From Make In India To Making In India: Q And A With Baba Kalyani 

When most top Indian defence companies were seen vying for orders under the government’s new “Make In India” initiative, this company seemed in no rush, and continued to invest and innovate. Today, the Kalyani Group — flagship company, the Rs 4,000-crore Bharat Forge Ltd — boasts of having developed a highly sophisticated indigenous gun to enable our artillery force to fight Indian wars with Indian solutions. The gun has successfully completed trials in deserts and is now under trial in hilly terrain.

Meet the man behind the wheel at the Kalyani Group— chairman and managing director Babasaheb Neelkanth (Baba) Kalyani. Positioned 47th on the Forbes 2017 list of the 100 richest Indians, with a net worth of $3.13 billion (Rs 20,000 crore), Kalyani aims to make Bharat Forge one of the top three artillery gun manufacturers in the world. His company has tied up with Israel’s Elbit and Rafale to manufacture gun platforms and missiles, and has set up a greenfield facility in Hyderabad. Bharat Forge is working on five gun platforms and has developed small indigenous jet engines for drones. It is now working on jet engines for helicopters and aircrafts. He spoke to Anupama Airy on his company’s plans and strategies, and the road ahead.

Excerpts:

Give us a sense of the Kalyani Group’s existing and future defence product line and orders.

As a company, our engagement with defence has been more a natural progression that got created from the capabilities that we have… which is fundamentally understanding metallurgy, materials, metal forming, machining etc. So that’s the way we have ventured into defence. For many years, we have been suppliers of components for the defence industry — whether components for tanks or guns, or shells for artillery; we have been doing that for more than 30 years. It was only in the last four-five years that we said to ourselves that we had reached a stage where we could move from components to designing complete systems and we took up the challenge of doing this with an artillery gun.

That was a time when India’s premier defence R&D organisation, the DRDO, also came up their programme of developing an advanced artillery gun called ATAGS or the advanced towed artillery gun system. We participated in this programme with DRDO, and that proved to be very satisfying and successful, from how little time it took for us to implement and make a full gun, and of course now that it is under trial, we will see what happens. Initial summer trials are over, which were very successful; now the gun has gone for winter trials. So if all that goes well, there will be trials with the army. We are looking at timelines of induction in limited quantities in the next two years.

With the success of ATAGS, we have developed many more programmes of artillery, including ultra-light artillery. Some independently, and some with our joint venture partners.

How is your ultra-light gun different?

It is much lighter, as it is made with titanium. Since it is indigenous, it is more cost-effective. We will send this for firing trials somewhere between May and June. So we have developed a lot of capability ourselves in terms of design and manufacture of these kinds of products, and we have a whole plant to make this happen. I am very sure that our artillery product line, since you asked the question, is going to be a big area for us in the next few years. We hope that in the next five to seven years, we will also be a large exporter of products like this from India.

The second area that we have been working on is air defence systems. Of course, there we have a joint venture with Israel’s Rafale, and we have built a plant in Hyderabad to set up these air defence systems. We have also set up a technology centre to do research and innovate in this area.

So our concept has always been that we do not like the whole idea of just getting a transfer of technology and not understanding the “know why” of products. We like to know the “know why” and not just the “know how”. Which is why we have a lot of engineers in Hyderabad who are learning the know why of the air defence systems. That’s how you become self-sufficient in the future.

So you are saying that just imbibing technology is not enough, and for a secure future, we should be able to develop it?

Absolutely. This has huge implications in terms of current business and the future of any business. But more than anything else, we recently heard Israel’s Prime Minister Benjamin Netanyahu say that all technologies are now converging into one another. So defence technologies are now being used to grow rice, through precision agriculture. So there is a lot of multiplier effect that is going to get generated. It was amazing to hear PM Netanyahu say that Israel was able to build completely new businesses out of nothing but just knowledge and technology in 10 years. So this is India’s opportunity. This is what I was talking about earlier. If you can get people like this to come to India talking about technology, you can get ideas on how to use that technology, ideas to do something completely different from what you have been doing.

So, although we are looking at defence as an area where high technology will be used, I’m very sure that in less than five years, the same technology that we are trying to use in defence, we’ll find applications for it in agriculture, in health, in education — it could be anything. India, with its 1.4 billion people, has tremendous need for many of these things.

We’ve now developed a small jet engine. We designed it from scratch and we were successful with the very first attempt. Now we are building a bigger jet engine and we will keep developing new things. We believe in spiral technology development.

What is the category of the jet engine that you have developed?

This is a smaller engine (for UAVs—unmanned aerial vehicles — and drones), and has about 120kg thrust. We will now target a 400kg thrust, then we will go to a helicopter engine, which is a 1,100kg thrust.

What export markets are you targeting for your defence product line?

I think markets around South East Asia is a natural area for us. Even the Middle East is a market. But we have to go to markets where the government of India would allow Indian companies to export — the green channel countries, so the opportunities rest there. Plus you can also become a sub-supplier to the US and European OEMs (original equipment manufacturers) and defence companies, which is the largest defence market in the world.

Give us some numbers. How much is the defence product line presently contributing to your overall business, and how will it change going forward?

Presently, it is not very large. Our total defence business would be in the region of Rs 500 crore out of a total business of Rs 5,000-odd crore. So, 10 per cent. However, this is poised to go up in the next four years, while the journey would be faster if we get a breakthrough with one of the large artillery or missile projects.

Are you looking at expansion through the greenfield or brownfield route? Also what about the capital expenditure plans of the Kalyani Group?

We are looking at a combination of greenfield and brownfield expansion, focusing more on greenfield for capacity enhancement and new developments. See, after a long time we’re now seeing a very strong up-cycle of business. Ours is a very cyclical business. I think now we are in the up-cycle. Our normal capex has always been somewhere in the region of Rs 200-300 crore, which is largely equal to our depreciation. I think our capex for the next two or three years will be at least double of that.

Are you happy with the pace of the Make in India programme in the defence sector?

Very honestly, I would like to see it happen much faster, but I’m sure there are inherent issues. I don’t think anyone is purposely making it slow, and that’s why I like to see this more as a transition phase. At the end of the day, if an Indian company or an Indian person is able to develop something which is absolutely fantastic, I can’t see any reason why the system won’t take it.