UKTI Aerospace Sector Short Term Business Attachment - India

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UKTI Aerospace SectorShort Term Business
Attachment - India

• 3rd Monthly Report
• By Jaimie Rogers

3
Achievements

• Attend Paris Airshow.
• I initiated contacts for 12 UK Companies to have
  1 to 1s with Indian Companies
• I had meetings with 6 UK Companies where I
  provided advice on the India market
• Met 9 India co.s. Some were initial meetings.
  Some were second meetings to discuss in more
  detail working with UK SMEs
• Supported the Advanced Engineering Sector Teams
  visit of the UK Aerospace Associations
• Set up and led a meeting with SBAC CII to
  agree how they could work more closely and a
  potential mission to India
• Had 14 guests at the UKTI Dinner and 3 guests at
  the Ambassadors Reception
• This was a very good opportunity to discuss the
  plans for the rest of my secondment with the UKTI
  Aerospace Team
• Successes Following the Paris Air Show Denroy
  Plastics commissioned an OMIS
• Aerologisitcs move closer to agreeing a JV in
  India, based in Bangalore
• 23 visits undertaken in Delhi, Mumbai, Pune and
  Bangalore
• Main focus for these visits has been the
  metallic manufacturing sector. Please see the
  Opportunities section for a report on this
  sector.
• A number of visits looking at civil aviation
  sector. This sector and its opportunities will be
  covered my next report
• These city visits have given me a good
  opportunity to give the UKTI sector teams a more
  technical appreciation of the aerospace sector
• A good opportunity for a UK company to JV with
  Samtel Displays - Information circulated to UK
  Aerospace Associations
• Attended the Open Sky Forum in Delhi - This was a
  one day conference focussed on the Indian Civil
  Aviation Industry
• The conference was well attended by the Indian
  Aviation Industry, the opening address by the
  Indian Minister of Aviation.

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Achievements

• Companies and Organisations met in the last
  month
• (These are only companies where I have had an
  extended meeting with the representatives)
• Paris Airshow
• UK Co.s NIS - Robert Crampton, Sales
  Manager Ultra Electronics - Graham Leighton,
  Head of Marketing
• South Dorset Engineering - Chris Bell - Managing
  Director Sitec Group - Guy Hobday, Business
  Development Manager
• Hampson - Mark Abbey, Group Global Aerospace
  Marketing Business Development Director
• Denroy Plastics - Jim Knowles, Technical Sales
  Manager
• UKTI Margaret Porteous, Head of Advance
  Engineering Sector Mike Lee - UKTI ITA
• Chris Beck, Global RD Specialist Richard
  Higgins, Inward Investment
• UK Assoc.s SBAC, WEAF, NWAA, MAA, FAC
• Indian Co.s Infotech - Ajay Desai, VP
  Marketing Maini - Chaitanya Koranne, VP
  Marketing
• Cades - Dataram Mishra - Managing Director CEO
  CIM Tools - Srikanth, Director
• HAL - M K Mishra - Chief Manager -
  Marketing Incat - Lloyd Hares, UK Account
  Director
• Conf Of India Industries - Gurpal Singh, Deputy
  Dir. Gen. Quest - Aravind Melligeri, Founder
  President
• TCS - Suresh Babu, Director Aerospace Pracitice
  Ian Todd, Business Development Manager
• Satyam - Pinaki Dasgupta, VP Global Head of
  Aerospace Defence Practice
• Delhi Visits

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Achievements

• Companies and Organisations met in the last
  month
• (These are only companies where I have had an
  extended meeting with the representatives)
• Bangalore Visits
• Satyam - Kapil Bakshi, Snr Manager Business
  Development RBU Eurpoe
• Indian Institute of Science - Aerospace
  Engineering Department - Prof. Murthy, Acting
  Head of Department
• CIM Tools - Srikanth, Director Dynamantics -
  Udayant Malhoutra, CEO MD
• Kumaran - M Parthasarathy, Technical
  Director JS Precision- DP Engineer, Managing
  Director
• Unique Instruments - Devang Shah, Managing
  Director Hampson - Ramesh Haridas, Facility
  Manager
• Mumbai Pune Visits
• Godrej Boyce Mfg. Co. - S M Vaidya - VP Bus.
  Head Precision Components System Division
• Jet Airways - Shirish Keskar - Gen Man. Tech.
  Services Delcam Software India - Vineet Seth,
  Managing Director
• Bharat Forge- N C Sharma, VP RD Product Design
  Manuf. Eng. Services
• Incat - Mr R Kumar, Project Manager Manuf.
  Systems Eng. Automation
• Mahindra Systems Technologies Ltd Aerospace
  Division - Ashwani Keswani - VP Business
  Development Systems Tech.
• Airworks India Engineering - Ravi Menon,
  Director Max Aerospace and Aviation - Bharat
  Malkani, Chairman

