Over the years the years, Indian auto component players have strongly integrated themselves into the global automotive supply chain primarily through their established manufacturing processes and world-class quality. They have been the torchbearers of Indian auto industry’s success story and a case study for our frugal manufacturing skills. The auto component sector has been the face of “Make in India” drive for more than a decade. Indian defence and aerospace sector is fast emerging as the sunrise sector and will take the centre stage in government’s “Make in India” drive. The government’s push for indigenization in defence and growing interest from global commercial aerospace players to source from Indian suppliers, have opened up multiple supply chain opportunities for Indian private players. We strongly feel, ACMA members are best positioned to grab these opportunities in the sector due to their proven manufacturing capabilities. The Indian auto component players have all the right ingredients in place to repeat the success story of automotive in aerospace & defence sector. This is the right time for the ACMA member companies to devise a clear strategy and come out with an action plan for the sector. In this context, KPMG had been appointed by ACMA to assist them in their endeavour towards diversification into aerospace & defence. Our efforts have received overwhelming support from the global aerospace & defence companies and have been successful in positioning ACMA as the right partner for the global OEMs and Tier1s who are looking at sourcing from India. We are glad to jointly release the Aerospace & Defence sector diversification report with KPMG. The report captures the sector’s landscape, opportunities, challenges and outlines the road map for the ACMA members who are aspiring to be a part of the sector. We hope you will find this document useful and informative in planning your next steps.

3. Glossary
OEM Original Equipment Manufacturer
JV J i V
CAGR Compound Annual Growth Rate
SEZ Special Economic ZoneJV Joint Venture
CIS Commonwealth of Independent States
MRO Maintenance Repair Overhaul
SEZ Special Economic Zone
HAL Hindustan Aeronautics Limited
NAL National Aerospace Laboratories
R&T Research & Technology
USD United States Dollar
UAV Unmanned Aerial Vehicle
MDL Mazagon Dock Limited
BEL Bharat Electronics Limited
DGCA Directorate General of Civil AviationUAV Unmanned Aerial Vehicle
AS Aerospace Standard
ISO International Organization for Standardization
MoU Memorandum of Understanding
DGCA Directorate General of Civil Aviation
MSME Micro Small and Medium Enterprises
MoCA Ministry of Civil Aviation
MoU Memorandum of Understanding
DRDO
Defence Research and Development
Organization
MoD Ministry of Defence
MRMR
Medium Range Maritime
Reconnaissance
DPSU Defence Public Sector Unit
ISRO Indian Space Research Organization
UTC United Technologies Corporation
MRMR Reconnaissance
MMRCA Medium Multi-Role Combat Aircraft
DG Director General
GE General Electric
FDI Foreign Direct Investment
IP International Protection
VAT Value Added Tax
NCR National Capital Region
DAC Defence Acquisition Council
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IP International Protection DAC Defence Acquisition Council

4. Glossary
RFI Request For Information
RFP Request For ProposalRFP Request For Proposal
ATGM Anti Tank Guided Missile
BRD Base Repair Depots
TEC Technical Evaluation Committee
DIPP Department of Industrial Policy and Promotion
CAD Computer Aided Design
CAM Computer Aided manufacturing
CNC Computer Numerical Control
ESD Electro Static Dischargeg
ToT Transfer of Technology
B2B Business to Business
PBT Profit Before TaxPBT Profit Before Tax
PAT Profit After Tax
EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization
NADCAP N ti l A d D f C t t A dit ti PNADCAP National Aerospace and Defense Contractors Accreditation Program
DGAQA Directorate General of Aeronautical Quality Assurance
NSIC National Small Industries Corporation
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LRU Line Replaceable Units

