Considering the business opportunities in domestic weapon production, defence will emerge as the largest business of the Reliance Group, said the group Chairman Anil Ambani. Reliance Group is readying its defence business to bid for projects worth ₹2.85 lakh crore in the next three-five years.
He was addressing an analyst meet on defence business where various aspects relating to market, opportunities and initiatives by Reliance Infrastructure Ltd and its promoted Reliance Defence Ltd and Reliance Defence and Engineering Ltd (RDEL-Pipavav) were discussed.
According to analysts who attended the meet, Ambani said that there was a huge opportunity for private sector in the defence business, as currently the country imports 70 per cent of its defence requirement in value terms and accounts for 14 per cent of the global defence imports in 2016.
There is over ₹70,000 crore worth of offset obligation, which is yet to be executed. This is a big playing field for domestic private sector. Reliance Group’s entry into defence sector is driven by the new policy of Make in India and Skill India, he told the analysts.
He told the analyst community that contrary to the general perception, defence is not a capital-intensive business. It is medium to light capital-intensive and unlike the infrastructure sector, revenue to capex ratio is quite high in defence.
The company’s vision is to be the leading manufacturer and supplier of advanced weapon platforms, equipment, systems and hardware to meet the domestic requirements of the Indian Armed Forces, he explained.
In a presentation to the analyst, the company said that there are more than 2,000 people in Reliance Defence, including 200 members of management team. It has total assets of ₹10,000 crore.
In the last 13 months, it has acquired Pipavav shipyard, which has a capability to undertake all types of construction and repair work for ships and submarines. It is the only shipyard in the country capable of building new aircraft carriers.
The company has obtained 27 industrial licences to build a full spectrum of defence platforms (Air, Naval and Land). It has signed a strategic partnership with Antanov, Ukraine for Transport Aircraft and has the key partnership with Dassault Aviation for 36 Rafale Fighter Aircraft. It has also been selected by US Navy to provide services to seventh Fleet.
The current order book of RDEL is ₹5,700 crore, which shall be completed by January 2021, the group said.