With 27 industrial licenses for manufacturing various defence equipments for Army, Navy and Air Force, Reliance Infra (RInfra) is confident of becoming one of the leading defence companies in India, its Chairman Anil Ambani said on Monday at an analysts meet.
The Anil Ambani led Reliance Group held an “Analysts Meet” on February 27 in Mumbai where over 80 analysts from India’s leading brokerage houses were briefed by the Reliance Group Chairman Anil D. Ambani on the defence business plans of the group.
Speaking to DefenceAviationPost.com, a leading brokerage house said that RInfra has already created sufficient facilities across the defence chain, be it land systems, aerospace or the shipbuilding/naval facilities. The company in a short span of 13 months starting January 2016 has made significant strides.
|India And The Defence Market|
|· The global defence market is estimated at USD 1800 Billion.|
|· India with a spending of USD 51 Billion in the year 2016 has moved up to 4th position from 6th position in the year 2015.|
|· Indian Defence budget is Rs. 2,62,000 Crore for FY 2017-18, an increase of 5% over the last year budget.|
|· The capital acquisitions of defence hardware in next 10 years is expected to be approx. Rs 15 Lakh Crore (Rs 1 Lakh Crore per annum)|
|· Out of this Rs 15 lakh crore, the programs and opportunities in the Indian Aerospace are pegged at Rs 5,20,000 Crore; Naval – Rs 3,50,000 Crore; Land systems – Rs 6,00,000 Crore and Security space will comprise opportunities for Rs 30,000 Crore in the next 10 years.|
|· India is the largest importer of defence products accounting for 14% of the total global imports in the year 2016.|
|· Currently, about 70% of the Indian defence procurements are imported.|
|· India will have Rs. 86,000 Cr of defence expenditure in the year 2017-18.|
|· This will offer large opportunities for Indian Private Sector Defence Companies, given renewed thrust by Government of India towards “Make in India” in the Defence sector.|
Briefing the investors about the progress on Reliance Defence Business, the investors were informed that the company has acquired management control of Pipavav Defence Offshore and Engineering Company Limited (PDOECL) now renamed as Reliance Defence and Engineering Limited (RDEL).
A detailed presentation on the company’s defence business segments was made by Rajesh Dhingra, CEO, Reliance Defence to the investors.
With the largest Dry Dock in India, investors were informed that Reliance Shipyard at Pipavav in Gujarat presently has world class infrastructure facility to undertake all types of construction / refit / life cycle support of Warships, Submarines, Commercial vessels (including large bulk carriers), Oil & Gas platforms / rigs, he added.
At 27, RInfra has the highest number of industrial licenses for any Defence Company in India. It has also formed several strategic partnerships and Joint Ventures with global defence majors. It has signed an agreement with Dassault Aviation, France, to be the key offset partner for 36 Rafael Aircraft contract and has the largest offset contract in the history of India at approx. Rs 30,000 Crore.
The investors were also informed that Reliance Shipyard (RDEL) being selected by U.S. Navy to provide services to its 7th Fleet consisting of more than 100 ships. In January 2017, RDEL has signed a contract to build 14 Fast Patrol Vessels (FPVs) for Indian Coast Guard. It has signed strategic partnership with Antonov, Ukraine for Transport Aircraft.
Informing the investors of the opportunities and programs, RInfra said that more than Rs 5,00,000 Crore of programs are expected to awarded in the next 15 years in theIndian Aerospace.
Stating that Reliance Defence has already taken a lead in the Aerospace segment with the Rafale Offset Contract, Rinfra informed investors that this is the largest ever in India and will form the nucleus of Aerospace eco-system in the country.
Dassault Reliance Aerospace Limited, a JV Company with Reliance holding a stake of 51% is to be a key player along with more than 100 SMEs & MSMEs in meeting the offset obligation of approx. Rs 30,000 Crore for “Rafael 36” contract.
Dassault Reliance JV will provide Performance Based Logistics for 50 years (scope includes maintenance, repair, overhaul and upgrades) and it is expected to execute additional orders of Rafael Fighter Aircraft, if awarded, for Indian Armed Forces under “Make in India”.
Briefing analysts on Offset Export opportunities, RInfra’s presentation stated that offset obligations are an integral part of the defence contracts and prevalent in many counties including India.
Offset obligations ensure exports from India and is instrumental in creating a defence eco-system in the country. Currently, the overall India Offset opportunities is in excess of Rs. 77,000 Crore.
In its presentation, RInfra also gave details on the Naval & Commercial Ship Building and Oil & Gas opportunities that exist for Reliance Defence & Engineering Limited (RDEL) at Pipavav
Investors were told that the naval defence market size is likely to be more than Rs. 3,50,000 Crore in the next 15 years and Reliance Shipyard at Pipavav has created world-class infrastructure facilities including:
- Total Assets of about Rs 10,000 Crore
- Largest Dry Dock of India (size – 662 m x 65 m) with capacity of more than the combined capacities of all other dry docks in the country.
- The Shipyard has two Goliath cranes of 600 tons each, with lifting capacity of 1,200 Tons in tandem. This results in faster construction of ships / submarines.
- With the modular and integrated Ship Building Technology, it has the capability to undertake all types of construction / refit / life cycle support of Warships, Submarines, Commercial vessels (including large bulk carriers), Oil & Gas platforms / rigs.
- Currently, Reliance Shipyard is the only Shipyard in India capable of building a new Aircraft Carrier of 65,000 Ton and above.
