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Anand Mahindra turns focus to aviation | The Australian
INDIA'S entrepreneur of the year, Anand Mahindra, has a fresh field to conquer: making passenger aircraft, aided by some Australian expertise.
Its a market of considerable size. In the Asia-Pacific region alone, Boeing estimates that airlines will spend $1.2 trillion over the next 20 years on as many as 9000 new planes.
Mr Mahindra, vice-chairman and managing director of the $7 billion conglomerate that bears his familys name, aspires to turn the groups aerospace arm into an Indian version of Embraer, the Brazilian plane maker which builds a range of aircraft up to the size of a regional jet.
But the Mahindra brand is better known for its tractors and utility vehicles, and building a regional jet is a complex and time consuming business that usually starts with the production of much smaller turbo prop aircraft.
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It took Embraer formed in 1969 by the Brazilian government and privatised in 1994 -- more than 20 years before it built its first passenger jets in the early 1990s.
To speed up the process, three months ago Mahindra agreed to pay about $40 million for a controlling stake in two small Australian aviation companies, Gippsland Aeronautics and Melbourne-based component maker Aerostaff Australia.
Gippsland Aeronautics, based in Victorias Latrobe Valley and maker of the popular 8-seat GA8 Skyvan utility plane, plans to beef up its range next year with an updated 18-seat version of the controversial Australian-made Nomad twin turbo-prop. It bought the rights to the Nomads type certification in 2008.
The Nomad, designed in the late 1960s and built in Melbourne by the old Government Aircraft Factories between 1971 and 1984, saw service with the Royal Flying Doctor Service and a variety of other civilian and military operators in Australia and overseas. About 170 examples of the Nomad were built, in variants from 12 to 18 passengers. But its reputation suffered from a run of fatal crashes, and the Australian Army retired its Nomad fleet in 1995.
Aerostaff Australia makes high precision aircraft components and assemblies for makers such as Boeing and Lockheed Martin.
So far, the Mahindra groups experience in aviation extends to the co-design of a five-seater plane with the National Aeronautics Laboratory (NAL) of India designated the NM5 and expected to fly later this year -- and the production under licence of a light Australian plane, the Seabird Seeker, for the Middle East.
Despite his groups relative lack of scale in aviation, Mr Mahindra sees great promise in the aerospace industry and the related defence offsets business.
We aspire to be a major force in aviation, he told The Australian in Mumbai earlier this month.
The driving force behind our Australian acquisitions is to be the Embraer of India, he said. We are not gunning for Embraer. Its more a case that we see it as a role model.
He points out that Brazil was a relatively low income country when Embraer started up and there was little expectation that an emerging nation could develop a successful global aviation business.
Mr Mahindra, known for his entrepreneurial acumen and ability to spot new business opportunities, said that to define the parameters of any plane that the group might build is to defeat the purpose of the aspiration.
There is no point dimensioning it, he said. So rather than quantify a goal such as a 50, 70, or 90-seat aircraft, Mahindra simply aims to get busy on developing a product line as quickly as possible.
Our aspiration is, why cant there be a company from the Indian private sector with a reasonable stake and a reasonable amount of achievement in aircraft manufacturing?" he said. "Thats the aspiration, and thats where wed like to be. We know it took a long time for Embraer to develop that skill, but these days things are compressed and you are expected to achieve things faster.
So we are busy plotting a trajectory to get us there. Some of that is organic, but if you are going to make strides, there have to be some inorganic pieces too. And with inorganic, you cant necessarily plan for it, as was the case with the Gippsland Aeronautics acquisition.
Mahindra said the Gippsland Aeronautics deal was attractive because it came with a portfolio of aircraft already flying and another, the Nomad, already certified. That gives you a kickstart, he said.
Mr Mahindra is conscious that it is a step-by-step process, going from a GA8 Airvan to a 10-seater, then to an 18-seater Nomad and on to regional jet. While he recognised that it takes time, he joked that he hoped it will happen before he retired. Mr Mahindra will turn 55 in about a months time.