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Actions in next month

• 2 day Visit to Hyderabad
• The focus of the visits will be on metallic
  manufacture and avionics.
• Also hope to visit Hamco who plan to do MRO and
  Pet Aviation who provide training for Air Traffic
  Controllers
• Engineering Design.In Conference and Expo
• Key Note Speaker in opening session - Main aims
• To promote UKAI
• Encourage Indian Co.s that there is a need for
  them to open European integration centres that
  these should be based in the UK
• Provide comments and recommendations on Indian
  Aerospace Engineering Services Sector
• Lead the UKTI stand for the 3 days of the Expo
• Two weeks of company visits in Bangalore
• One of the main focuses will be visits to HAL
• The other main focus will be visits on civil
  aviation sector
• Completion of the Genser Report

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Opportunities

• Metallic Parts Manufacturing in India
• History of the Sector
• The vast majority of aerospace manufacture in
  India was started to support HAL, Hindustan
  Aeronautics Limited in Bangalore. HAL was formed
  in Bangalore following the First World War when
  there were a large number of aerospace engineers,
  who had provided maintenance and servicing to the
  military aircraft during the war. Bangalore has
  quite a heritage with the military. The British
  Army would come to Bangalore in the hotter months
  to their hill camps because of its milder
  climate. The climate is also why the Texas
  Instruments set up in Bangalore and lead to the
  booming ICT sector in Bangalore.
• Hyderabad is another, smaller cluster for
  metallic parts manufacture. This has developed
  for the manufacture for space applications for
  ISRO, Indian Space Research Organisation, even
  although ISRO does not have a large manufacturing
  or assembly facility in Hyderabad.
• Other companies such as Godrej in Mumbai and
  Bharat Forge in Pune are located where the
  original non-aerospace related business was
  founded.
• Background
• It has only been in the last three years that
  orders form international companies have been
  placed directly with private Indian Companies.
  Before this Indian companies supported the
  Nationalised/ domestic aerospace customers
• HAL, Hindustan Aeronautics Limited
• NAL, National Aerospace Laboratories
• ISRO, Indian Space Research Organisation
• IAF, Indian Airforce
• DRDO, Defence Research Development Organisation
  and their aerospace arm ADA, Aerospace
  Development Agency
• GTRE, Gas Turbine Research Establishment

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Opportunities

• LCA, Light Combat Aircraft (Tejas) being
  developed by DRDO NAL and is in limited
  production with HAL
• Kaveri Engine, the engine developed for the LCA
  developed by GTRE
• IJT, Intermediate Jet Trainer still in
  development
• LTA, Light Transport Aircraft (Saras) a 14 seater
  commercial regional aircraft in development with
  NAL HAL
• Hansa, 2 seater civil A/C being developed by NAL
• ALH, Advanced Light helicopter (Dhruv) in
  production with HAL
• Lancer - Light Attack Helicopter in production
  with HAL
• Components for Space launch vehicles for ISRO
• Lakshya pilotless drone produced by HAL
• Components for the A/C HAL is manufacturing under
  license
• Jaguar Deep Penetration Strike Aircraft for BAE
  Systems
• Aour Mk-811 Engine (Jaguar Engine) for Roll
  Royce
• Hawk new work for BAE Systems
• Adour Mk 871-07 Engine (Hawk Engine) for Rolls
  Royce
• Dornier DO 228, a light transport A/C for
  Dornier Luftfahrt, Germany
• Garrett TPE 331-5 Engine (DO 228 Engine) for
  Garrett Engine Division (Honeywell)
• Sukhoi - 30 Mk 1 for Russian Government
• AL-31 FP Engine (SU-30 Mk 1 Engine) for Russian
  Government
• Chetak helicopter for Aerospatiale

