India's R&D in Defence DRDO, PSUs and Private Sector

Indranil · Post by **Indranil** » 23 Jan 2016 03:27

A landmark move!

ramana · Post by **ramana** » 23 Jan 2016 04:04

Dr. K.V. Govindrajan was awarded for developing low weight Silicone rubber insulation with chopped carbon fiber reinforcement.

Good for rocket motor liner insulation.

Amazing journey in life.

member_29172 · Post by **member_29172** » 23 Jan 2016 06:12

srai wrote:^^^

US is a model of how superpowers operate. All major weapons systems they buy are from their own MIC, which are a massive part of the economy and have powerful political support behind them. A constant goal to be the top innovator in the world; everyone else relegated to emulators. If they buy anything from elsewhere, a huge percentage will be made in the US itself. Then when they export their wares, they influence policies of foreign nations through various intrusive contracts as part of deals; a dog lease if you will--long-one for best friends while shorter-ones for others. Nothing is sold for "free" so to speak

The american companies also milk the govt. cash cow ruthelessly. Even with the 700 billion dollar budget, a lot of the stuff they produce seems quite underwhelming. There are also stories of corruption and massive ineffiencies that barely come up in US media because americans like to pat themselves in the back and would close their own eyes to the shortcoming than correcting it.

Wonder what measures the Raksha Mantri here can take to avoid this.

arshyam · Post by **arshyam** » 24 Jan 2016 22:42

Not sure if this was posted.

Karan M · Post by **Karan M** » 24 Jan 2016 22:45

ramana wrote:Dr. K.V. Govindrajan was awarded for developing low weight Silicone rubber insulation with chopped carbon fiber reinforcement.

Good for rocket motor liner insulation.
Amazing journey in life.

Truly no? India has climbed to wherever it is, thanks to the efforts of so many otherwise unknown people, and the folks on the border holding the terrorists at bay. Meanwhile gasbag award returnees and worthless media types hog the airwaves, while countless engineers, doctors, and soldiers keep doing their tasks.

Karan M · Post by **Karan M** » 24 Jan 2016 22:50

arshyam wrote:Not sure if this was posted.

Arshyam, good stuff. This is the entire CNBC-TV18 system, a must watch IMHO.

https://www.youtube.com/watch?v=uJXna0D ... G_8liCe68h

Suresh S · Post by **Suresh S** » 24 Jan 2016 23:11

Karan M wrote:
ramana wrote:Dr. K.V. Govindrajan was awarded for developing low weight Silicone rubber insulation with chopped carbon fiber reinforcement.

Good for rocket motor liner insulation.
Amazing journey in life.
Truly no? India has climbed to wherever it is, thanks to the efforts of so many otherwise unknown people, and the folks on the border holding the terrorists at bay. Meanwhile gasbag award returnees and worthless media types hog the airwaves, while countless engineers, doctors, and soldiers keep doing their tasks.

Hit the nail on the head

Karan M · Post by **Karan M** » 26 Jan 2016 01:14

DRDO at Mysore Science Congress
http://www.drdo.gov.in/drdo/English/ind ... 012016.jsp

DRDO Pavilion (credit to Mrs Sastry)
https://www.youtube.com/watch?v=jSVvoL2wcbE

Zynda · Post by **Zynda** » 26 Jan 2016 10:23

Folks, all these tenders that are called from DRDO/HAL/NAL, especially involving defence items, can the participating agency have any foreign nationals with OCI card on payrolls and/or as consultants? Or is it similar to ITAR in US, where only US persons can participate?

Karan M · Post by **Karan M** » 26 Jan 2016 18:26

Zynda, get an answer from the horse's mouth. List here, some legwork may be required to get the right answers and a firm one.
http://www.drdo.gov.in/drdo/English/ind ... ontact.jsp

arshyam · Post by **arshyam** » 27 Jan 2016 20:41

Karan M wrote:Arshyam, good stuff. This is the entire CNBC-TV18 system, a must watch IMHO.

https://www.youtube.com/watch?v=uJXna0D ... G_8liCe68h

True, but not all of them are available outside of India for some reason. This Godrej episode was one of them.

Dileep · Post by **Dileep** » 28 Jan 2016 14:53

Our KB is majority owned by an OCI, and we had no problem winning tenders.

