Mahindra Aerospace to Purchase Aircraft Manufacturing Parts from Boeing

[jha]

Mahindra Aerospace to Purchase Aircraft Manufacturing Parts from Boeing Australia

Mahindra & Mahindra Ltd. has signed a deal to buy aircraft parts-making machinery from Boeing Co.'s plant in Melbourne, Australia, a senior executive from the Mumbai-based company said.

"I believe the equipment will be shipped to India by the end of this (calendar) year," Hemant Luthra, president of Mahindra Systech--a group entity that incorporates all of Mahindra's component manufacturing units--, told Dow Jones Newswires recently.

The company hopes the deal between unit Mahindra Aerospace Pvt. Ltd. and Boeing will boost orders as it will likely help improve the quality of aircraft parts it produces and attract clients that need to fulfil their offset obligations in India. Under Indian law, foreign companies selected for government defense contracts have to source about 30% of the project value from local vendors if the project is worth 3 billion rupees or more.

The Indian government put an offset clause on a $15 billion, 111 aircraft deal signed in 2005 by national carrier Air India with Boeing and European manufacturer Airbus, so about 30% of the ongoing project will have to sourced locally. Boeing also last year signed a $2 billion deal with the government to supply eight long-range maritime reconnaissance and anti-submarine warfare P-8I aircraft to the Indian Navy. Mahindra plans to invest 2.5 billion rupees in its aerospace business over the next few years, with 1 billion rupees earmarked for aircraft manufacturing and the rest for making components.

Last year, Mahindra purchased 75.1% stakes in two Australian aerospace companies--Gippsland Aeronautics and Aerostaff Australia--for a total of 1.75 billion rupees ($37.9 million) to expand its aircraft and aerospace-component manufacturing capabilities in Australia. Asked about the value of the deal to buy machinery from Boeing's Melbourne plant, Mr. Luthra said: "It's a slightly complex deal and I wouldn't want to get into a specific value." A senior executive at Boeing India confirmed the deal, but didn't provide any more details.

Mr. Luthra said Mahindra is in talks with several other companies for possible acquisitions to expand its aerospace business, but he declined to elaborate. The company also plans to establish an aerospace facility in India, possibly in the south Indian state of Karnataka, he said. "We are on the verge of finalizing the land deal to set up the plant. It should hopefully be commissioned by late next year," he said. Mr. Luthra added that Mahindra's aerospace business is expected to post revenue of $100 million a year once the new plant in India starts production.

Mahindra Systech's component manufacturing units include Mahindra Aerospace Pvt. Ltd, as well as Mahindra Forgings Ltd., Mahindra Composites Ltd. and Mahindra Ugine Steel Co. Ltd. Mahindra & Mahindra is India's biggest sport-utility vehicle maker by sales.

 

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Aerospace parts business the next growth driver

Mahesh Kulkarni & Praveen Bose / Bangalore


India is set to import both passenger and military aircraft in large numbers, and SMEs have their eyes on orders that could result from the offsets policy.

Small and medium enterprises (SMEs) here expect a substantial amount of business from units that will set up shop in the aerospace special economic zone (SEZ) being developed by the Karnataka government near Bangalore International Airport.


Bangalore-based companies such as Bharat Fritz Werner (BFW), Ace Group and Kennametal India Limited (KIL) and Rajkot-based Jyoti Huron are already supplying machining centres for making moulds, prototyping models, forging dyes and precision mechanical parts to the aerospace sector.
Boeing estimates that India will need 1,000 commercial aircraft worth $100 billion over the next 20 years, while PricewaterhouseCoopers estimates that India will spend $25 billion on commercial aircraft and $100 billion on defence until 2014. This will drive growth for domestic components suppliers.

SMEs are looking to supply cutting tools for machining of structural parts and landing gear for Boeing and Airbus as part of the offset facility the government provides. There is also an opportunity in cutting tools for the machining of parts and engines of Sukhoi fighter jets manufactured by Hindustan Aeronautics Limited (HAL).

“The aerospace business was non-existent for us three years ago. It is in a nascent stage now. About 3 per cent of our sales is from this sector, but we hope to grow this to double digits in the next two years,” said Santanoo Medhi, KIL’s managing director.

The Karnataka government has acquired 1,000 acres near the Bangalore International Airport in Devanahalli for the aerospace SEZ. About 55 per cent of the land will be allotted to companies for setting up factories.

Units in the SEZ will cater to domestic demand as well as the export market. The park will include aviation MRO (maintenance, repair and overhaul) activities too.

So far, state-owned defence suppliers BEML Limited and HAL, Mahindra and Mahindra, Dynamatic Technologies and Japan’s Amada have been allotted land. These companies are eyeing a substantial portion of the business emerging out of the offset business opportunity.

Shrinivas Shirgurkar, managing director of the Ace Group, said, “The aerospace industry requires high-precision and sophisticated components. Machine tool makers in India currently lack the technology and skill-sets to manufacture such components. But, there are immense opportunities for us to meet these requirements and we look forward to meeting them.”

The Indian Machine Tool Manufacturers’ Association (IMTMA) has urged the Central government to help the industry set up a corpus fund to assist companies in adopting new technologies.

“We need to gear up with the latest technology and enhance the skills of our engineers to enable them to produce sophisticated components for aerospace applications,” an IMTMA official said.

However, the aerospace industry requires unsophisticated parts as well, and SMEs in Bangalore (including his own Ace Group) already supply some of these components and turning and milling machines to HAL.

Medhi of Kennametal said, “We are in talks with Spirit Aviation from the United States for the supply of cutting tools. Spirit has an arrangement with Bangalore-based Dynamatic Technologies for outsourcing components like flap track beams for the Airbus A320.”

Kennametal currently supplies cutting tools to HAL (which uses them to make parts for Sukhoi jets and helicopters) and TAL, a joint venture between the Tata Group and Boeing (which uses them to make floor beams of the Boeing 787 Dreamliner).

Some of the SMEs that supply parts to HAL, other defence PSUs and the Indian Space Research Organisation (Isro) have been set up by former employees of HAL and the Defence Research Development Organisation (DRDO).

“Opportunities are there. When the volumes will start flowing in is the moot question. It could become big when the medium multi-role combat aircraft (MMRCA) project-related work starts,” an industry source said, adding that offsets will be the biggest growth drivers for SMEs.

The National Centre of Aerospace and Innovation Research (NCAIR) is being set up at Indian Institute of Technology, Bombay. To be sponsored jointly by the Department of Science and Technology and Boeing, NCAIR will work on innovation and research on avionics and structures in order to build an ecosystem for the manufacture of aerospace components.

Some 50 companies are expected to join and participate in projects. “Companies are expected to use it as a training ground for young engineers to benefit the private and the government sector,” an official added.


Aerospace parts business the next growth driver

 

[Capt.Popeye]

Way to go M&M !!

Anand Mahindra is really set to diversify the family group in to new frontiers.
Also watch the Tatas in this area. The fact that Ratan Tata is a licensed pilot just as J.R.D. Tata was (in fact the holder of PPL No.1 in India), adds a personal touch to their business plans.