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Opportunities

• Experience
• Because of the industry history most companies
  experience in small precision and structural
  components. It has only been in the last 3 years
  that international orders have been placed
  directly with these private companies. HAL is
  also slowly changing and putting larger work out
  to its supply chain as it tries to cope with the
  very large volume of work it has. The exception
  to this is companies who have undertaken work for
  ISRO. Companies such as Godrej, MTAR and SKM
  technologies have good experience in medium sized
  precision components and assemblies from ISROs
  space products.
• See the table below, which gives an idea of what
  areas companies have capability. Interesting to
  note that the companies with the international
  orders are the more advanced thinking companies,
  know they have work to do to develop and are not
  just waiting for the orders to arrive.

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Opportunities

• HAL
• Other than in passing HAL is not being mentioned
  in this report. The reasons being that regardless
  of how much work they have they will not put work
  this kind of manufacturing to an overseas
  company. I also strongly recommend that UK SMEs
  do not to try and put work into HAL of any
  kind.
• Quality
• Approvals 7 companies have AS9100, most the top
  15 are ISO9001 approved.
• Quality and inspection, all with the exception of
  Kumaran and JS Precision have good inspection
  facilities. Most have inspection rooms and a CMM.
  They seem to demonstrate good quality and show
  good feed back from customers.
• NB This is where UK companies will need to put
  the effort in to ensure they are getting the
  standard of product delivered they are looking
  for.
• Company size
• Most of the aerospace facilities are still fairly
  small by overseas standards. They have a small
  number of CNC machines, (1 to 8machines) and a
  number of supporting conventional machines that
  are used for aerospace. In some cases such as
  Maini, Dynamatics or Godrej they will have a much
  larger machine shop for other sectors such as
  automotive. The number of employees in these
  facilities tends to be much higher than would be
  seen in an onshore plant. There tend to be a
  number of helpers which may boost numbers by
  1.5 or 2 times what we might expect to see.
  Annual turnover is greatly affected by whether a
  company buys in its own material or has it
  supplied by their customer. All work done for the
  Indian nationalised companies, the customer will
  supply the material, even where the final
  customer maybe an international customer, eg HAL,
  who have the contract with Airbus for the A320
  doors provide suppliers with material.
• The companies can be split into four general
  categories

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Opportunities

• Very Small Companies e.g. Kumaran, JS Precision,
  Amado Tools
• These are very small machine shops. They are all
  currently only undertaking domestic work,
  although some of it may be licensed work for HAL.
  Therefore they have little experience of working
  with overseas companies. Some are looking to
  grow. It maybe 3 to 5 years before this happens.
  I would not recommend using such companies. This
  is a high risk.
• Small Companies Cim Tools, Traveni, Unique
  instruments
• By UK standards their aerospace machine shops are
  still currently classed as pretty small. They do
  have good experience and a number of overseas
  customers but only in the last 3 years. They will
  understand UK companies issues. Most attend
  airshows. CIM were at the Paris Airshow 2007. All
  are on the verge of major expansion, looking to
  expand 5 to 10 times their current size. Most do
  not have serious financial backing so it may take
  time for them to realise their goals.
• Medium sized Companies Dynamatics, Godrej,
  Titan, Maini, MTAR, SKM Technologies
• Most of the comments for the Small Companies are
  still relevant. The big difference is the
  financial backing these companies have. All have
  a link to a much larger organisation. This will
  accelerate their ability to grow. E.g.
• Dynamatics is one of the Worlds largest
  manufacturers of hydraulic gear pumps and a major
  manufacture of automotive components
• Titan Is 6th largest manufacturer of watches in
  the World. This is a division of the Tata group
• Godrej Very large Indian Engineering Company who
  has been manufacturing a large range of products
  for many years material handling equipment,
  tooling, domestic appliances, office and domestic
  furniture.
• These companies see aerospace as a attractive
  sector to enter a growth sector, good profits
  and good prestige. Although they aerospace
  operations are currently small they have the
  backing to grow quickly if required.
• Sleeping Giants Tata, Mahindra, Bharat Forge,
  Larsen Toubro These are the very large
  engineering manufacturing companies in India.
  Their experience may cover automotive, power,
  transportation or marine. These very large
  companies whose annual turnovers are measured in
  terms of billions. Currently they have very
  little or no presence in the aerospace
  manufacturing sector. They do have good base of
  manufacturing experience, huge financial backing
  and experience working with international
  companies. Aerospace is seen as a very attractive
  sector to enter as with the medium sized
  companies. There is the potential for some of
  these players to enter the sector and very
  quickly jump up the experience, capability curve.
  This may well be stimulated by a major
  international OEM who does not want to work with
  HAL and wants a large capable supplier/ partner
  in India.
• Tata have bought land in an SEZ in Nagpur for
  aerospace manufacturing. LT have signed a MoU
  with EADS Boeing to do component manufacture.