Zynda · Post by **Zynda** » 29 Jan 2016 09:42

^^ Dileep & Karan M, thanks for the response. I am trying to get some legal advise on the above. Will post here when I find the answer definitively.

VinodTK · Post by **VinodTK** » 30 Jan 2016 05:24

Zen Tech to produce customised simulators

Zen Technologies Ltd is all set to build customised solutions for Indian and global clients, leveraging its two decades of expertise in developing simulators for the security and defence sectors.

“Be it a Paris-type terrorist attack or the 26/11 one in Mumbai or unmanned aerial vehicle simulators, we have the confidence to build training simulators, especially combat training centres (CTCs) for the security forces,” said Ashok Atluri, Chairman and Managing Director of the Hyderabad-based listed company.
Product range

Zen Technologies, with a portfolio of 30 products, is ready to take both technological and financial risks to scale up. It recently tied up with Rockwell Collins of the US to provide key products to the Indian military.

The company sees immense scope for its technology, especially in view of the recent defence production policy initiatives of the Centre, which gives priority to indigenous technology development.

“We are well-positioned to take advantage of the policy,” Atluri said.

Since Zen Technologies has been taking technological and financial risks, it has emerged as a developer for customers than merely undertaking contract production for the Defence Research and Development Organisation.

“We expect to pursue about ₹7,000 crore potential orders in the next five years,” Atluri told Business Line.

The company has around ₹500-crore order book expected in the next 2-3 years. It is also probing export markets with customised solutions to West Asia and Europe. At present, it exports to a few African and South Asian nations.
Production facilities

At the company’s facilities at Maheswaram on the outskirts of Hyderabad, development work is in full swing on aviation simulators with focus on developing a full mission Unmanned Aerial Vehicle Simulator and Anti-Aircraft Air Defence Simulator (3AD Sim), the first of their kinds in India. It also has an expanding facility in Solan, Himachal Pradesh.

In its core area of design and manufacture of training simulators, which help in artificially creating combat scenarios for the armed forces, police etc, Zen Technologies has been successful in the supply of over 400 simulators to various customers.

Karan M · Post by **Karan M** » 30 Jan 2016 17:16

Another positive step.

LRDE's Coastal Surveillance Radar is apparently ready. Displayed at Republic Day.

A big thing since we are deploying huge numbers of such radars as versus the imported Israeli kit earlier.

http://www.thehindu.com/news/national/k ... 436668.ece
July 2015

Indigenous integrated coastal surveillance soon
S. Anandan

A chink in India’s coastal security armour is that unlike bigger vessels (300-tonne ones and above) that are mandatorily fitted with automatic identification system (AIS) — which provides for automatic locating and tracking — the thousands of smaller vessels operating along the country’s shores are largely unaccounted for, necessitating physical authentication of their identity.

This is set to be passé, if the multi-sensor network developed by the communication cluster laboratories of the Defence Research and Development Organisation (DRDO) is chosen to replace the predominantly Israeli sensor suite in the Coastal Surveillance Network steered by the Coast Guard during the project’s Phase-II expansion.

The fully indigenous network — known as the Integrated Coastal Surveillance System — capable of mounting real-time surface and subsurface surveillance over the coastal seas is in the final stages of pilot-testing and trials at coastal Kochi in Kerala, confirm defence sources.

The system has taken about four years to attain a certain level of maturity.

Assembly and trials

Dehradun-based Defence Electronics Application Laboratory (DEAL) has developed the Indian AIS while the coastal surveillance radar for the package has been developed by the Electronics and Radar Development Establishment (LRDE) in Bengaluru, and the electro-optical sight by the Instruments Research and Development Establishment (IRDE) in Dehradun. The Centre for Artificial Intelligence and Robotics (CAIR) in Bengaluru has developed the software and the Kochi-based Naval Physical and Oceanographic Laboratory (NPOL) has put together the underwater sensors (the diver detection system) besides coordinating the project assembly and trials.

Nearly 150 boats — in the under 20-tonne category — operating along the Kochi coast have been fitted with the Indian AIS (IAIS) for trials. Radars have been set up at Aroor, Malippuram, and Fort Kochi.

“The beauty of the project is that it’s all done in-house. The trials have given encouraging results, with just the fine-tuning left to be done now. The network can be scaled up for deployment along the country’s 7,500 km coastline,” revealed a top source.