5. Foreword
Over the years the Indian auto component players have strongly integrated themselves into the global automotive supply chainOver the years, the Indian auto component players have strongly integrated themselves into the global automotive supply chain
primarily through their established manufacturing processes and world-class quality. They have been the torchbearers of Indian
auto industry’s success story and a case study for our frugal manufacturing skills. The auto component sector has been the face
of “Make in India” drive for more than a decade.
Indian defence and aerospace sector is fast emerging as the sunrise sector and will take the centre stage in government’s “Make
in India” drive. The government’s push for indigenization in defence and growing interest from global commercial aerospace
players to source from Indian suppliers, have opened up multiple supply chain opportunities for Indian private players.
W t l f l ACMA b b t iti d t b th t iti i th t d t th i f t iWe strongly feel, ACMA members are best positioned to grab these opportunities in the sector due to their proven manufacturing
capabilities. The Indian auto component players have all the right ingredients in place to repeat the success story of automotive
in aerospace & defence sector. This is the right time for the ACMA member companies to devise a clear strategy and come out
with an action plan for the sector.
In this context, KPMG had been appointed by ACMA to assist them in their endeavour towards diversification into aerospace &
defence. Our efforts have received overwhelming support from the global aerospace & defence companies and have been
successful in positioning ACMA as the right partner for the global OEMs and Tier1s who are looking at sourcing from India.
We are glad to jointly release the Aerospace & Defence sector diversification report with KPMG. The report captures the sector’s
landscape, opportunities, challenges and outlines the road map for the ACMA members who are aspiring to be a part of the
sector. We hope you will find this document useful and informative in planning your next steps.
F. R. Singhvi
Chairman
3© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Chairman
Aerospace, Defence & Railways, Committee, ACMA

6. Executive Summary
Government’s defence modernization push and “Make in India” drive have renewed the
f & d f t
1
focus on aerospace & defence sector
1
Global aerospace majors have started focusing on India to source components for their
I di d l b l i t
2
Indian companies are now looking at aerospace and defence sector as a long term
Indian and global requirements
3
sustainable opportunity
ACMA members, with their proven global manufacturing capabilities make ideal candidates
3
4
ACMA members may focus on commercial aerospace supply chain through global
t hi d t k t i ti h t d d f
as supply chain partners in aerospace and defence
5
4
partnerships and take an opportunistic approach towards defence5
ACMA should play a proactive role with central and state governments for policy reforms
related to aerospace and defence manufacturing in India6
There are significant regulatory, commercial and financial risks associated with aerospace
and defence that ACMA members must be aware of before taking the plunge
7
related to aerospace and defence manufacturing in India
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and defence that ACMA members must be aware of, before taking the plunge

7. Contents
M k t O i C i l & D fMarket Overview – Commercial aerospace & Defence
Opportunity Landscape for ACMA Players – Aerospace & Defence
Key considerations by aerospace OEMs & Tier1s when evaluating suppliers
Automotive Vs Aerospace
Key considerations by aerospace OEMs & Tier1s when evaluating suppliers
Sector specific challenges
Key activities by ADR committee & Outcome
Road Map & challenges during the journey
y y
Broad policy measures: To support aerospace component manufacturing
C di f l I di lCase studies of select Indian players
Overview of key India based Joint ventures in the sector
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International”), a Swiss entity. All rights reserved.

9. 1. Market Overview
(Commercial aerospace & Defence)
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10. Emerging Economies Set to Drive Future Growth
Today
28%
of worldwide
GDP
69%
of worldwide
population
(4 9 billion
39%
of world
passenger
39%
of world
fleet in serviceGDP (4.9 billion
people)
trips
fleet-in-service
2032
40%
67% 54% 51%40%
of worldwide GDP
of worldwide
population
(5.7 billion people)
54%
of world
passenger trips
51%
of world
fleet-in-service
Emerging economies (54 countries)g g ( )
All other countries (150 countries)
Emerging economies represents 50% of new aircraft demand over the next 20 years
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Source: Airbus report, Global Market Forecast 2013-2032

11. Global fleet Size to grow at a CAGR of ~ 4% during 2015-2034
Single-aisle airplanes around Asia-pacific region will continue to dominate the world’s fleet
Region Wise Increase in aircraft deliveries
during 2014-2034
2580 2660
38,050 New Aircraft Deliveries Globally during
2015-2034
4356021600
10000
15000
20000
[VALUE] [VALUE]
2580
0
5000
2520 5800
[VALUE]
740 670
1620 3800
2520 5800
2014 2034
Fleet Size
Source – Boeing Current Market Outlook 2015-2034
Note- The figures includes both passenger and freight aircrafts
2014 2034
Large Widebody Medium Widebody
Small Widebody Single Asile
Around 41% of the existing aircrafts will be replaced and 15% will be retained by 2034
providing significant scope for new component manufacturing players. As per recent
industry estimates, India & other emerging markets would generate aircraft demand
i d USD illi i 20
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estimated at USD 5 trillion in next 20 years

