure assemblies for Dornier aircraft

Pilatus Aero structures for PC-12

Airbus group To build transport aircrafts for defence


Airbus group To build transport aircrafts for defenceSource : Company Wesbite, Annual reports, KPMG Analysis

17) Walchandnagar Industries) g

About Walchandnagar Industries Key Financial InformationCompany Info Head Quartered :Mumbai, India

More than 100 years manufacturing heavy engineering products and EP&C

■ Group Turnover FY15 – INR 6,382 Crores■ Aerospace and Defense revenues – INR 150

Croresengineering products and EP&C servicesAssociated with the Indian Navy since 1967 Key Partnerships and Alliances

Additional Info:


Energy, Defense, Aerospace,Nuclear power, Industrial & Marine Transmissions, Propulsion systems

Partner Details

DCNS MoU to supply critical submarinecomponent for the Scorpene contract, t d P j t 75 b th I di NManufacturing

PlantsMumbai, Satara, Dharwad, Dahej (4 plants)

Key Product Flight motor casings

termed Project 75 by the Indian Navy.

MDL WIL is a subcontractor of MDL supplying high-end structural requirement of ScorpeneCategories Nozzles

Heat shields for various stages of space launch vehiclesGear boxes for marine

Scorpene

Masson Marine

Marine Gear Boxes

Gear boxes for marineTi & Al alloy bridgesMissile casings & launchers

Key Customers ISRO, HAL , DRDO


Key Customers ISRO, HAL , DRDOSource : Company Wesbite, Annual reports, KPMG Analysis

10. Select JVs


Case Study 1: Tara Aerospace Systems Ltd (Tata – Sikorsky JV) (1/2)Aerostructure Assemblies

JV partners &■ Tata Advanced Systems Ltd (TASL) – 74%, Sikorsky Aircraft company, USA – 26%

Aerostructure Assemblies

JV partners & Ownership Structure

■ Two production facilities under the JV - One for assembling the S-92 helicopter cabins and other for producing around 4000 aero structural part required for the cabins

F t it li th I di ilit d i ili h li t t iti

Objectives

■ Focus to capitalize on the Indian military and civilian helicopter opportunities■ Alternate supplier/location to replace Mitsubishi, Japan and decided to choose India■ To emerge as a facility that assembles fully built helicopters for Indian and global

customers

■ TASL investment in aerospace and defence business - INR 500 Cr in its over 5-7 years since 2007Investment since 2007

■ Investment in the JV - ~ INR 100 Cr

■ TASL - Manufactures the semi finished structural cabin assembly for the S-92

Responsibilities & work share

yHelicopters and machines around 4000 parts that goes into the cabin assembly

■ Sikorsky - Integrates the structure into its final helicopter assembly line in USA■ Plan to build the entire Naval multi role helicopters (NMRH) in India once the approval& work share ■ Plan to build the entire Naval multi role helicopters (NMRH) in India once the approval

process are through


Source – Media reports, KPMG Analysis

Case Study 1: Tara Aerospace systems Ltd (Tata – Sikorsky JV) (2/2)Aerostructure AssembliesAerostructure Assemblies

Current■ TASL Annual revenue: ~ INR 400 Cr

Current revenues/profits

■ Order book: ~ Rs 4,500 crore of the total Tata group defence order book of Rs 8,000 crore.

■ US and other export marketTarget market

■ US and other export market■ Indian Military and civil helicopter market

■ Tata’s core strengths in manufacturing, quality & engineering processes, R&D proved as h i f th JVa game changer in success of the JV

■ Tata deployed its key manufacturing experts from other business verticals thereby reducing the learning curve in absorbing the technology

Key Insights ■ The JV has been strategically formed for converting the facility to a full fledged helicopter assembly unit for India and export market



Case Study 2: Tata Lockheed Martin Aerostructures (Tata–Lockheed Martin JV)Aerostructures for C-130J aircraftAerostructures for C 130J aircraft

JV partners & ■ Tata Advanced Systems Ltd (TASL)– 74%, Lockheed Martin Corp – 26%

Ownership Structure

■ The JV was established in 2011 to build aerostructures for C-130 Hercules and C-130J Super Hercules at TASL Hyderabad facility

■ To create high quality, low cost and built-to-print manufacturing capability in India

Objectives ■ Critical aero-structural assemblies ( Centre wing box and empennage for Hercules aircrafts)

Investment ■ Tata - ~ INR 100 crores; Lockheed Martin - ~ INR 50 croresInvestment

Responsibilities & k h

■ Centre-wing box spares, leading edges and tail empennage sections for the C130J Super Hercules Transport AircraftC tl P d t th (t il bl ) f th L kh d M ti& work share ■ Currently Produces two empennages per month (tail assembly) for the Lockheed Martin C-130 and plans to increase up to four a month as required

Target market ■ Lockheed Martin and its clients in US marketg

Key Insights

■ First JV of Lockheed Martin in India, and second JV for Tata in Aerospace components space

■ By the end of 2015, Tata will become the sole supplier to Lockheed Martin for the Key Insights y , ppempennage section



Case Study 3: Bharat Forge Elbit Advanced System Private Ltd (1/2)Project based JV for participation in Indian army artillery program

JV Partners & O hi Bh t F 74% Elbit S t I l 26%

Project based JV for participation in Indian army artillery program

Ownership Structure

■ Bharat Forge– 74%, Elbit Systems, Israel – 26%

■ Approved by FIPB in Sep 2013K f I di ’ USD 12 14 b Fi ld A till R ti li ti P

Objectives

■ Key focus - Indian army’s USD 12 – 14 bn Field Artillery Rationalisation Programme (FARP) to up grade its obsolete artillery systems