“Given the asymmetric threats posed by smaller craft, a tracking system for vessels regardless of their size is a hugely positive development. Better still, if the system is indigenous, developed by DRDO labs and productionised for trials by the Machilipatnam unit of Bharat Electronics,” he added.

Once operational, the IAIS can be integrated with the IMO-mandated AIS. While the prototype of the IAIS made for trials cost about Rs.25,000 apiece, volume production will render it far cheaper and affordable to boatmen, said another official.

In return for equipping their boats with the IAIS, fishermen will get weather and fish shoal data from INCOIS (Indian National Centre for Ocean Information Services) relayed to the system, which will double up as a distress alert beacon, he pointed out.

Karan M · Post by **Karan M** » 30 Jan 2016 17:19

http://www.drdo.gov.in/drdo/whatsnew/DRDO-calendar.pdf

First pic of Himshakti - Mountain EW system.

gunjur · Post by **gunjur** » 01 Feb 2016 13:00

Hopefully the right thread (admins can move this to off topic thread if they feel so).

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I have started trading in stocks. A newbie to trading. Please let me know some indian defense related companies of which i can buy shares. Please note that my primary intention is not just making some quick buck of these(if i do make money, that would be an added bonus. More of a long term investor as far as defense is concerned).

I have purchased stocks of bharatforge and LnT (both in single digit) as of now. I would be more interested on buying shares of the specific company in the group which is into defense like Tata advanced systems rather than the generic tata group shares. Also i do not/can not invest huge amount in shares. An avg of 5k per month max.

Also am aware that any suggestions from brf folks are just that i.e. suggestions. The risks of buying those stocks would entirely rest on the purchaser. Basically i just need the names of the defense companies which are currently on the market (many might not even be on the market).

VinodTK · Post by **VinodTK** » 02 Feb 2016 04:48

Gunjur wrote:Hopefully the right thread (admins can move this to off topic thread if they feel so).

--------------------------------------

I have started trading in stocks. A newbie to trading. Please let me know some indian defense related companies of which i can buy shares. Please note that my primary intention is not just making some quick buck of these(if i do make money, that would be an added bonus. More of a long term investor as far as defense is concerned).

^^^^Really please move it to investments thread

shiv · Post by **shiv** » 02 Feb 2016 05:30

Karan M wrote:Another positive step.

LRDE's Coastal Surveillance Radar is apparently ready. Displayed at Republic Day.

[/quote]
Ah so that's what it is! I saw this thing whirling round and round in the parade telecast and wondered what it was

A Sharma · Post by **A Sharma** » 02 Feb 2016 18:42

DRDO Newsletter 2015 Anniversary Issue

VinodTK · Post by **VinodTK** » 03 Feb 2016 04:43

Boeing keen to make F/A-18 fighters in India: CEO Dennis A Muilenburg

NEW DELHI: Aircraft maker Boeing has offered to manufacture its F/A-18 fighter jets — the mainstay of the US navy — in India through the government's Make in India programme, taking another stab at winning a potential multi-billion contract from one of the world's biggest military spenders.

"We are taking a hard look at the opportunity for the F18 fighter jet as an area where we can build industrial capacity, supply chain partnerships, technical depth, design and manufacturing supply chain partnerships, technical depth, design and manufacturing capability in India, providing an operational capability that is useful for Indian defence forces," Boeing Chief Executive Officer Dennis A Muilenburg said in New Delhi on Tuesday.

"Make in India is an enabler aligned with that strategy," said Muilenburg.

The F/A-18 lost out in the government's medium multi-role fighter aircraft (MMRCA) procurement programme — designed to replace ageing Indian Air Force jets — to French company Dassault Aviation's Rafale fighter jets. But the Rafale deal for 36 planes, estimated to be worth $9 billion, has been stuck over negotiations over price.

Boeing's latest offer to help the government create an industrial ecosystem to build its fighter planes signals it sees an opportunity in the delays over the Rafale deal. Military officials and Defence Minister Manohar Parrikar have said the government is open to buying an alternative fighter jet.

"Our intent here is to build an industrial framework for the long run that builds on the aerospace investments being made not only by programme by programme, but also by long-term industrial capacity that is globally competitive," said Muilenburg, who is visiting India for the first time since becoming CEO of the $91-billion aerospace giant last July.