12. A significant pipeline of new models and production ramp up of existing
models offers significant opportunitiesg pp
Product lifecycle
R&T R&D OE Manufacturing Aftermarket
Value
Manufacturing
Product lifecycle
V
Manufacturing
peak
R&D definition
Extended support
‘tail’R&D definition tail
approx. 15 approx. 30 approx. 50
Platforms: A350
XWB
B787 A380 B777 A320 B747
B737
MaxB777X
Years
A320
Neo
XWB
C Series
C919
B747-8
B767
A330
B737 Classics A300/
A310
B757
B717
Max
JSF Typhoon
B777X
A340
A330
Neo
Many aircraft models are either entering the manufacturing stage or
undergoing a production ramp up. This would provide significant opportunities
for Indian companies to become part of the global supply chain
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for Indian companies to become part of the global supply chain

13. Major aerospace global players and their position in the supply chain
Aircraft owners
Commercial airlines and
Freight carriers
Maintenance, Repair and
Overhaul
Aircraft Leasors and/or
M t C iAircraft owners
OEMs
Engine manufacturers Aircraft manufacturers
New build
only
Freight carriers
TransDigm, AAR Corp, Heico,
Aviation Technical Services,
Timco Aviation Services,
StandardAero
Management Companies
Civil Aircraft and
Major Component
Manufacturers
Rolls-Royce, GE, P&W, CFMI,
IAE, Honeywell
Boeing, Airbus, Bombardier, Embraer,
Gulfstream, Cessna, Dassault
only
Tier 1
Systems Integration
Engines/
Actuators
Aero-
structures
Wheels,
brakes, and
landing gear
Flight
control
and avionics
Interiors
GKN, Spirit, Messier-Dowty,
B tti M itt
Goodrich, Safran
Rock ell Esterline
Zodiac, AIM,
Cobham DiehlAvio (now GE)
Supply chain management
and tooling manufacturer
Tier 2
Sub-assembly
manufacture Trac, Gardner, MB Aerospace, Shimtech,
Aernnova,
Triumph,
Latecoere,
Alenia Aernautica
Bugatti, Meggitt Rockwell, Esterline Cobham, DiehlAvio (now GE),
Volvo (now GKN)
MTU, MHI, Eaton,
Moog, Nexcelle,
AVIC
Principal component manufacturers
Pattonair, Wesco,
MB Aerospace
Tier 3
Make-to-print
components Sub-component and parts manufacture
p
Monogram, Panasonic, Parker, PFW,
Mitsubishi, Kidde, PPG, Fuji
Hamilton Sundstrand,
Doncasters,
Firth Rixson,
PCC
MB Aerospace
Brookhouse
Tier 4
Materials and Raw materials suppliers, casting and foundry
Target area for
ACMA Companies
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Materials and
processes
Manufacturers - Alcoa, Kaiser, Aubert & Duval. Distributors - Thyssenkrupp

14. Indian aerospace and defence sector stakeholders and their objectives
■ Domestic players
■ Public: DPSUs Ordnance
■ Foreign players
■ Public: DPSUs, Ordnance
Factories, DRDO, HAL, NAL, ISRO
■ Private : Tata, Mahindra, Samtel, L&T etc
■ Boeing, Airbus, Goodrich, Honeywell, UTC
, Thales, Rolls Royce, GE, Dassault etc
■ Capture opportunities arising out of ■ Capture rapidly emerging market
t itiincreased push for indigenization including
offsets and in domestic market
■ Technology acquisition and capability
development
opportunities
■ Leverage domestic industry competencies
■ Preserve competitive advantage
Industry
de e op e
Stakeholders
User Government
■ Ministry of Defence■ Defence, paramilitary and police forces y
■ Ministry of Civil Aviation
■ Defence, paramilitary and police forces
■ Civil aircraft operators/airlines
■ Private users ■ Development of competent domestic
industry
■ Defence Forces
■ Socio-economic benefits such as industrial
growth, employment generation, and
export growth
■ Growth of civil aviation and development
■ Defence Forces
– Increase Forces capabilities; Rapid
replenishment of depleting equipment
■ Civil aircraft operators/airlines
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■ Growth of civil aviation and development
related infrastructure
p
- Leverage the high growth in air travel

