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Baba Kalyani, CMD, Bharat Forge
In recent months, Pune-based forgings company Bharat Forge has seen a lot of traction on the defence and aerospace fronts. The company is also betting big on its aerospace programmes in India, Baba Kalyani, Chairman and Managing Director, told BusinessLine in an interview. Edited excerpts:
You have recently won two orders — one from French company Safran and the other from Boeing. Who are your other aerospace customers?
As of now, we have four big customers – Boeing, Rolls Royce, Safran and Lieberrh. At the Bangalore air show, we got a contract from Boeing for supplying structural components, and we are already supplying jet engine components to Rolls Royce. Both these are titanium-based, not steel components. Fundamentally, we have broken our aerospace business into three parts – large parts which go into the wings and fuselage, components for jet engines and specialised structural components for landing gear.
What about aerospace programmes in India?
A huge number of programmes have been announced – like the medium multi-role combat aircraft (MMRCA), the light combat aircraft, and then the light combat helicopter and civil helicopter. Also, Sukhois are currently being assembled in Ozar (Maharashtra) and the government will have to open up an indigenisation programme for them.
You cannot make an aircraft without forged components. Very few people have the capability – we have got all the necessary Nadcap (National Aerospace and Defense Contractors Accreditation Program) approvals to make aerospace components. So we will become an integral part of all these programmes, one way or the other.
With Safran and Rolls Royce, we are working right now on engine components, but if the MMRCA happens, which has Safran engines in it, and Dassault aircraft, we can also make structural parts. We are in discussions with HAL (Hindustan Aeronautics Ltd) and the Ministry of Defence (MoD).
How big is the aerospace business today?
We are building the business, and we are getting very good traction.
Our first goal is to develop a $100-million business in the next three-to-four years with these overseas customers. By then, I am hoping that many of the contracts in the Indian aerospace market will be in place and production plans will start materialising. We will easily be able to dovetail ourselves, at least on the components side.
How will Bharat Forge participate in the defence business?
Bharat Forge’s involvement has always been at the component level and it will remain so. It’s not necessary that we will supply only to our own defence joint ventures (JVs) but to anybody who wants components where we have capability.
We are also looking at how to export because the MoD is now coming up with a fairly transparent policy structure on what you can export, and what you can’t, and to whom you can, and to whom you can’t. This is because defence export is a licensed product and one can’t get up one day and say I am going to export. You need a fairly open policy framework for this and I think it’s beginning to happen.
The Kalyani Group has four defence JVs. Are there any more in the offing?
There are a whole lot of companies who want to do JVs with us, but I don’t want to get into unrelated areas where I have no knowledge and I will end up being a financial investor. I am a very hands-on person and I like to be involved in driving my business. So in addition to these four, there will be two or three support JVs we will create to make electronic sub-systems for the defence systems business.
How is your non-auto business doing? Any new initiatives planned on the auto front?
Today, our non-auto business accounts for around 47 per cent of the total business. Our target is to take it to 60 per cent by 2020.
Of course, we are hoping that even the auto business also keeps growing.
We are entering the passenger cars segment with many products such as power trains, transmissions, engine components and crankshafts. We learnt hard lessons during the financial downturn, and I am happy the de-risking strategy is working for us.
Your revenues in recent times have been boosted by exports. Do you expect this to continue?
Currently, we get around 60-62 per cent of revenue from exports. To be fair, all this will work in the bandwidth of plus or minus 10 per cent. So realistically, it should be 50:50 from exports and domestic sales.
‘We want to be an integral part of India’s defence aircraft programme’ | Business Line
