March 29, 2016

Likely to tie up with Humvee; keen on JVs: Baba Kalyani

Almost a year after the government introduced the Make in India programme, Kalyani Group has four artillery platforms that are fully designed and manufactured in the country, says Group’s Chairman & Managing Director, Baba Kalyani. Speaking from the sidelines of Naval and Homeland Security Exhibition, Defence Expo 2016, Kalyani says the company will be launching new products including American company AM General’s Humvee for the domestic market. The industrial group will tie up with AM General, he says, adding: ”We need to produce it at a price point, which is suitable for the Indian market.” The 2016 Defence Procurement Policy (DPP) is a good policy platform to work with, says Kalyani.
 The newly-introduced Indigenously Designed, Developed & Manufactured (IDDM) category is a certain positive move, he added. The major challenge for the Defence Ministry is adopting the new framework quickly, he said. The company is keen on joint ventures (JVs) and will announce atleast 2-3 JVs this year, he added. The company will also target an opportunity of 4,000 guns needed by the Army in next 20-25 years, Kalyani said. Below is the transcript of Baba Kalyani’s interview with CNBC-TV18’s Rituparna Bhuyan.
 Q: It has been about one year of Make in India. What is the Kalyani Group doing as far as defence is concerned? Why don’t you start with this platform which is at display?
A: First of all as a company hardly any company hardly any company has done what we have been doing. We believe in Make in India, we have now four artillery platforms that are 100 percent designed and manufactured in India. You can see all of them including the Ultra Light Howitzer and we have some newer products which is the famous American HUMVEE which AM General wants to now manufacture in India for the armed forces in India as well as for exports. So, yes, there is a lot of excitement.
Q: Will you be tying up with HUMVEE for their platforms in India?
A: Yes, certainly. It is their product, it is not our product. But we need to produce at a price point which is suitable for the Indian market and for the South East Asian markets. I think we can make that happen.
Q: If you can also give us some idea about the kind of platforms that is under development as of now because indigenous design development and manufacturing (IDDM) that is a new category which has been introducing Defence Procurement Procedure (DPP). What is your comment on DPP and IDDM?
A: We are very happy that we have a category called IDDM. Designed and developed and manufactured in India. We have four platforms right there, we have the 105 light gun which is 100 percent indigenous. We have the Ultra Light Howitzer which is 100 percent indigenous. We have the 52 calibre 155 millimetre gun which we made out of the first platform we made and even exhibited during the last defence expo which is 100 percent indigenous.
Now that platform has undergone firing trial and firing test and come out with flying colours. Now we will give a product to the army for field trial. So, this is what the new category will provide us and if what is written in the DPP that indigenously designed and developed products they are talking about 40 percent indigenous content, our is 100 percent indigenous content. It also makes us very competitive because when we manufacture everything our costs are much lower and it makes us very competitive. We have now a good policy platform to work with. We have products ready, we just have to find a way to test them and take them to the market.
Q: Does it mean that we could see more capital expenditure (capex) from the Kalyani Group as far as the defence is concerned?
 A: Yes, capex will be related to orders that we get. We have already spent a lot of money and built capabilities, built the manufacturing capabilities. We now have manufacturing capabilities to manufacture 100 guns a year of 155 calibre and we can make them ultra light, we can make them 52 calibre, we can make them truck mounted, we can make them towed. We have all the designs ready with us. So, that is something that will happen pretty quickly.
 Q: From your side you were ready as far as design and development part is concerned. So, going forward what kind of programs will you be targeting, if you can give a brief idea of the kind of programs that you will targeting?
A: The army requires 4,000 plus guns in the next 20-25 years. That is what is in their perspective plan. So, obviously even if we were to do half of them or one third of them it is a lot of guns and a lot of value. So, we are going to be there.
Q: The new defence policy explicitly says that if foreign guys want to come into India they will have to tie up with Indian companies like you. Going forward are you exploring joint ventures and tie ups with foreign companies?
A: We have joint ventures. We have a joint venture with Rafael, we have a joint venture with Elbit Systems, we are talking to three four other companies, AM General for example. The next thing we want to do is ammunition. So, yes, the days of imports are over for India. That is clear from the Prime Minister’s Make in India policy and defence minister’s new DPP 2016.
The import regime is over. We have a lot of things in the pipeline from the previous processes and now we have a new procurement policy. The challenge in front of the ministry of defence is how quickly they adopt themselves to the new policy.
Q: So, do we see the new joint ventures this year itself? A: Yes, you will see at least two or three new joint ventures announcements this year and formation this year.
Q: This is the platform, it has obviously got me excited. So, as far as the HUMVEE is concerned what can you tell us, when do we see production, will there be a new production line that will be set up here?
A: Yes, once we pass through the process of meeting qualitative requirements (QR) etc and that is all done and we get a cost number which we feel is competitive we will set up a production line

The company will also target an opportunity of 4,000 guns needed by the Army in the next 20-25 years, says Group's Chairman & Managing Director, Baba Kalyani.

Read more at: http://www.moneycontrol.com/news/business/likely-to-tie-uphumvee-keenjvs-baba-kalyani_6029201.html?utm_source=ref_article

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