15. Currently presence of Indian private players is primarily limited to Tier-3
manufacturing, Engineering and R&D services domaing, g g
Aircraft and
subsystem
design
Avionics, critical
components
design
Simulation and
testing services
Component
design, IT
solutions
Design
Engineering and
IT solutions
P l t i Ai ft i t iC t
Castings, forging
s
Power, electronic
components, cabl
es, wiring
Sheet metal
components
Aircraft interior:
seats, windows, u
pholstery
Component
manufacture
(Tier-3)
Avionics & flightComponent
Hydraulic
systems
Electrical
systems
Avionics & flight
system
components
Component
manufacture
(Tier-2)
E i A i i & fli ht Wi & l di
Subsystems
Engine
manufacture
Avionics & flight
control systems
Wing & landing
gear assembly
y
manufacture
(Tier-1)
Full aircraft Aircraft testing Fuselage empenAircraft Full aircraft
assembly
Aircraft testing
and validation
Fuselage, empen
nage assembly
Aircraft
assembly
Presence of private playersp p y
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16. Existing & upcoming Aerospace & Defence SEZs/parks across the country
Upcoming major manufacturing clusters - India
• Air India MRO, Delhi
Air works Avionics repair • Maharashtra Airport• Air works Avionics repair
shop at Gurgaon
• Proposal to develop
Aerospace park & MRO hub
at Hisar
• Maharashtra Airport
Development Company (MADC)
SEZ at Nagpur
• 50 Acres Air India MRO
New Delhi
at Hisar
• NCR Region: Small
component manufacturing
facilities
Nagpur
Gujarat• 3,500 Acre SEZ at Dholera
• Adani Specialized A&D SEZ
at Mundra
• MRO Facilities: Upcoming
• Aerospace SEZ at Adibatla
• New defence SEZs & Clusters
planned at AP & Telangana
Belgaum
gp
Hyderabad
• MRO Facilities: Upcoming
Q t SEZ t B l (300
planned at AP & Telangana
• DRDO & ISRO facilities
Bangalore
Kochi
Chennai
• Quest SEZ at Belgaum (300
Acres)
• 1000 acres Aero park near BIAL
• Several small medium & largeSeveral small, medium & large
aerospace manufacturers• 250 acres Cochin
International Airport industry
park for aerospace
manufacturing
D f k i P l kk d
• Aerospace & defence SEZ
at Sriperumbudur
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Source – Secondary research, KPMG analysis
• Defence park in Palakkad
p

17. Global aerospace & defence majors and their activities in India (1/2)
S. No Company Country Year
Revenue
& PAT
Sales -
Defence Vs Activities in Indiap y y
(USD bn) Commercial
1 B i USA 1916 87 5 35 65
Recently won Naval & Airforce helicopter
orders
& &1 Boeing USA 1916 87, 5 35:65 R&D center in Bangalore & supplier
relationship with HAL, BEL, Dynamatics
and Tata
Sources over USD 400 million worth of
2
Airbus
Group
Europe 1969 79, 1.5 20:80
Sources over USD 400 million worth of
components & services from India and
plans to increase it to USD 2 billion
Strong presence in civil aviation andg p
participating key military programs
3
UTC
Aerospace
USA 1975 63, 6 19:81
Manufactures commercial aerospace
components in India (Bangalore). R&D
Aerospace
p ( g )
centre in Bangalore
4
Lockheed
M ti
USA 1995 45, 3 78:22
JV with Tata for mfg aero structures
Participating in rocket launchers4
Martin
USA 1995 45, 3 78:22 Participating in rocket launchers,
missiles, UAVs & radars programs
5
General
Dynamics
USA 1899 31, 2.5 60:40
Won its first contract in India in 2011 for
HAL - Hawk jet Trainer aircrafts
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y j
Source: SIPRI, media reports, company financials