If and when a regional transport aircraft emerges from the Mahindra group, Anand Mahindra is adamant that it will be a world-class product. We dont want two levels of quality and two sets of specifications, he said.
We dont think in two compartments any more when designing a product. The moment you say this ones for India and thats for the world, it encourages a split personality, and thats not a good thing. You dont want any schizophrenia in the company.
Look, well make a world-class product and well go where the markets are. Arguably, the biggest aircraft markets in the world in the next two decades are going to be China and India anyway."
Last September, Boeing said it expected the Asia Pacific region to be the worlds largest aviation market by 2028, with about $1.2 trillion being spent on almost 9000 new planes over the next 20 years. Boeing said that strong demand for single aisle planes in China and India meant that about 5600 of these would be single aisle models.
Along with Boeing and Airbus, makers such as Embraer and Canadas Bombardier compete for the single-aisle market. Chinese and Japanese manufacturers also aim to enter the sector by 2016.
Mr Mahindra said Indias huge domestic market gave it a tremendous home-base advantage in building a scale business. He said it was important for Indian business people to understand that it was the big domestic market that allows us to become world-class players.
Mr Mahindra and his uncle Keshub Mahindra, who joined the group in 1947 and has been its chairman since 1963, are regarded as among the towering figures of Indian industry. Keshub Mahindra sits on the Prime Ministers Council on Trade & Industry, while last month, Anand Mahindra was named Ernst & Youngs entrepreneur of the year and business channel NDTVs business leader of the year.
The Mahindra groups businesses include financial services, automotive products, trade, retail and logistics, information technology and infrastructure development. It is one of the worlds biggest tractor makers, with plants in India, China and the United States, and an assembly site in Brisbane, Australia. In Australia, it also sells the Mahindra Pik-Up, a light utility.
The Mahindra family and associates hold a stake of about 13 per cent in the main group company, Mahindra & Mahindra, which has a market capitalisation of $7bn.
INDIA'S entrepreneur of the year, Anand Mahindra, has a fresh field to conquer: making passenger aircraft, aided by some Australian expertise.
Its a market of considerable size. In the Asia-Pacific region alone, Boeing estimates that airlines will spend $1.2 trillion over the next 20 years on as many as 9000 new planes.
Mr Mahindra, vice-chairman and managing director of the $7 billion conglomerate that bears his familys name, aspires to turn the groups aerospace arm into an Indian version of Embraer, the Brazilian plane maker which builds a range of aircraft up to the size of a regional jet.
But the Mahindra brand is better known for its tractors and utility vehicles, and building a regional jet is a complex and time consuming business that usually starts with the production of much smaller turbo prop aircraft.
Start of sidebar. Skip to end of sidebar.
End of sidebar. Return to start of sidebar.
It took Embraer formed in 1969 by the Brazilian government and privatised in 1994 -- more than 20 years before it built its first passenger jets in the early 1990s.
To speed up the process, three months ago Mahindra agreed to pay about $40 million for a controlling stake in two small Australian aviation companies, Gippsland Aeronautics and Melbourne-based component maker Aerostaff Australia.
Gippsland Aeronautics, based in Victorias Latrobe Valley and maker of the popular 8-seat GA8 Skyvan utility plane, plans to beef up its range next year with an updated 18-seat version of the controversial Australian-made Nomad twin turbo-prop. It bought the rights to the Nomads type certification in 2008.
The Nomad, designed in the late 1960s and built in Melbourne by the old Government Aircraft Factories between 1971 and 1984, saw service with the Royal Flying Doctor Service and a variety of other civilian and military operators in Australia and overseas. About 170 examples of the Nomad were built, in variants from 12 to 18 passengers. But its reputation suffered from a run of fatal crashes, and the Australian Army retired its Nomad fleet in 1995.
Aerostaff Australia makes high precision aircraft components and assemblies for makers such as Boeing and Lockheed Martin.