■ To bid for India’s current 155mm 52/39 gun programs and future artillery programs such as Advanced Indian Gun Systemas Advanced Indian Gun System

■ To produce shells for the guns and armoured vehicles upgrades

Investment ■ Bharat Forge has made an investment of INR 100 Cr for expanding its defence b iInvestment business

Responsibilities■ Bharat Forge’s existing production facility will be used for prototype and mass

production after winning the orderResponsibilities & work share

production after winning the order■ Elbit will share its expertise in developing products such as ATHOS 155/52 Towed Gun

System, the ATMOS 155/52 Mounted Gun System etc



Case Study 3 : Bharat Forge Elbit Advanced System Private Ltd (2/2)Project based JV for participation in Indian army artillery programProject based JV for participation in Indian army artillery program


■ The JV is not making any revenues as they are yet to win any orders■ Bharat Forge as a whole is expected to generate around USD 100 mn from aerospace

and defence business by 2020■ Bharat Forge had a strong expertise in forgings which is very critical in manufacturing

these artillery systems. ■ The JV has enabled Bharat Forge to mature as a system integrator from being a

liKey Insights

component supplier■ The expertise from JV might help Bharat Forge to bag global orders for manufacturing

sub components (forgings) for artillery systems



Case Study 4 : Multiple JVs of Aequs (formerly Quest Global) (1/2) Manufacturing Aerostructures

■ Aero structures Assemblies India Pvt Ltd - Aequs – 74%, SAAB, Sweden – 26%

Manufacturing Aerostructures

JV Partners & Ownership Structure

■ SQuAD Forging India Pvt Ltd – Equal equity distribution between Aequs , Setforge Auburt Duval, ERAMET,FARINIA, France

■ Aerospace Processing India Pvt Ltd – Aequs – 74%, Magellan Aerospace, Canada –26%Structure 26%

■ Established during 2011/2012 at Aequs private SEZ at Belgaum , Karnataka

■ The focus of the three JVs formed by Aequs is to build its capability in aero structure■ The focus of the three JVs formed by Aequs is to build its capability in aero structure manufacturing across different manufacturing processes.

■ Aequs – SAAB JV – Focus on aero structure details parts and sub assemblies for SAAB’s global plants and also for other customers

Objectives

SAAB s global plants and also for other customers■ Aequs – Magellan JV – Aerospace surface treatments■ Aequs – Setforge JV - Aero structural parts, landing gear, and braking system

components in aluminum steel titanium or nickel base alloyscomponents in aluminum, steel, titanium or nickel base alloys■ To emerge as India’s leading private sector player in precision machining, sheet metal

fabrication, assembly, forging, and special processing

Investments■ Aerospace SEZ – Total investment around INR 150 Crores■ Aequs – SAAB JV - Total investment INR 55 Crores■ Other JVs: approx 50 – 70 Crores each


pp


Case Study 4 : Multiple JVs of Aequs (formerly Quest Global) (2/2) Manufacturing Aerostructures

Responsibilities■ Aequs has set up a state of the art aerospace SEZ in Belgaum, Karnataka housing all

the supporting infrastructure required for aerospace manufacturing

Manufacturing Aerostructures

Responsibilities & work share

the supporting infrastructure required for aerospace manufacturing■ The global JV partners will bring with them the expertise in multiple domains such as

machining, sheet metal, surface treatment and forging

CurrentCurrent revenues/profits Aequs - SAAB JV - Targets revenues over INR 265 Cr in five years

Target market Global commercial aircraft programs

■ Aequs through these strategic JVs and global acquisitions has positioned itself as a

Key Insightsleading aerospace supplier to global OEMs & Tier 1s

■ The company has chosen its partners to build its capabilities across a broad spectrum thus capitalizing the global sourcing opportunities



Case Study 5: International Aerospace Manufacturing Private Ltd (1/2) (HAL – Rolls Royce JV)

JV partners & ■ Hindustan Aeronautics Ltd. – 50%, Rolls-Royce Overseas Holdings Ltd, UK– 50%

Th JV f ilit i B l f t t f R ll R

Aero engine components

pOwnership Structure

■ The JV facility in Bangalore manufactures compressor parts for Rolls-Royce

■ To emerge as the best supplier to Rolls Royce globally

Objectives

■ To emerge as the best supplier to Rolls-Royce globally■ To develop IAMPL as a centre of excellence with the latest manufacturing techniques

and training programmesE h hi h l dd d f t i i I di d t ib t t I di ’ i■ Enhance high-value added manufacturing in India and contribute to India’s growing aerospace and technology industry

Investment The JV has been setup with an investment of around USD 27 million

Responsibilities

■ Manufactures components for Trent 700 engines (only civil aerospace engines) which are used in Dreamliner, Airbus A350 & A330 (wide-bodied aircraft)

■ It also manufactures engine components for narrow bodied aircraft like the V-2500 i d i Ai b A320Responsibilities

& work shareengine used in Airbus A320

■ Produces around 120 different parts which are across range of Rolls-Royce civil engines (including the Trent family)



Case Study 6: International Aerospace Manufacturing Private Ltd (2/2)(HAL – Rolls Royce JV)

Current■ IAMPL facility generates close to USD 40 million a year

Aero engine components


■ Produces 25000 aerospace parts for Rolls-Royce per annum

Target market Rolls Royce and its target customersTarget market y g

■ HAL and Rolls-Royce have been strategic partners since 1956, when HAL started to produce Orpheus engine, under license agreement with Rolls-Royce

Key Insights■ Rolls Royce is looking to source aerospace grade steel, precision machined

components, sheet metal fabrications from low-cost countries such as India■ The Aerospace grade steel sourcing requirements for Rolls Royce is around 2000

Tonne/year and has a value of 5X times the normal steelTonne/year and has a value of 5X times the normal steel