18. Global aerospace & defence majors and their activities in India (2/2)
S. No Company Country Year
Revenue &
Sales -
Defence Vs Activities in IndiaS. No Company Country Year
PAT
Defence Vs
Commercial
Activities in India
6 BAE Systems UK 1999 28, 0.20 94:6
JV with HAL & participating in Indian
artillery and howitzer programsy g
7
Northrop
Grumman
USA 1994 25, 2.0 82:18
MoU with Bharat Electronics Limited
(BEL) and Pipavav Shipyard
8 Raytheon USA 1922 24, 2 93:07
Supplies radar systems for Indian P8I
Aircraft & thermal imaging fire control
system for T-72 tank upgrade
9 Finmeccanica Italy 1948 21, (-)0.6 50:50
Major defence deals like MRMR and Multi
Role Helicopters
y ( )
Role Helicopters
10 Thales France 2000 19, 0.8 55:45
Supplies sensors and electronic systems
for transportable radar systems order
(IAF) d S b i (I di
0 a es a ce 000 9, 0 8 55 5
(IAF) and Scorpene submarines (Indian
Navy)
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Source: SIPRI, media reports, company financials

19. Large number of Indian private players have entered the aerospace & defence
supply chain (1/2)pp y ( )
Private Players in A&D Products/Services offered
Aequs (Civil aero)
Precision Machining, sheet metal fabrication, assembly, special processing
and forging for aero structures
Alpha Design Technologies
(Defence)
Develops and manufactures radar systems, electronic warfare equipment,
mobile ATCs, Test stations, microwave components and related software
development
Astra Microwave Products
Ltd (Defence)
Develops and manufactures sub systems for RF and microwave systems
for defense, space and telecommunication industries
Avasarala Technologies Ltd
(Defence)
Manufactures products such as heat pipes, wave guides and mechanisms
for space sector
Bharat Forge
(Civil aero and defence)
Supplier of airframe, structural and engine parts
Dynamatic Technologies
(Civil aero & defence)
Design and build highly engineered products for defense and security
applications
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20. Large number of Indian private players have entered the aerospace & defence
supply chain (2/2)pp y ( )
Private Players in A&D Products/Services offered
Larsen & Toubro
(Defence)
Control Systems, Servo drives, Embedded systems, Custom-built
electronic products for aerospace & defence applications
Mahindra Aerospace
(Civil aero)
Aircraft and sheet metal, surface treatment and assembly manufacturing
capabilities
MKU (Defence)
Manufacture ballistic protection products, night sight devices and platform
protection for aircrafts, ships and land vehicles
Punj Lloyd (Defence) Defence land systems, aerospace, electronics and MRO
Sansera Aerospace
(Civil aero)
Ready to fit aerospace precision machined parts, seating systems, Cargo
systems, cargo system parts, lighting system parts, sensors and structures( )
Tata Advanced systems
Limited (TASL) Aerospace and aerostructure components
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(Civil aero & defence)

21. Strategic collaborations & JVs by Indian private companies to foray and
expand in aerospace & defence sector
Company Partnership Details/Investment Key clients
p p
Tata Sikorsky
JV - Aero structure assemblies for S-92
helicopters; Investment : ~ INR 250 cr
Sikorsky and clients in
US/Indian market
Tata
Lockheed
Martin
JV - Aero structures for C-130J aircrafts
Investment: ~ 200 cr
Lockheed and its clients
in US market
Dynamatics
Spirit
Aerosystem,
Boeing
MoU - Manufacture aero structure assemblies
Boeing, Airbus, Bell
Helicopters
Boeing
p
Aequs
SAAB,
Magellan,
S tf
JV - Aerospace surface treatment solutions
and manufacturing aero structures
GE, Magellan Aerospace,
Rolls Royce, Honeywell,
G d i h d E tSetforge
and manufacturing aero structures
Goodrich and Eaton
Mahindra
Aerospace
Gipps Aero,
Aerostaff
Acquisition - Aero structure components to
global aerospace GE (Aerostructures)
Aerospace
Australia Expects USD 300 mn in revenue in 3-4 years
Bharat Forge Safran
MoU - Forged and machined components
Expects to generate USD 100 mn in 4 5 years
Safran affiliates and
clients
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Expects to generate USD 100 mn in 4-5 years clients

23. 2a Opportunity landscape for ACMA2a. Opportunity landscape for ACMA
players
(Aerospace - Commercial)(Aerospace - Commercial)
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International”), a Swiss entity. All rights reserved.