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Opportunities

• Company Growth
• It has been very clear when I have visited
  companies that a number are still be classed as
  small machine shops. They are looking to expand.
  This is certainly not all talk. I have seen their
  new buildings and facilities which, in most
  cases, still waiting for equipment to arrive.
  They have fairly aggressive timescales for
  expansion, 6 to 12 months. I think they are being
  over optimistic but expansion will come. Most are
  looking to take a step change in their size by 5
  to 10 times their current capacity. This rate of
  expansion is certainly something that needs to be
  confirmed via further visits.
• Although they all make reassurances this level of
  growth will inevitably affect quality of
  deliverables something UK companies need to be
  aware of
• Why do they want to grow so quickly? Aerospace is
  a new sector in India. These compnaies are
  watching it grow. Very simply, they want to grab
  as large a slice of the aerospace cake as
  possible. They do not want to turn work away.
  This is true for the whole aerospace sector. What
  they have not realised is that if quality drops
  off they will not get repeat or new orders to
  fill their new facilities.
• Why do they expect this level of growth? There is
  now a great deal of interest from overseas
  companies. Many have a number of large,
  international customers. They believe that as
  their customers confidence in their abilities
  grows they will get more orders. They are
  expecting these to be for new sub a assembly work
  as well as the existing component manufacture.
  This is where all these companies are trying to
  head, moving up the value chain to take on more
  sub assembly and assembly work. HAL is now
  looking to become more of an integrator company
  and are slowly offloading more level 4 and some
  level 3 work i.e. component manufacture and sub
  assembly work to their supply chain.
• Most are focusing on export. Many of the new
  facilities being built will be for export only.
  They are setting up bonded stores for material to
  be used in exported parts to prevent paying
  import duty. A number have also bought additional
  land in SEZs, Special Enterprise Zones, which
  provide a range of very good tax incentives.
  There is an SEZ very close to the new Bangalore
  Airport where a number of these companies have
  bought land.
• On the following page I have included my view on
  the growth capability of these companies. This is
  based on information gained from my visits.
• Financial Status
• All companies are in a good financial position.
  All seem to have no large outstanding debts or
  overdrafts. (A few of the smaller companies have
  mentioned that they will required backing to
  support the level of growth they are trying to
  achieve). Why is this the case? As in the
  engineering design sector these companies are
  making very good profits on the work they do even
  with the rates they offer. They have very low
  overheads Labour is very cheap in India. Most
  already own their land, so even as land and
  property prices increase in Bangalore they are
  protected. Many have also purchased other further
  land for future development conscious of the
  increase in land prices. Equipment, this is
  probably their biggest overhead, especially if
  they are looking to expand. Currently most have
  only a few machines, which they try to buy second
  hand.

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Opportunities
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Opportunities