The government has long been looking to end its reliance on foreign arms makers and create a homegrown military manufacturing sector. The Make in India manufacturing programme is expected to be a springboard to these efforts. The F/A-18 Super Hornet is a twinengine, supersonic, all weather multi-role fighter jet capable of landing and taking off from an aircraft carrier, according to the Boeing website.
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Philip · Post by **Philip** » 04 Feb 2016 05:47

Aerospace crisis.How the DPSU's have been bullsh*tting us about the source of their profits.They soak uop huge advances from the GOI against orders and bank the moolah claiming the interest as "profits"! Oder books full but delivery of orders? That'sanothstory.

http://www.thehindu.com/news/national/d ... yndication

Delay in production, delivery plagues the units enjoying monopoly in defence aerospace sector.

The success of Make in India critically hinges on country’s success in creating a robust aerospace industry, but a vacuum occupies the core of the government-dominated sector. Classified official reports on the state of affairs in defence production and delivery in the aerospace sector present a revealing picture.

Official studies have been conducted in recent years into India’s ambition to emerge as a major aerospace manufacturer that can design and build its own aircraft and related systems. All those reports remain confidential, and the government has taken almost negligible action on them to improve the situation, according to an assessment by The Hindu.

The studies show that the Hindustan Aeronautics Ltd, Bharat Electronics Ltd, Bharat Dynamics Ltd and Mishra Dhatu Nigam Limited (MIDHANI) —all of them enjoying virtual monopoly in defence aerospace sector — have been booking profits over the years not from their businesses. Instead, they take huge advances from the military against future deliveries, earn interest on them, and show them as profits. Then they award a significant part of the so-called profit to their majority shareholder, the government.

With annual defence budget growing at a healthy rate, and defence forces under pressure to spend them within the financial year, it is now a well-established practice for them to give away significant advances to the defence PSUs, even if there is significant delay in production, and products are not delivered for years. That cycle is adding to what is plaguing the DPSUs, the reports point out.

“Although, the profits have been increasing, a major portion of the profit has been from ‘other income’ not related to aircraft repair, maintenance, manufacture/overhaul. Significant portion of the other income comprises the ‘negative’ financing cost due to the interest accrual on advances from Defence Customer for the huge order book,” says the latest report on aerospace sector, submitted in April 2014 and written by a team of officers led by Air Marshal M. Matheswaran.

“HAL is an engineering company in the aerospace sector. It should, by and large, make profits from manufacturing and sale of aeronautical products and allied services in MRO … HAL has very little incentive to create profits through quantity, quality and innovation,” the report says.

How it makes profit is an eye-opener. The HAL receives advance from the military, almost three times its annual turnover. In 2010-11, the financial turnover was a bit over Rs. 13,000 crore, but the order book was Rs. 68,265 crore, against which HAL took advance of Rs. 35,146 crore from its customers. On that advance, it earned an interest income of over Rs. 2,200 crore, and booked a profit after tax of Rs. 2,114 crore. That year, HAL paid the government, its majority shareholder, a dividend of Rs. 423.12 crore.

“HAL is not a financial institution that makes money from money; it is meant to be an aeronautics engineering company,” the Matheswaran report points out.

It points to “large scale contribution [more than 70 per cent] of other income [interest on advances etc.] in the profitability of the company. The company’s income has been rising mainly from non-core activities. In the last ten years, other income from interest etc. has grown nearly eight times whereas the net profit after tax has appreciated only 2.8 times,” the report says.

With a captive customer base, and no government demand on performance improvement, HAL has become an predominant assembler of systems for the Indian military. Its exports have remained negligible: In 2012-13 it exported just Rs. 382 crore worth of systems, the report points out.

The huge advances against future orders are collected at a time when DPSUs have order books that extend beyond 15 to 20 years. “In theory, at current rates of production and overhaul, HAL would need several decades just to meet the current order book,” the report says, even as it highlights the fact that HAL has stopped indicating its order books since 2010-11 in public reports.
Bharat Electronics Ltd
With over 10,000 employees, BDL is a Navratna DPSU since June 2007 and has nine production units and 31 manufacturing divisions. It produces electronic warfare systems, avionics components etc. for aircraft.

“Like HAL, Bharat Electronics Ltd also enjoys assured orders and large advances from MoD. Its sales/turnover have been rising consistently along with profits,” the report points out. More than 70 per cent of its income has been coming mainly from non-core activities. The report points out that BEL’s income from other sources, especially against advance taken from the military, almost doubled between 2010 and 2013. In 2012-13, other income of BEL stood at Rs. 723.35 crore.
Bharat Dynamics Ltd
A manufacturing base for guided weapons systems, BDL has been the prime production agency for the Integrated Guided Missile Development Programme.