24. Current Indian aerospace landscape & growing opportunities
Aerospace and defence is one of the focus sectors underp
central govt’s “Make in India” initiative
Following the state of Karnataka, the state governments of
AP Telangana Tamil Nadu Punjab Maharashtra MP &
Increasing focus by
the government
AP, Telangana, Tamil Nadu, Punjab, Maharashtra, MP &
Gujarat are coming out with similar aerospace and defence
policies
Global majors such as UTC, Sirkosky, Lockheed Martin,
Rolls Royce Moog etc have set up manufacturing facilities
Investments by global
Rolls Royce, Moog etc have set up manufacturing facilities
and developing the supply chain in India for their global
requirements
y g
OEMs and Tier 1
players in India
& fAerospace & defence majors such as Airbus, Boeing, Bell
Helicopters, Sirkosky, GKN, Rolls Royce etc. have significant
plans to increase their sourcing volume from India
India gradually being
seen as a favourable
sourcing base
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International”), a Swiss entity. All rights reserved.

25. Commercial Aerospace – Emerging opportunity for auto component
playersplayers
Global aerospace OEMs and Tier 1s are increasingly looking at India to source for their
global aircraft programsglobal aircraft programs
Risk mitigation
• OEMs and Tier1s source more than 70% of their systems from US &
European suppliersRisk mitigation
of supply chain
p pp
• The system integrators and Tier1s are keen to de-risk and diversify by
developing their suppliers in Asian regions (Especially India and China)
Driving cost
effectiveness in
• India is perceived globally as a low cost yet high quality base for
manufacturing productseffectiveness in
the supply
chain
manufacturing products
• Global OEMs and Tier1s are increasingly looking at India to drive down
costs
Offsets
• Offset opportunities arise from commercial as well as military aircraft
purchases by the government
(Defence &
Commercial)
purchases by the government
• Defence offsets can be discharged both by defence and commercial
aerospace sourcing
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International”), a Swiss entity. All rights reserved.

26. Aerospace OEMs want to focus more on system integration and hence
actively looking for credible partners to build the sub assembliesy g p
TodayPast The “New Aggregators”
L l
Platform
Assembly
Aggregators
like Airbus,
System Integrators
Large-scale
Integration
Value-added Parts
TIER 1
RSP*
Boeing etc.
Make-to-print Parts
and Assemblies
and Assemblies
Positioning of Indian
Suppliers
Positioning of Indian
Suppliers
Raw Materials
Suppliers
1.Fewer, but still many
direct partners
2 Limited role for
1.Many direct partners
2.No real role for “integrators”
3 Design to print of parts and
1. More of Large direct risk sharing partners
• Strong ties
• Sharing capital expenditure2.Limited role for
“integrators”
3.Design to print of parts and
sub-assemblies
Sharing capital expenditure,
development costs and risk with
aggregators
2.A real global extended enterprise
3.Extensive role for “integrators”
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g
* Risk Sharing Partners

27. Opportunity for ACMA members – Select facts
Airbus is planning to increase its cumulative sourcing from India to USD 2 bn by 2020. 85% of
thi ill b i l
a.
this will be commercial aerospace
Airbus is planning to add new suppliers from India this year and looking at developing a
supplier base to support its recent win with Indian Airforce for supplying transport aircrafts
b.
supplier base to support its recent win with Indian Airforce for supplying transport aircrafts
Boeing is looking at fulfilling their offset obligations (more than USD 1 bn) through commercial
aerospace sourcing
c.
aerospace sourcing
Bell Helicopters has recently signed an order with Dynamatics for supplying major aero
structures for its civil helicopters and keen to repeat this success with other capable players
d.
structures for its civil helicopters and keen to repeat this success with other capable players
UTC Aerospace is looking at increasing their supplier base from India for their global
programs
e.
programs
GKN Aerospace is planning to increase its sourcing from the low cost countries to USD 450
mn from 150 mn by 2019
f.
mn from 150 mn by 2019
Other tier1 suppliers of Boeing & Airbus are actively evaluating alternate sourcing destinations
such as India for their global supply chain
g.
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g pp y