• Rates
• A very general view of hourly rates Machining
  rates range from 10 to 50/hr. The high end will
  be for 5 axis CNC work. 3 axis CNC work around
  20 - 25/hr.
• Treatments
• Most companies are looking to move into
  sub-assembly and assembly work. One major
  capability that has prevented this from
  happening, especially around system component
  assembly is the lack of metal treatments.
  Currently suppliers are manufacturing components
  and where treatments are required they send them
  back to their customer, limiting the potential to
  do any assembly work. Currently there are very
  few aerospace metal treatment companies in India
  and none with NADCAP approvals
• - HAL have their own heat and chemical treatment
  facilities.
• - Dynamatics do limited chemical and heat
  treatments based around their automotive work.
  They are looking to get NADCAP approval for some
  of their heat treatments shortly.
• - Vijaya are the only independent chemical
  treatment house. They are a very small operation,
  focussing on small components such as hydraulic
  end fittings. Are looking to get NADCAP approval
  but this will take some time.
• - Godrej do some chemical and heat treatments and
  are working toward NADCAP approval. Do provide
  their services to other companies.
• - Quest with Magellan are looking to enter into
  this field.
• - Aerologistics from the UK are now looking to
  agree a JV very shortly to offer chemical
  treatments, based in Bangalore. They have NADCAP
  approvals in their other plants in the UK and
  Poland and are looking to get it for their Indian
  operation.
• - Hightemp Furnaces - do heat treatments for
  aerospace
• - Matcon UK Ltd - Have a rep in India offering
  metallic powder coatings.
• - Bharat Forge - As part of their plan to expand
  into aerospace they will do surface treatments.
• Material Suppliers
• For domestic orders all material is still
  supplied by the customer. For international
  orders some customers will provide material some
  will not.
• Orders for aerospace components are still small.
  Although some aerospace grade materials are
  available in India it is still cheaper to source
  small quantities directly from overseas, which is
  why we see a number of customers providing
  materials to their supply chain, it is the most
  economic route. Indian material suppliers will
  only start to become viable when larger orders
  are placed.

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Opportunities

• TW Metals have a distribution centre in
  Bangalore Apollo Metals have a distribution
  centre in Mumbai
• AM Castle Diamond
• Carpenter Aviation
• All Metal Services Marine Corrosion
• Opportunities for UK Companies
• Providing all types of production machinery and
  equipment, from CNC centres to inspection
  equipment to these companies. With very
  aggressive growth plans all will need machinery
  and equipment. This will be second hand as well
  as new equipment. These India companies should be
  approached directly.
• Apart from HAL no Indian companies offer casing
  capabilities. Very few forging and only a
  handful of sheet metal pressing.
• Providing chemical and heat treatments to these
  companies. The facility will have to be located
  in India, probably Bangalore and/or Hyderabad.
• Bharat Forge are looking to set up a complete
  composite manufacturing facility. They are
  currently looking for advice on the facility.
• The main opportunity for UK Companies is to
  offshore work. The two main drives being OEM
  offset commitments and cost benefit/ saving to UK
  companies. It also provides an opportunity for
  companies to increase capacity without investing
  in additional machinery or free up key machinery
  that is tied up with repeat orders that could be
  used on new orders.
• India is placing large orders for military and
  civil aircraft. Both now have offset commitments
  attached. OEMs are looking to fulfill their
  offset obligations both directly and indirectly
  through their supply chains into India. They
  would probably prefer to put as much of the work
  indirectly through their supply chains because it
  reduces the effort they require to invest. UK
  SMEs who have an offshore element in their supply
  chain will have an advantage over their
  competitors.

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Opportunities

• A Guide - How to put metallic parts manufacture
  work into India
• Identify very carefully what work to offshore. It
  maybe done for one of the following reasons
• OEM/ customer wants work done off shore
• Moving work will free up key machinery that can
  be used for new orders
• It frees up key staff whose experience can be
  better used
• The work is very labour intensive and offshoring
  will give good cost benefit
• Looking to increase production capacity
• The most important guideline is to keep the work
  simple.
• Currently I would only recommending working with
  the small and medium sized Indian companies.
• Identify a number companies that you think might
  have the potential to work with. Use all sources
  of information
• Look at company websites
• Meet companies at airshows
• This report
• Talk to other UK companies, your customers

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Opportunities

• Indian companies will do prototypes for their
  customer before moving into production
• Select only one or two companies to work with and
  develop a long-term relationship with them.
• Offshoring work should be seen as a long-term
  strategy for a UK company. The pain of getting
  quality and standards in place will mean that the
  benefit from the first few orders will be
  absorbed in the additional integration costs.
  This overhead will reduce as production runs
  extend or more
• orders are placed.
• Finally - Be prepared that someone will have to
  manage the supplier closely, especially to start
  with. This will mean that regular visits to
  India, phone conferences and regular
  communication will become part of their day job.