October 2014 | Nithin Rao
Batting for defence
With India's defence market thrown open to private players, Tata Sons subsidiary Tata Advanced Systems, the leading aerostructures and defence systems contractor, seeks to leverage its experience of working with top international OEMs
The S-92 is a state-of-the-art helicopter, deployed around the globe for VIP transportation (including for heads of states and governments such as the US President). So when Sikorsky Aircraft, a subsidiary of American major United Technologies Corporation — and the producer of the versatile chopper — selected Tata Advanced Systems (TASL) as its joint venture partner for the manufacture of fuselage for its S-92 helicopters about five years ago, it was a major endorsement of the manufacturing capabilities and technical skills of this 100 percent subsidiary of Tata Sons.
|The Sikorsky S-92 facility at TASL’s Hyderabad unit|
Another facility, of the Hyderabad-based TASL-Sikorsky JV, which is a subsidiary of TASL, is an integrated fabrication facility where 4,000 unique parts for the S-92 fuselage are produced, and is the only one of its kind in the Indian private sector. Masood Hussainy, head, aerostructures division of TASL, says that the feedback from the client has been excellent. “The quality of the product we make in Hyderabad is in many ways better than the products they were getting from Japan,” he explains. “This is a testament to the kind of talent we have in India.”
The Hyderabad unit of TASL will supply approximately 47 cabins this year, a much higher number than that supplied from Japan. “The tolerances are very small, just the breadth of a human hair,” notes Mr Hussainy. “We have implemented the Six Sigma quality strategy in our factory. We are now at 4.8 Sigma and the errors are in mere decimals.” This has been achieved in just three years, a feat unheard of in the aerospace industry. “We have been recognised not just by the customer, but even by the American Helicopter Society, the premier society for vertical aircraft. We were given the international fellowship award in recognition of our quality and performance,” he adds.
Global single source
Today TASL is one of the largest private sector aerospace and defence systems companies in India, with partnerships and joint ventures with — besides Sikorsky Aircraft Corporation, Lockheed Martin Aeronautics and a few other leading aircraft, missile, radar and other defence manufacturers. It has state-of-the-art factories in Hyderabad and Delhi and plans to set up more to cater to the growing needs from OEMs. A profitable company, its current order book is worth about `40 billion.
|TASL recently signed an agreement with Pilatus Aircraft of Switzerland for the manufacture and supply of its PC-12 'green aircraft'|
Within a short span of five years, TASL has become a significant player in the global aerospace market, making Hyderabad a premier manufacturing destination for global OEMs. It has developed capabilities through the entire aerospace value chain from design to full aircraft assembly. Aerospace is only one of the three major verticals within the company, the others being defence systems and homeland security. Mr Singh says, “We have on hand more than a dozen projects in different areas. “Our objective is to use our capabilities, both in aerostructures and defence systems, sub-systems and integration, to be able to supply full platforms. In the long run we hope to be able to combine our expertise and put up the final assembly line for full platforms such as an aircraft.”
Mr Singh points out that the company’s strategy from the beginning has been to supply to aerospace and defence companies in Europe and the US, through long-term contracts with foreign defence OEMs. Consequently, 90 percent of its products are exported; TASL is not involved in sales to governments abroad, restricting itself — for the time being — to manufacturing, while selectively addressing requests for proposal (RFP) for the Indian market. The aerostructures vertical includes two joint ventures and has three plants in operation; and two more are being constructed. In the defence systems vertical, there are about half a dozen projects, all directly under TASL’s operations, which focus on missiles, optronics, unmanned aerial vehicles (UAVs), radars, command and control systems and homeland security.
Notes SK Mehta, head, defence systems division of TASL: “After tendering, we won a major order for the design and manufacture of combat management systems for the medium-range surface-to-air missile programme (MRSAM) from the Defence Research and Development Organisation, beating our rival, a public sector undertaking.”