“Like other DPSUs, the profitability of the company is mainly due to heavy advances received from MoD. In fact, other income of BDL has been more than the profit of the company.”

The report points out that the company has been making losses in its core activities and “has been showing profit only due to large order book & advances received from the Government.”

In 2013, the company had a turnover of Rs. 1,074.71 crore, had taken an advance of Rs. 4,899 crore from the government and earned almost Rs. 522 crore on it, and booked it as other income.

It also says that BDL is overbooked far beyond its capacity with the requirement of ATGM (anti-tank guided missile) and SAMs (surface to air missiles). It almost enjoys a monopoly in missiles production within India due to government restrictions. Against an annual turnover of just Rs. 1,100 crore the total value of AON (acceptance of necessity) with the company was over Rs. 35,000 crore.
Mishra Dhatu Nigam Limited
MIDHANI is equipped for metallurgical facilities to make super-alloys, titanium, special purpose steels etc. for aerospace, defence, atomic energy etc. “The financial analysis of the company for the last two financial years indicates increase in sales revenue and net profit. The profitability of MIDHANI like other DPSUs has a significant contribution of other income generated by the interest accrued on advances received from its customers,” the Matheswaran report says.

(Tomorrow: Part 2 — The secret recipe for success for Indian aerospace majors)

uddu · Post by **uddu** » 04 Feb 2016 08:02

^^^The import lobby at work. Tomorrows article will have suggestion on from where and all we can import. They are so predictable.

Sid · Post by **Sid** » 04 Feb 2016 08:47

^^This report was headed by Air Marshal M. Matheswaran (retd.), who never missed a chance to berate LCA/HAL/DRDO.

Recognizing his talents Reliance Defense Ltd. hired him as President of their aero business.

DexterM · Post by **DexterM** » 04 Feb 2016 09:24

>>classified official reports on the state of affairs in defence production and delivery in the aerospace sector present a revealing picture.
1. If it is classified, and MM is using privileged information to write this article and derive his ana-l-cyst, then is he violating OSA?
2. What specific portion of the crapticle has anything remotely related to that analysis he mentions?
3. Cash flow management is a key aspect of financial well-being of any corporation. Folks arguing that HAL is doing a bad job by managing its monies well are being foolish. If anything, they must focus on why additional monies were not being invested into additional R&D or associated labs or the expansion of manufacturing facilities.
4. Conflating HAL cash management with BDL's lack of manufacturing capacity is plain stupid.

With friends and advisors like this, the country will never miss any enemies.

Kailash · Post by **Kailash** » 04 Feb 2016 09:28

Divestment of these entities will surely help them become transparent. At AGMs, investors could come up with questions and scrutinize their accounts more. I am waiting for more IPOs for HAL and the likes this year. After all which investor doesn't love monopolies..

SSridhar · Post by **SSridhar** » 04 Feb 2016 09:50

There is no point in attacking the messenger, whatever may be his motives. The defence PSUs must answer the allegations made in order to shut the messenger's mouth. Unless and until they do it, the allegations would rankle, especially as we know how our state-controlled PSUs function. These allegations cannot remain unanswered. Obviously, this was an official study, whatever that means. Naturally, GoI must have elicited responses from these defence PSUs as the study is almost 2 years old. The Hindu must also publish those responses.

Kailash · Post by **Kailash** » 04 Feb 2016 10:11

^^^
+100 to that. I was amazed at the speed at which this article was discredited in this thread.

Aditya_V · Post by **Aditya_V** » 04 Feb 2016 10:29

SSridhar wrote:There is no point in attacking the messenger, whatever may be his motives. The defence PSUs must answer the allegations made in order to shut the messenger's mouth. Unless and until they do it, the allegations would rankle, especially as we know how our state-controlled PSUs function. These allegations cannot remain unanswered. Obviously, this was an official study, whatever that means. Naturally, GoI must have elicited responses from these defence PSUs as the study is almost 2 years old. The Hindu must also publish those responses.

SSridhar, However, some of what is written in the article is in a mentality of 7 year old. In fact it shows that is priced to MOD is pretty reasonable and DSPU's are not having any huge profits. There are issues however, where in the past stuff like TATRA trucks etc. were passed off as Indigenous production. and thee Political class in the country has got away scott free for decisions taken over 69 years.

