Auto firms aim for projects in de­fence as growth slows

WAR FOOT­ING Com­pa­nies see govt’s lo­cal­iza­tion push for the sec­tor as key biz op­por­tu­nity

Hindustan Times (Chandigarh) - - Comment - Amit Pan­day

MUMBAI: In­dia’s au­to­mo­tive and auto parts com­pa­nies are look­ing to tap op­por­tu­ni­ties in the de­fence sec­tor to off­set slug­gish de­mand for au­to­mo­biles in the do­mes­tic mar­ket amid the coro­n­avirus cri­sis. The com­pa­nies also want to ex­ploit a gov­ern­ment push for in­creased lo­cal man­u­fac­tur­ing of de­fence equip­ment and a deeper pres­ence of pri­vate firms in this strate­gic sec­tor.

Com­pa­nies such as Ashok Ley­land Ltd, Force Mo­tors Ltd, BEML Ltd, Bharat Forge Ltd, JCB In­dia Ltd and Au­to­mo­tive Axles Ltd see the gov­ern­ment’s lo­cal­iza­tion push for the de­fence sec­tor as a ma­jor op­por­tu­nity.

The de­fence min­istry on 9 Au­gust is­sued a list of 101 items on which an im­ports em­bargo will be im­posed with cer­tain time­lines. While 69 items on the list were given the im­port em­bargo dead­line of De­cem­ber 2020, the time­line for the re­main­ing items stretches un­til De­cem­ber 2025.

“There will be a num­ber of in­di­g­e­nized de­vel­op­ments, which will bol­ster the de­fence lo­gis­tics in­dus­try. Now, with clar­ity on the re­stricted items, the in­dus­try will work on strength­en­ing its prod­uct of­fer­ings,” said Vipin Sondhi, man­ag­ing di­rec­tor and CEO,

Ashok Ley­land Ltd.

“This will also of­fer an op­por­tu­nity to sup­pli­ers to par­tic­i­pate with the au­tomak­ers in the de­vel­op­ment and growth,” Sondhi said, adding that more than 50 items in the is­sued list were al­ready part of im­port re­stric­tions as per the de­fence pro­duc­tion pol­icy 2018.

Ashok Ley­land is one of the largest sup­pli­ers of heavy ve­hi­cles to the mil­i­tary. In FY20, the com­pany supplied 359 ve­hi­cles in­clud­ing bul­let-proof ve­hi­cles, as well as kits for 8X8 trucks. It also en­tered the tracked ve­hi­cles—which can be used in all ter­rains—business for sup­ply­ing ag­gre­gates and com­po­nents for

T-72 and T-90 bat­tle tanks, it said in its an­nual re­port. The firm has al­ready as­signed its de­fence ver­ti­cal as one of the core fo­cus ar­eas for growth in the midterm.

Deepak Shetty, deputy chief ex­ec­u­tive of­fi­cer and man­ag­ing di­rec­tor at JCB In­dia Ltd, the coun­try’s largest con­struc­tion equip­ment man­u­fac­turer, said the gov­ern­ment de­ci­sion has the po­ten­tial to cre­ate more op­por­tu­ni­ties. “We have been sup­port­ive of the make-in-in­dia pro­grammes for a long time. We have been sup­ply­ing to the de­fence force based on their ten­der-spe­cific re­quire­ments,” he said. JCB pro­vides con­struc­tion and ma­te­rial han­dling equip­ment to the

In­dian Army and the Bor­der Roads Or­gan­i­sa­tion.

Amit Kalyani, deputy man­ag­ing di­rec­tor, Bharat Forge Ltd, called the gov­ern­ment’s plan to boost lo­cal­i­sa­tion in de­fence equip­ment is a great step that recog­nises lo­cal ca­pa­bil­i­ties. “This is also good for the sup­ply chain. We are work­ing with over 400 com­pa­nies in the de­fence sup­ply-chain ecosys­tem,” he said in a re­cent an­a­lyst call to dis­cuss the June quar­ter earn­ings.

The com­pany, which is look­ing to more than dou­ble its de­fence rev­enue of ₹500 crore in four years, is look­ing for­ward to the com­ple­tion of fi­nal tri­als of its lo­cally de­vel­oped ar­tillery guns.

“We have de­vel­oped four plat­forms. Once the last phase of tri­als is over, we will be ready for the sale process to be­gin,” Kalyani said, adding that three of the guns are in the ad­vanced stages of test­ing. Bharat Forge is look­ing to set up a ca­pac­ity to make up to 150 ar­tillery guns per year. The cost of each ar­tillery gun is pegged at ₹12-15 crore.

The com­pany has cre­ated a “three-hori­zon strat­egy” to grow. While prod­ucts like ar­tillery guns come un­der hori­zon 1, ar­moured and spe­cialty ve­hi­cles come un­der hori­zon 2, and hori­zon 3 in­cludes elec­tronic and high-tech prod­ucts.

PTI

Ashok Ley­land Ltd is one of the largest sup­pli­ers of heavy ve­hi­cles to the mil­i­tary.

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