The Shipyard is building five Naval Offshore Patrol Vessels (NOPV) for Indian Navy. Reliance Shipyard is the first shipyard to be awarded warship contract by Indian Navy.
In January 2017, RDEL has signed contracts with Indian Coast Guard to build of 14 Fast Patrol Vessels (FPVs).
Reliance Shipyard is the first Shipyard in India to be selected by U.S. Navy. The Master Ship Repair Agreement (MSRA) has been signed in Jan 2017. The scope includes complex repair and alteration for more than 100 ships of 7th Fleet of U.S. Navy. RDEL has strategic partnerships with the global majors like, DCNS, SAAB, SAFRAN and Thales.
RInfra also briefed investors on the Land Systems & Integrated Security Systems segment that focuses on, Small Arms, Ammunition, Artillery Guns, Air Defence Guns, Future Ready Combat Vehicles and Anti Tank Missiles and Upgrading of Tanks. This Integrated Security vertical, as per RInfra will focus on Border Security, Air field security and security of critical / sensitive installations / assets across the country.
The Reliance – Rafael (Israel) JV that has been incorporated will focus on air defence systems and strategic aerostat solutions. The market for this segment is likely to be approx. Rs. 60,000 Crore in India, in the next 15 years.
The defence Land Systems (primarily supply to Indian and security solutions) opportunity is likely to be approx. Rs. 6,70,000 Crore in the next 15 years.
Defence Systems and Technologies
Defence Systems and Technology caters to common technology / equipments across all the defence segments namely Army, Navy and Air Force. The technologies are used to build various common equipments such as Radars, Electro-optics, C4I system (Command, Control, Communications, Computers, and Intelligence), Underwater systems, Missiles and Guided Weapons, Avionics, Communication and Electronic Warfare.
It’s a high value, complex and high technology segment that requires highly skilled intellectual capital for implementation and IPR from global OEMs.
RInfra said Reliance Defence Systems & Tech Limited (RDST) already functional at Bangaluru will be developing the above said systems / technologies.
India’s Defence Programs and Reliance Defence
- The Indian defence business opportunities is estimated at Rs 15 Lakh Crores over a 15 year period.
- Currently, the offset export opportunity is estimated at Rs 77,000 Crore.
- Government of India has undertaken substantial changes in the defence policies with a specific focus on “Make in India” thereby creating a conducive business environment for Private Sector participation for capability and capacity creation / utilization.
- RInfra is committed to develop a robust defence business contributing significantly to the national security and to be self-reliant in defence segment.
- RInfra is confident of becoming one of the leading Defence Companies in India.
- All the defence businesses will be housed under RInfra.
- The Defence business is expected to become a leading business vertical of RInfra.
|Highlights Of The Reliance Defence Analyst Meet|
|1. Defence will emerge the largest business of Reliance Group In the years to come|
|2. Rs 2 Lakh Crores worth of opportunities expected in next 5 years for Indian industry.|
|3. India will spend Rs. 86,000 Cr on purchase of new arms in 2017-18.|
|4. This shall offer large opportunities for Private sector, given renewed thrust by Government of India to “Make in India” in Defence sector|
|5. Defence is a low capital business with high turnover|
|6. In last 2 years, Reliance acquired Pipavav Shipyard, received 27 licenses and formed several partnerships and JVs with global defence majors.|
|7. Reliance Defence taken a lead in the Aerospace and Offset segment.|
|8. Rafale Offset Contract, biggest ever in India, to be the nucleus of Aerospace eco-system in the country.|
|9. Reliance – Rafale JV to create largest supply chain involving 300 – 400 small and medium enterprises..|
|10. Dassault Reliance JV opens up opportunities like, lifecycle support potential, additional orders for Rafael for Indian Armed Forces under “Make in India” and potential export orders.|
|11. Overall India Offset opportunities in excess of Rs. 77,000 Cr; peak obligation of Rs. 10,000 Cr. in 2018.|
|12. RDEL has best infrastructure in India with largest dry dock at Pipavav|
|13. In first two months of 2017, RDEL signed contracts with Coast Guard for 14 Fast Patrol Vessels (FPVs) and with US Navy for ship repairs for the Seventh Fleet.|
|14. RDEL only shipyard in India to be selected for Master Ship Repair Agreement (MSRA) by the US Navy, for 7th Fleet of over 100 Ships.|
|15. RDEL has partnerships with the global majors like, DCNS, SAAB, SAFRAN and Thales.|
|16. Business opportunity of over Rs. 3,50,000 Cr. in Naval in the next 15 years.|
|17. Reliance initiatives in 2017 to be focussed on creation of ecosystem for Land Systems after focussing on Naval and Aerospace segments in the first two years.|
|18. Focussing on, Small Arms, Ammunition, Artillery Guns, Air Defence Guns, Future Ready Combat Vehicles and Anti Tank Missiles and Upgrading of Tanks.|
|19. Army opportunity more than Rs. 6,00,000 Cr. in the next 15 years|
|20. Reliance Defence to have a separate strategic focus on common defence technologies like Radars, Electro-optics, C4I systesm, Underwater systems, Missiles and Guided Weapons, Avionics, Communication and Electronic Warfare.|
|21. Reliance Defence Technologies and Systems operational at Bangaluru.|
|22. Systems contribute higher in the value chain as compared to the platforms. Systems and technology refresh every 5 – 10 year as against platform life of 30-50 years.|
|23. Lifecycle cost of platforms 3 – 4 times the initial acquisition costs.|