Kalyani Group plans new JV with Saab; to invest Rs. 1000 crore for defence systems

The Kalyani Group, parent of forgings major Bharat Forge, has firmed up plans to form a joint venture company with Swedish defence and security company Saab with whom it currently has a strategic alliance.

The new partnership to make land and air defence systems, will be the fourth such alliance by Kalyani Strategic Systems Ltd (KSSL), the company under which the entire defence systems business will vest.

The investment for all the new defence systems ventures is expected to be around Rs. 1000 crore over the next five years, Kalyani Group Chairman Baba Kalyani told Business Line.

While the new JV with Saab is expected to be established in the next two-three months, the Group already has formed 51:49 JV partnerships with two Israel-based companies - Elbit Systems and Rafael Advanced Defence Systems Ltd to develop and manufacture high-technology systems for the defence sector. It has also formed a JV with Hyderabad-based Premier Explosives to make ammunition.

“We will put up separate plants for each of the four JVs,” Kalyani said, adding that while those for KSSL-Rafael and KSSL-Premier Explosives will come up in Hyderabad, the Kalyani-Elbit JV will be located in Gujarat in a region that is being developed by the State government as a defence hub. The JV plant for defence systems will be located near Pune.

Bharat Forge, which will make components for the defence vertical, is also in talks with foreign partners for support joint venture companies to make electronic sub-systems.

For these plants – two or three at best – the company is in discussions with the governments of Maharashtra and Madhya Pradesh to derive benefit under the electronics policy. As Pune district has such a policy, these plants could well be located around Pune or even in Khed City, an SEZ and industrial area being developed by the Group, he indicated.

Bharat Forge's current historic forged defence components business is valued at Rs. 200-300 crore, and is pegged to grow to Rs. 600-odd crore in the next three years. “We are also actively looking at how to export,” Kalyani added.

Refusing to put a figure to the systems business stating that it will take time to develop, he asserted, “In each of these areas, even if I take the tenders which are in `request for information’ or `request for quotation’ stage, it runs into thousands of crores.” 

 thehindubusinessline