TASL is also involved in the design and manufacture of mission control centres for the missile defence programme, and is also working on missile systems for the long-range surface-to-air missile programme.
According to Mr Mehta, for the MRSAM contract, it won for the crucial command and control system, which is the decision-making system. “The command and control system senses the threat, the radar tracks the aircraft or the missile, measures the distance, decides whether it is a ‘friend’ or ‘foe’, and then sends a command to the launcher,” he explains. When TASL realised that there were many components that could be produced internally instead of importing them, it set up an R&D centre in Delhi with a group of engineers, and is working on indigenising different parts, both for cost and strategic reasons.
In another highly confidential weapons integration project, which cannot be identified, TASL has been able to negotiate the source code from the international partner. “With this source code, we have already begun to develop products for Indian customers,” explains Mr Singh. “We trained our engineers at our partner’s overseas facility and are now jump-starting innovation.”
TASL is positioning itself as a ‘prime’ player — as against a sub-prime or a component maker — a company that takes the entire project risk. “In the aerostructures vertical, we have literally transplanted (or transitioned) plants from Japan, the US and the UK to India,” says Mr Singh. While cost reduction is a key factor for the international OEMs who shift their production to TASL’s factories, they are very demanding when it comes to quality and processes.
The capital-to-labour ratio in all aerostructure projects in the developed world is skewed towards capital, whereas in India the relatively lower labour costs gives it a competitive edge on this front. Aerospace majors around the world usually focus only on design and the final assembly of the aircraft, depending on the global supply chain for parts and components. They source these from the US, Europe, Japan, and now increasingly from TASL. “Our aim is to become a supplier of choice for these global OEMs,” remarks Mr Hussainy. The company lays great emphasis on systems and procedures. “We have consciously chosen to recruit a young workforce and train them to international standards. There is not much talent in the aerospace sector in India and we have to develop our own pool of talent.” TASL set up a training centre in Hyderabad and hired expatriates who had rich experience in working with global OEMs. “The average age of our employees is 24,” says Mr Hussainy. “They are fresh out of college and the foreign aerospace experts train them in Hyderabad.”
|Sukaran Singh, TASL, speaks about the liberalisation of the defence sector|
While TASL does engage in innovation and some development work, Mr Singh admits that doing pure R&D in defence is very difficult for a private company, which cannot invest large sums into R&D independent of the needs of the user. R&D is closely linked to the specific requirements of the end-user — the armed forces. “No one can spend billions of dollars in R&D in an industry where you are not sure whether the end-user will buy the product. Even in the US and Europe, the governments support the R&D initiatives of the private sector to a large extent.” Another side of the business that TASL has participated minimally, is in tendering for projects, either in India or abroad. While its products are destined for the defence forces in the US and Europe, the bidding is done by the OEMs who win the contracts. “Of course, we are looking at the domestic market in India, which is huge, but it will take a long time for large tenders to materialise,” Mr Singh adds.
With the expected opening up of the defence sector in India — the government wants to encourage the Indian private sector to take up more projects — TASL is keen to take up work for the armed forces. “There are opportunities in all the verticals that we operate in,” says Mr Singh. “We have been able to show our capabilities and have received a combination of export-based and domestic work in all the targeted sectors.”
TASL has a facility in Noida for the assembly of third-generation, image intensifier based night vision devices (NVD) in partnership with ITT Exelis, the largest NVD manufacturer in the US. TASL assembles NVDs for the US Army but its facility is open to the domestic market as well. Similarly, it assembles electro-optic pods for UAVs, for supply both domestically and for export. Transmit-receive modules, which are critical parts of modern radars, are also assembled by one of TASL’s subsidiaries for the export market. It is keen to supply them to the Indian forces, including the Navy.
Mr Singh says the company has already started answering RFP tenders and if it wins some of these, it would be in a position to produce a full platform (an aircraft or a radar system) for the Indian Defence Ministry. The main problem confronting the private sector in India is the uncertainty relating to orders and the length of the procurement cycle. “We have to take a call whether to put our resources into a specific project that has no certain end date. The longer the procurement cycle, the more the delays,” he notes.