But to compare HAL PAT with Interest Income and Advances is ridiculous. We cannot judge efficiency based on that. HAL cannot just sell its products to private customers and Foreign nations, it needs to toe the line on what MOD decides the price is. It cannot negotiate like Dassault, MIG or Sukhoi.

And all aviation/defence companies will be paid Advances, it is like telling a builder or contractor to build a house and expect payment after delivery. How many contractors would agree to that. Sure whatever excess cash flow they will do some temporary investments and earn some interest income. That article is a hit job, its time to call a spade a spade.

We need to evaluate the what is the in country capability these DSPU's have given us. We should not stall any acquisitions already in place. The MOD personal, Defense personal, corrupt journalists, politicians who supported items like TATRA imports some of them who supposedly saints need to be hauled over the coals especially those who are retired over past decisions.

The last thing we want is in service people to be distracted and fight these issues while moving focus away from increasing current efficiency.

Aditya G · Post by **Aditya G** » 04 Feb 2016 11:46

Aditya_V wrote:....And all aviation/defence companies will be paid Advances, it is like telling a builder or contractor to build a house and expect payment after delivery. How many contractors would agree to that. Sure whatever excess cash flow they will do some temporary investments and earn some interest income. That article is a hit job, its time to call a spade a spade....

as per article DPSUs benefit from advances made without meeting project milestones:

... defence forces under pressure to spend them within the financial year, it is now a well-established practice for them to give away significant advances to the defence PSUs, even if there is significant delay in production, and products are not delivered for years.

Aditya_V · Post by **Aditya_V** » 04 Feb 2016 14:10

So rather than surrender the fund sto MOF, MOD pays advances to DSPU, is this pressure only on DSPU's or Other programmes. There a lot of delays in Defense sector, but I am sure we are paying similar advances to Foreign private Companies as well.

So article is saying if a program me is a bit delayed- stop the funding and close the programme? Given the state of Economy and Massive Budget deficits , returning the Funds back to MOF and hoping it will be available will terminate many a programme. Then we must only import from USA for C-130, Chinook, Apache, C-17 etc at inflated prices where they who would have invested heavily tolerated delays in thier programmes, tech would have matured. Even P-8I - 737 has been in service for donkey years, the software is going through iterations.

Not saying DSPU's are perfect or there is no scope for improvement- infact we all know there are is a huge scope for improvement, but that judging HAL efficiency by PAT VS other income is ridiculous.

This particular article is trying to just get public perception in favour of 189 Rafales as opposed to 106 LCA's which has happened post May 2014. This seems to targeting HAL suddenly in Feb 2016 since LCA is goign to see the light of day.

The way the article is presented, please go through it again comparing, Turnover, Advance From Defense Customers, Other Income, Income from Interest, PAT and Other Income. It is very absurd for the following reasons

The inference from this that these "ADVANCES" are just sitting in Bank FD's and earning interest for DSPU's and look how cleverly rather than comparing with PBT- author puts PAT, and look how only certain years have been cherry picked. Capital assets with long programmes don't have advances sitting with DSPU's they need to spent. For example, HAL for LCA will continue to classify money received from MOD for orders as "Advance" until LCA are delivered but would have spent money on to adancces to Vendors, production capacity, buying GE404 IN 20 engines etc. Similarly for Su-30 MKI aircraft.

It is absurd to talk about profitability vs efficiency for these organisations when their pricing and almost everything is controlled by MOD. Their value is the capability they provide for the country which has long history of dealing with Foreign Governments and Foreign Private Companies for imports of Barretta sub machine guns to Agusta Westland to C-17's.

Mishra Dhatu Nigam Limited
MIDHANI is equipped for metallurgical facilities to make super-alloys, titanium, special purpose steels etc. for aerospace, defence, atomic energy etc. “The financial analysis of the company for the last two financial years indicates increase in sales revenue and net profit. The profitability of MIDHANI like other DPSUs has a significant contribution of other income generated by the interest accrued on advances received from its customers,” the Matheswaran report says.

