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Mahindra Aerospace scouts for tech partner

Mahindra Aerospace scouts for tech partner
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First Published: Mon, Jun 20 2011. 11 02 PM IST
Updated: Mon, Jun 20 2011. 11 02 PM IST
Mumbai: Mahindra Aerospace Pvt. Ltd, the aerospace unit of Mahindra and Mahindra Ltd (M&M), is scouting for a technology partner to make aircraft components at its proposed plant in Bangalore.
“Our plant then gets certified much faster,” said Hemant Luthra, president of Systech, M&M’s component manufacturing division, of which Mahindra Aerospace is a part. “This will include an equity as well as technical collaboration.”
Rajiv Chib, associate director of aerospace and aviation at consultant PricewaterhouseCoopers, said given the long-drawn qualification process and certifications involved in the manufacture of aircraft parts, the gestation period for an Indian firm without US or European collaboration could be as long as eight years. “With a technology partner, the lead time can be cut to two to three years.”
Mahindra Aerospace has outlined an investment of Rs 230 crore for the Bangalore factory, which will make components to be supplied to global aircraft manufacturers as well as Mahindra’s own aircraft manufacturing business.
M&M entered the aerospace business with the acquisition of Australia’s Gippsland Aeronautics Pty Ltd and Aerostaff Australia Pty Ltd in December 2009. Gippsland makes aircraft and Aerostaff high precision metal components for companies in businesses such as aviation and defence equipment.
The acquisitions made the Mahindra group, India’s first private sector conglomerate with the ability to build aircraft. Most Indian firms can only make components and subsystems.
Luthra said the Bangalore plant will make use of the government’s so-called offset clause, which requires foreign military aircraft and defence equipment manufactures to locally source components worth 30% of contracts valued at Rs 300 crore or above.
India may buy defence equipment worth at least $100 billion (Rs 4.5 trillion) over the next 15 years, according to the estimate of industry lobby group Confederation of Indian Industry.
“Eventually we hope to be direct suppliers to Boeing Co. and Airbus SAS,” said Luthra, referring to two of the world’s biggest aircraft manufacturers.
PricewaterhouseCoopers’ Chib said most Indian companies participating in the government’s offset programme need a technology boost from a partner, and this could trigger a spate of mergers and acquisitions in the sector.
Auto component makers are also looking to tap into opportunities indirectly.
“We are looking at an acquisition in India to get technology for aerospace parts, said L. Ganesh, chairman of Chennai-based auto component manufacturer Rane group. “We plan to supply parts to companies that have interest in the aerospace sector.”
Chib said India on average buys 30 jets and 30 helicopters every year for commercial and defence requirements, and there are several European and US firms looking for local partners to benefit from the low-cost manufacturing base that India offers.
“There are a lot of companies in Europe up for sale, which can be bought by the Indian firms,” he said. The offset programme has a potential of $2 billion a year, mostly in the aircraft purchasing space.
Mahindra Aerospace, which has a contract with National Aerospace Laboratories to make two- to five-seater planes, will manufacture, along with the two Australian firms, 475 aircraft in the two-to-twenty-seater range in the next five years.
shally.s@livemint.com
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First Published: Mon, Jun 20 2011. 11 02 PM IST