Other Tata group companies are also expanding their presence in the defence sector. TASL works in cooperation with many of them, across both aerostructure and defence systems verticals. With the company gearing itself to produce a full platform — possibly an aircraft ready to take-off from its plant — this cooperation will surely increase in the coming days. ¨
Aerostructures: Smooth take-off
Their job was to mentor and train young Indian engineers and technicians, who had zero exposure to the aerospace sector. The foreign experts took up the ambitious project and within a span of a few months trained about 450 employees. Today, the aerostructures division has 600 highly trained personnel, whose average age is 24 years. They today constitute the young workforce of TASL’s aerostructures business, located in Hyderabad.
Within a short span of time, TASL has developed into a leading player with established capabilities. With three programmes in operation, and more than a thousand highly trained personnel, TASL is on its way towards becoming the global supplier of choice of aerospace OEMs.
The vertical includes two joint ventures — Tata Lockheed JV and Tata Sikorsky JV — and a fully-owned operating unit for helicopter fuselage assembly. Both these US-based aerospace giants entrusted the critical task of assembling helicopter fuselage (for the Sikorsky S-92 helicopters), integrating the detailed part manufacturing for aircraft and helicopters and assembly of the empennage (for Lockheed Martin’s C-130J aircraft) to TASL.
Sikorsky, for instance, had a partner unit in Japan, where the assembling of the fuselage of the helicopter was being done from 1992. Following the establishment of the Tata Sikorsky JV, there was a successful ‘transition’ of the plant and facility from Japan to India. In the case of Lockheed Martin’s C-130J, there was a successful transition of a plant in the US to India. Both the transitions have been smooth.
TASL has identified aerostructures as an area of strategic importance for the Tata group. And the company has been established as the lead entity for aerostructures. It is today the global single source for assembly of helicopters and fuselage for the Sikorsky S-92 helicopters and wire harness installations, for the assembly of empennage for the C-130J, and for the manufacture and assembly of Dornier 228NG aircraft body.
TASL today has capabilities across the value chain — design, engineering, detailed part manufacture and major structural assembly. And considering the excellent work that it has been doing for international OEMs, the aerostructures division is all set to take off on a new trajectory, ultimately producing a complete aircraft.
Defence: Hi-tech infrastructure
TASL and its subsidiaries are currently participating in three major Indian missile programmes for the defence forces and have created a development centre in Delhi to support missile systems among others. These missile projects include the design and manufacture of combat management systems (CMS) for the medium range surface-to-air missile (MRSAM) programme; the design and manufacture of mission control centres for the ballistic missile defence programme; and precision parts manufacturing such as rocket motor casing, control fins and thrust vector control systems for another Indian missile project.
The optronics unit has state-of-the-art infrastructure for the assembly and testing of complex electro-optic payloads for UAVs. It also has a facility for the assembly and testing of third-generation night vision devices in partnership with American major ITT Exelis.
The radars unit is also an important vertical for TASL, which had a mandate to create the necessary infrastructure and technology base for radar systems.
TASL has bid to build full radar systems with foreign technology collaborations. The company also has a 14,000 sqft manufacturing facility in Hyderabad, and some of the modules and sub-systems produced there are supplied to the Indian defence forces. TASL has entered into strategic partnerships with world-renowned radar manufacturers.
TASL has also built a state-of-the-art command and control centre in collaboration with partners that will bid to undertake systems integration of weapon systems onto naval warships for the Indian Navy.
Nations around the world are realising the importance of homeland security to protect critical assets, infrastructure and people. For TASL, homeland security is a strategic focus area.
In 2010, it set up a joint venture, TAS-AGT, which offers innovative technology solutions in the areas of critical infrastructure and border protection, urban security and surveillance, transportation, law enforcement and for ensuring adequate preparedness for natural disasters.