Some these projects would need secure cash flows, there cannot be uncertainty here, especially when MOF babus are under pressure to cut Budget defecits. It is like expecting a steel mill stop, let everything cool down and start at whims and fancies. There will be advances, these will be spent over time, some of these will be used to earn some monies. Nothing wrong, especially when the margins of DSPU's are kept at a minumum by the Government and there is not much freedom for them to invest in R&D programmes, hire personal etc.

Josy Josesph and the Hindu management having written and published such an article must now prove that Lockheed martin does not receive any funding for R&D or receives all monies only after delivery if they have any credibility left.

JayS · Post by **JayS** » 04 Feb 2016 14:47

GoI money is going back to GoI. Why anyone should have takleef for that?? OTOH if the advances are stopped, how will DPSU start investments on long lead items. It seems to be a better situation for all when there is money available for DPSUs to start work on anything without waiting for funding to get approved. Already there is so much less being spent on MIC and MoD waits for clearing of files from MoF all the time. I do agree that this money should be invested back in RnD in the company itself rather than giving out dividends. The DPSUs can be smart here. But I guess, if GoI arm-twists them to surrender money to spend on some populist 'yojana', or to balance the money syphoned off to swiss bank, then there isn't much the management of DPSUs could do much. All in all, I don't see the point of the article unless there is some syphoning off of the money or such scam.

ramana · Post by **ramana** » 04 Feb 2016 22:01

AM^2 types have problem with that. They want to keep it in their hands.

Anyone seen the BOD of HAL etc., All are govt. appointees serving or retired officials.

But do agree there is a need to unjam the production floors.
The miniscule production output is not confidence enduring.

SSridhar · Post by **SSridhar** » 05 Feb 2016 15:40

HAL’s import, assemble, supply ‘model’ - Josy Joseph, The Hindu

The Ravindra Gupta Task Force Report on Defence Modernisation and Self Reliance submitted its report in September 2012, officially recording that the Hindustan Aeronautics Limited, India’s aerospace giant, has been importing most of its raw material from abroad, assembling them and supplying finished products to the Indian military. And that it has failed to create a robust supply network of domestic companies and R&D capabilities.

Of the total raw material consumption of HAL, the import component has been going up over the years. Between 2000-01 and 2010-11, it was always above 77.3 per cent. And in 2009-10 and 2010-11 it went up further to 92.6 and 95.4 per cent respectively.

Over the last decade, as HAL grew exponentially, its total raw material consumption was worth Rs. 12,280 crore in 2010-11. The indigenous component was just Rs. 565 crore, which was just 4.6 per cent of the total consumption as opposed to 15.8 per cent in 2000-01, the Task Force Report pointed out.

How did HAL react to the Task Force concerns? Air Marshal Matheswaran’s report points out that the annual reports of HAL for 2011-12 and 2012-13 omit the details of imports after the Task Force report. The report pointed out that the figures available from the Task Force and other sources show that “These figures reiterate the window-dressing that ‘indigenisation’ actually has become in many DPSUs/PSUs.”

“HAL has been an assembler, in essence, of SKD and CKD [semi knock down and completely knock down] kits for engines and aircraft for six decades. Much of this is dependent on component, sub component, engine and airframe assemblies manufactured under licence. Hence it could actually be thought of as a ‘licence raj’,” the Matheswaran report says. It points out that the import content of HAL for materials and spares amounts to a major portion of its turnover itself.

Little indigenisation

“HAL’s model ... has resulted in very little indigenisation, less than expected ancillary job and revenue generation within India, besides inadequate vendor development. Along with scanty vendor development in terms of true value and criticality of product to the aircraft itself, there is negligible impact on skill development within the DPSU/PSU,” the report points out.

Examining the 2010-11 performance of HAL, the report points out that the company’s turnover was Rs. 13,115.5 crore and the total consumption was Rs. 12,280.2 crore. Of the total consumption “Rs. 11,715.1 crore [i.e. 95.4 per cent] went abroad towards imports and can be said to be towards profits that foreign OEMs, vendors and MRO services would make there from,” the report says.

“Although 10 Research and Development centres have been in existence for a long period of time at various divisions of HAL, their contribution towards self reliance is negligible,” the report says. Most of these centres spend most of their time resolving basic transfer of technology implementation issues. Resultantly, HAL has come to be fully dependent on imported items.

Aditya_V · Post by **Aditya_V** » 05 Feb 2016 15:58

This is a more valid report how so called offset policy and some Indegensiation was a joke. It seems Su-30MKI, and other TOT deals, ALH engine etc leave a large scope for improvement. Hopefully this is corrected in future programmes.

