Defence MSME major Samtel Avionics is betting big on the Indian market even as the Indian defence industry is poised for a quantum leap, says Puneet Kaura, MD and CEO, Samtel Avionics. The Samtel Avionics, which has a joint venture with Thales, is exploring various options to meet the offset obligations of Dassault Aviation that manufactures Rafale jets. In an interview with BusinessLine, he said procurement of the French Rafale fighter jets will bring big business for the firm. Excerpts:
Now that the $8-billion Rafale deal is in place, what benefit does it bring to you?
We have the same aim for Rafale that is similar to our Mirage upgrade experience. In Rafale, we are looking at supplying infra red search and track system, some work on the electronic warfare suite, we are also looking at avionics, including computers and displays. This was also our original plan when the MMRCA (medium multi-role combat aircraft) was in discussions. I don’t see any reason why it should change.
Rafale will bring big business to the Indian market. They need offsets and this will stretch beyond 2018-19, which is the time required to set up and start manufacturing things like this. There will still be a pipeline of 130-140 more planes to be made for the global market. And plus, let’s say India buys two more squadrons then it comes back to 167-170 planes. And then, they can always use the last leg, the last 6-10 aircraft they can still use even if the timeline is short for manufacturing from India.
Does the scaling down of the project from 126 jets to 36 impact you?
See we are starting somewhere at least. It has been 15 years that this discussion is going on. We have to look at the reality. The initial plan was too ambitious.
Of late biggies such as Lockheed Martin, SAAB and Boeing all have expressed their intention to set up their assembly lines here. What kind of opportunities does that bring for MSMEs like you?
We are working with all consortium partners. We are already engaged with many of them as supplier. So these will augment our business. We are engaged with a lot of American, Russian, European and Israeli companies.
Tell us about your Mirage 2000 upgrade experience?
This was a good experience. We were able to set up a world-class production line similar to what they have in France, transferred the technology and manufactured about 21-22 ship sets. Now we are looking at all the other Mirages that are coming up that will be using this facility for this product for global supply chain. Then there are whole lot of indirect offsets that we are planning to do. We are looking at developing global supply chains for locally designed, developed products. The product lines for those are under discussions right now. This is what we call ‘Go Global.’
For MSMEs like you won’t Make-II be more beneficial where the projects are fully funded?
This is definitely more beneficial. Once the product is developed it is easier for the government to invest. Make-II gives more confidence to the supplier that the customer will buy because it will be based on a contract with a timeline.
What is your opinion on how the Strategic Partnerships chapter is shaping up? The government is yet to finalise it and it seems the big firms are opposed to having only one SP in one segment?
See part of the problem is that every category there is a PSU that exists. I do not think we have the market for two SPs. It is not an easy task. Let’s see how it unfolds. But they are first looking at fighters to start with the SPs because there is a huge gap there. So let us see how it goes.
Now that you have gained a deep foothold in the market, are you planning to expand your portfolio?
In the electronic space, we are already looking at avionics that includes cockpit avionics and electronics that go into back-end of the aircraft. We are looking at sensor suites, high-end sensors, so we are looking at multiple product lines. Then there is vehicle electronics such as armoured vehicles and tanks. Still there is huge shortage of players in electronic space and then there is huge demand also for electronics.
Are there any plans to expand production units?
We have three production units. These are independent to each other. Instead of going for JVs, we are now looking for joint working groups by either through ToT and giving royalty to foreign OEMs or joint manufacturing without equity infusion.