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By Megha Mandavia, ET Bureau | 4 Sep, 2015, 02.53AM IST
US Telephonics Corporation to hike stake in Mahindra defence JV to 49 per cent - The Economic Times
MUMBAI: Telephonics, part of US-listed Griffon Company, will pump in about $10 million in the next one year, SP Shukla, group president for aerospace and defence business at Mahindra, told ET.
The joint venture, formed between Mahindra Defense Systems and Telephonics in 2013, makes electronic surveillance and communication systems for the Indian aerospace and defence market.
"Increase in ownership goes to show Telephonics has faith in the capability of the joint venture," Shukla said."They are showing commitment to the sector. With Telephonics infusing several million dollars, we will expand capabilities."
The government, which has raised the foreign direct investment limit in defence to 49 per cent, gave permission to Telephonics to increase its shareholding in August. It is the first private company in the Indian defence sector to receive the nod.
"It is certainly good news. Finally someone has benefited from the increase in FDI limit. The only word of caution is that these foreign investors need some assurance about government orders because government is the sole buyer. It is the opposite of monopoly," said Dhiraj Mathur, executive director, PricewaterhouseCoopers.
In June, Mahindra Telephonics started manufacturing radar series of airborne weather radars for helicopters. Shukla said the next area of growth for the company will be to make radars for border surveillance and later for naval applications.
The government raised the permitted level of foreign direct investment to 49 per cent last year. This can go higher, if the foreign partner transfers state-of the art technology to the Indian venture.
However, foreign companies want the limit to be increased to 74 per cent to gain control over the company.
"We hope more foreign companies in crease equity investments in Indian defence companies. defence companies.There are several such joint ventures in India. The flurry of activity expected after the government raised FDI limit has not happened," said Ankur Gupta, senior professional with transaction advisory services at consultancy EY. "The whole point of providing technology to Indian companies is to have some semblance of control."
India's attractiveness to global defence companies is rising due to shrinking global defence budgets. India was the sixth-biggest spender on defense worldwide from 2000 to 2010, according to a report by consultancy firm McKinsey. The initial transfer of technology in 2013 was for the manufacture of transducers used for both commercial and aerospace applications.
The Indian government is encouraging defence manufacturing in the country as a part of its 'Make in India' campaign.
US Telephonics Corporation to hike stake in Mahindra defence JV to 49 per cent - The Economic Times
MUMBAI: Telephonics, part of US-listed Griffon Company, will pump in about $10 million in the next one year, SP Shukla, group president for aerospace and defence business at Mahindra, told ET.
The joint venture, formed between Mahindra Defense Systems and Telephonics in 2013, makes electronic surveillance and communication systems for the Indian aerospace and defence market.
"Increase in ownership goes to show Telephonics has faith in the capability of the joint venture," Shukla said."They are showing commitment to the sector. With Telephonics infusing several million dollars, we will expand capabilities."
The government, which has raised the foreign direct investment limit in defence to 49 per cent, gave permission to Telephonics to increase its shareholding in August. It is the first private company in the Indian defence sector to receive the nod.
"It is certainly good news. Finally someone has benefited from the increase in FDI limit. The only word of caution is that these foreign investors need some assurance about government orders because government is the sole buyer. It is the opposite of monopoly," said Dhiraj Mathur, executive director, PricewaterhouseCoopers.
In June, Mahindra Telephonics started manufacturing radar series of airborne weather radars for helicopters. Shukla said the next area of growth for the company will be to make radars for border surveillance and later for naval applications.
The government raised the permitted level of foreign direct investment to 49 per cent last year. This can go higher, if the foreign partner transfers state-of the art technology to the Indian venture.
However, foreign companies want the limit to be increased to 74 per cent to gain control over the company.
"We hope more foreign companies in crease equity investments in Indian defence companies. defence companies.There are several such joint ventures in India. The flurry of activity expected after the government raised FDI limit has not happened," said Ankur Gupta, senior professional with transaction advisory services at consultancy EY. "The whole point of providing technology to Indian companies is to have some semblance of control."
India's attractiveness to global defence companies is rising due to shrinking global defence budgets. India was the sixth-biggest spender on defense worldwide from 2000 to 2010, according to a report by consultancy firm McKinsey. The initial transfer of technology in 2013 was for the manufacture of transducers used for both commercial and aerospace applications.
The Indian government is encouraging defence manufacturing in the country as a part of its 'Make in India' campaign.