Gyan · Post by **Gyan** » 05 Feb 2016 16:15

Same is the situation with BEL and BDL. (except for DRDO products)

Karan M · Post by **Karan M** » 05 Feb 2016 16:24

SSridhar wrote:There is no point in attacking the messenger, whatever may be his motives. The defence PSUs must answer the allegations made in order to shut the messenger's mouth. Unless and until they do it, the allegations would rankle, especially as we know how our state-controlled PSUs function. These allegations cannot remain unanswered. Obviously, this was an official study, whatever that means. Naturally, GoI must have elicited responses from these defence PSUs as the study is almost 2 years old. The Hindu must also publish those responses.

SSridhar, I am afraid it is not that simple. People like M2 enjoy a privileged space in the Indian ecosystem. They can accuse, berate, scold all in public. Their victims, cannot even reply openly lest it cause further delays in key programs and some projects suddenly discover the "endless trials" dictum. There is also an element of capriciousness that the very same folks who constantly berate and hector all other organizations get very upset if civilians question their actions & criticize it as IAS/babu/insert pejorative meddling.

Unfortunately, more and more, folks from the civilian side are beginning to resent this and regard it as barely disguised attempts to land high powered trophy positions in DPSUs.

However, within the GOI, responses are now being given back. Two examples here are worth noting - again from open media reports. The IAF attempted to shut down HAL's HTT-40. This while M2 above was giving reports of how HAL never does anything on its own and is addicted to its licensing model. The MOD sided with HAL and the HTT-40 continues. IAF made claims that HAL et al were responsible for its poor state of serviceability. HAL had a rejoinder that IAF was not ordering enough spares and countered with a statement that if needed HAL was ready to offer PBL, and we now had reports leaking from MOD on how IAF was keen on maintaining its privileged BRD empire and ensuring its interests were served.

Even after the Pathankot attack, we saw the vituperative vitriol which some gents put out & the manner in which even a person as senior as the NSA was attacked by folks. Media was able to access readily available folks in the services who were putting out claims like "worst planned op", its all the fault of the civilians etc.

In short, this turf war business being exacerbated by some gentlemen who decide to non stop attack everyone else, without introspecting the challenges caused by their own organizations (an omerta there) is not helping things. More & more the perception gaining ground is not to give way to "unreasonable" demands. This has important ramifications in that with the PSUs at least there is some element of MOD control. The entities seeking to supplant them & aiding & abetting such planted articles to drive the feud further, once they are ensconced are so powerful they will further cause issues for national aims.

At the end of the day, this is all the fault of a weak and directionless MOD in the past which operated in its own benefit. It neither devoted sufficient care to empowering the DPSUs or meeting the demands of the services. Its perceived weakness allows people to act in this manner.

What it has done is ensure that its people fight with each other in the most petty and unbecoming manner, whilst issues are left to fester.

Gyan · Post by **Gyan** » 05 Feb 2016 16:59

Both sides, HAL and IAF are equally dirty in turf war. They both want to rely on imports but "from their own preferred source". HAL has not even bothered to start screw driver assembly of Shakti engine of ALH. For HTT-40, if we list component wise, hardly any important component will be indigenous. Al-55 engine is supposedly (fake) JV in which we will import first 100, then SKD 100, then CKD 100 thereafter phase wise indigenization even thought the requirement will hardly ever go beyond 100-150 engines.

JayS · Post by **JayS** » 05 Feb 2016 17:46

One query regarding this raw material import by HAL. Isn't HAL is bound by contract to procure raw material from Russian suppliers only for Su-30 even when they manufacture the components from scratch in-house??

Neela · Post by **Neela** » 05 Feb 2016 17:48

Boost to Make in India: HAL Rolls-out HTT-40 Prototype

Bengaluru February 2, 2016:

HAL has rolled-out the first prototype of HTT-40 with the aircraft sporting all the aircraft lights and powered on cockpit. Mr. T. Suvarna Raju, CMD, HAL said that the HTT-40 prototype efforts symbolizes the renewed and revitalized proactive approach at HAL. “It is important that all of us work towards meeting deadlines by overcoming challenges to meet the expectations at various levels. The project has managed to steer through the initial headwinds and now is going full throttle. There are plans to weaponize and optimize HTT-40 aircraft”, he added.