Re­liance forms aero­space and se­cu­rity so­lu­tions com­pa­nies

SP's MAI - - CORPORATE -

Re­liance In­dus­tries Lim­ited (RIL), In­dia’s top rank­ing com­pany’s quest for or­ganic and non-or­ganic growth con­tin­ues in dif­fer­ent sec­tors. The lat­est is its en­try into the boom­ing aero­space and de­fence in­dus­try, the plans of which are slowly un­fold­ing.

Early July 2012, RIL ap­plied for an in­dus­trial li­cence with the Depart­ment of In­dus­trial Pol­icy and Pro­mo­tion (DIPP) to ‘de­sign, de­velop, man­u­fac­ture, equip­ment and com­po­nents, in­clud­ing air­frame, engine, radars, avion­ics and ac­ces­sories for mil­i­tary and civil­ian air­craft, he­li­copters, un­manned air­borne ve­hi­cles and aerostats.” RIL has cre­ated two new en­ti­ties: Re­liance Aero­space Tech­nolo­gies Pvt Ltd and Re­liance Se­cu­rity So­lu­tions Ltd.

Re­liance In­dus­tries sees enor­mous po­ten­tial in the de­fence and aero­space sec­tor as the to­tal off­set op­por­tu­nity is expected to sur­pass $12 bil­lion over the next 10 years, driven by de­fence pro­cure­ment plans. In­dia’s de­fence bud­get in 2012-13 was over $42 bil­lion. In­dia is the world’s largest arms im­porter with plans to spend $100 bil­lion on weapons over the next decade.

RAL to in­vest $1 bil­lion

The new com­pany is expected to in­vest close to $1 bil­lion over the next few years in aero­space sec­tor. RIL last year had roped in Dr Vivek Lall who was head­ing Boe­ing’s De­fense, Space and Se­cu­rity unit in In­dia, to give shape to RIL’s en­try into aero­space and de­fence.

Dr Lall over the past few months has been busy cob­bling up the ven­ture, fi­nal­is­ing the busi­ness plans and go­ing on a tal­ent-hir­ing spree both in In­dia and over­seas. Sources said the new aero­space unit will cre­ate about 1,500 jobs forth­with.

The com­pany will also un­der­take re­search and pro­duce new aero­space tech­nolo­gies, ma­te­ri­als, com­po­nents and equip­ment and test and carry out their cer­ti­fi­ca­tion.

The com­pany will part­ner with global ma­jors to bring in so­phis­ti­cated civil and mil­i­tary aero­space tech­nolo­gies into the coun­try. Ear­lier this year, RIL had en­tered into a mem­o­ran­dum of un­der­stand­ing (MoU) with Das­sault Avi­a­tion for ‘pur­su­ing strate­gic op­por­tu­ni­ties for col­lab­o­ra­tion in the area of com­plex man­u­fac­tur­ing and sup­port in In­dia’. Das­sault man­u­fac­tures Rafale com­bat jets (which won the deal to pro­vide In­dian Air Force 126 Rafale fighter jets) and Fal­con busi­ness jets.

Ac­cord­ing to me­dia spec­u­la­tion, the hub could be in Nashik, Ma­ha­rash­tra. Cre­at­ing a man­u­fac­tur­ing hub is at the heart of Mukesh Am­bani’s am­bi­tion in the aero­space busi­ness, an un­named Mum­bai con­sul­tant has been quoted in the me­dia. “He seems to be fo­cus­ing on air­craft parts in the short term and on de­vel­op­ing new tech­nolo­gies in the long term,” the con­sul­tant said.

The de­fence mar­ket in In­dia is largely dom­i­nated by off­set con­tracts. The gov­ern­ment has an off­set clause in de­fence pro­cure­ment con­tracts with for­eign firms, which re­quires for the for­eign com­pany that gets a weapons deal over ` 300 crore has to plough back at least 30 per cent of the value into In­dia.

In­dus­try ex­perts feel the RIL may emerge as the big­gest In­dian player in var­i­ous de­fence projects like com­bat air­craft, mil­i­tary sys­tems and home­land se­cu­rity in near fu­ture. Mukesh Am­bani’s new ven­tures of de­fence, aero­space so­lu­tions and home­land se­cu­rity may over­take his ex­ist­ing busi­nesses in years to come.

The rapid rise of Re­liance In­dus­tries Lim­ited as In­dia’s most valu­able com­pany by mar­ket value is not sur­pris­ing at all. From a largely petro­chem­i­cals gi­ant, RIL has for­ayed into sev­eral sec­tors and now is ranked 99th in For­tune Global 500 com­pa­nies. And now with RIL en­ter­ing the de­fence and aero­space sec­tor, the sky is the limit for Mukesh Am­bani’s growth.

Dr Vivek Lall heads Re­liance Aero­space Tech­nolo­gies & Re­liance Se­cu­rity So­lu­tions

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