So far, the Mahindra groups experience in aviation extends to the co-design of a five-seater plane with the National Aeronautics Laboratory (NAL) of India designated the NM5 and expected to fly later this year -- and the production under licence of a light Australian plane, the Seabird Seeker, for the Middle East.
Despite his groups relative lack of scale in aviation, Mr Mahindra sees great promise in the aerospace industry and the related defence offsets business.
We aspire to be a major force in aviation, he told The Australian in Mumbai earlier this month.
The driving force behind our Australian acquisitions is to be the Embraer of India, he said. We are not gunning for Embraer. Its more a case that we see it as a role model.
He points out that Brazil was a relatively low income country when Embraer started up and there was little expectation that an emerging nation could develop a successful global aviation business.
Mr Mahindra, known for his entrepreneurial acumen and ability to spot new business opportunities, said that to define the parameters of any plane that the group might build is to defeat the purpose of the aspiration.
There is no point dimensioning it, he said. So rather than quantify a goal such as a 50, 70, or 90-seat aircraft, Mahindra simply aims to get busy on developing a product line as quickly as possible.
Our aspiration is, why cant there be a company from the Indian private sector with a reasonable stake and a reasonable amount of achievement in aircraft manufacturing?" he said. "Thats the aspiration, and thats where wed like to be. We know it took a long time for Embraer to develop that skill, but these days things are compressed and you are expected to achieve things faster.
So we are busy plotting a trajectory to get us there. Some of that is organic, but if you are going to make strides, there have to be some inorganic pieces too. And with inorganic, you cant necessarily plan for it, as was the case with the Gippsland Aeronautics acquisition.
Mahindra said the Gippsland Aeronautics deal was attractive because it came with a portfolio of aircraft already flying and another, the Nomad, already certified. That gives you a kickstart, he said.
Mr Mahindra is conscious that it is a step-by-step process, going from a GA8 Airvan to a 10-seater, then to an 18-seater Nomad and on to regional jet. While he recognised that it takes time, he joked that he hoped it will happen before he retired. Mr Mahindra will turn 55 in about a months time.
If and when a regional transport aircraft emerges from the Mahindra group, Anand Mahindra is adamant that it will be a world-class product. We dont want two levels of quality and two sets of specifications, he said.
We dont think in two compartments any more when designing a product. The moment you say this ones for India and thats for the world, it encourages a split personality, and thats not a good thing. You dont want any schizophrenia in the company.
Look, well make a world-class product and well go where the markets are. Arguably, the biggest aircraft markets in the world in the next two decades are going to be China and India anyway."
Last September, Boeing said it expected the Asia Pacific region to be the worlds largest aviation market by 2028, with about $1.2 trillion being spent on almost 9000 new planes over the next 20 years. Boeing said that strong demand for single aisle planes in China and India meant that about 5600 of these would be single aisle models.
Along with Boeing and Airbus, makers such as Embraer and Canadas Bombardier compete for the single-aisle market. Chinese and Japanese manufacturers also aim to enter the sector by 2016.
Mr Mahindra said Indias huge domestic market gave it a tremendous home-base advantage in building a scale business. He said it was important for Indian business people to understand that it was the big domestic market that allows us to become world-class players.
Mr Mahindra and his uncle Keshub Mahindra, who joined the group in 1947 and has been its chairman since 1963, are regarded as among the towering figures of Indian industry. Keshub Mahindra sits on the Prime Ministers Council on Trade & Industry, while last month, Anand Mahindra was named Ernst & Youngs entrepreneur of the year and business channel NDTVs business leader of the year.
The Mahindra groups businesses include financial services, automotive products, trade, retail and logistics, information technology and infrastructure development. It is one of the worlds biggest tractor makers, with plants in India, China and the United States, and an assembly site in Brisbane, Australia. In Australia, it also sells the Mahindra Pik-Up, a light utility.
The Mahindra family and associates hold a stake of about 13 per cent in the main group company, Mahindra & Mahindra, which has a market capitalisation of $7bn.