29. 2b. Opportunity landscape for ACMA2b. Opportunity landscape for ACMA
players (Defence)
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30. India will witness a significant spend across Army, Navy and Airforce to
modernize its Soviet era equipments (1/2)q p ( )
Capital Outlay split under Indian Navy, 2014-15
1%7%
4%
46%
Capital Outlay split under Air force, 2014-15
1% 3%
14% 0%
18%
53%
7%
49%
46%
4%
53%
Land Construction
1%
Construction
Aircraft & Aero engines
H d M di V hi l
Capital Outlay split under Indian Army, 2014-15
Aircraft & Aero engines Heavy and Medium Vehicles
Other Equipment Joint staff
Naval fleet Naval Dockyard
Heavy and Medium Vehicles
Other Equipment
y
Other equipments includes avionics, missile
guiding systems radars precision weapons
1%
17% 8%
1% 1%
guiding systems, radars, precision weapons,
simulators, electronic warfare, control systems
that supports these aircrafts, high technology
weapons, artillery systems, unmanned vehicles, advanced
systems and munitions other electronics systems training
11%61%
systems and munitions, other electronics systems, training
ship, polar and hydrographic survey vessel etc.Land Construction
Aircraft & Aero engines Heavy and Medium Vehicles
Other Equipment Rolling Stock
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Rashtriya Rifles

31. India will witness a significant spend across Army, Navy and Airforce to modernize its Soviet era
equipments (2/2)q p
Aerospace- Market Potential Aerospace and naval systems domain presents a huge market
opportunity with dual market potential i e defence and commercial
Major Contracts
Rafale Fighter Jet
C
Naval - Market Potential
L d S t M k t P t ti l
opportunity with dual market potential i.e. defence and commercial
Avro Replacement Program
Major Contracts
Submarines (Project-75I) Major Contracts
Future Infantry Soldier As a
Land Systems - Market Potential
Pilatus Basic Trainer Aircraft
Light Utility Helicopter (LUH)
Indigenous Aircraft Carrier
(INS-Vishal)
Future-Infantry Soldier As a
System Program
Future Infantry Combat Vehicle
Sukhoi Fighter Jet
Multi Role Frigates
(Project 17A)
y
M777 Ultra Light Howitzers
Tejas- Light Combat Aircraft
Kamov helicopters
Landing Platform Docks
Corvettes (Warships)
Light Armored Multipurpose
Vehicle
(Project 28A) Thermal imaging sights for
T-72 tanksUSD 30 Bn +
USD 22 Bn +
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International”), a Swiss entity. All rights reserved.
USD 16 Bn +

32. Current Market Players in Defence: DPSUs - The dominant force
Hi d t A ti Ltd (HAL) I di ’ l t i t t h i bl f b ildi
Aircrafts and Aerospace systemsAircrafts and Aerospace systems
Hindustan Aeronautics Ltd (HAL) – India’s only aerospace system integrator who is capable of building
fixed wing and rotary systems for the Indian defence forces
Bharat Electronics Ltd (BEL) - India’s leading defence electronics manufacturer supplying critical( ) g pp y g
systems to Indian aircraft and missile programs
Bharat Dynamics Ltd (BDL) - Leading manufacturer of missile systems for our defence forces. DRDO
designs and develops these missiles. MIDHANI - Manufacturing aerospace & missile grade materials
Naval SystemsNaval Systems
Indian defence shipbuilding sector is dominated by 5 Govt shipyards each specializing in certain type of
naval vessels
Goa ship yard – Patrol vessels, interceptors | Cochin shipyard – Aircraft carriers| Mazagon Dock Ltd –
Submarines, Destroyers | Hindustan shipyard - Cargo liners, barges | GRSE – Frigates, Corvettes
I di O d F B d (OFB) h d 41 f i I di f i d
Land SystemsLand Systems
Indian Ordnance Factory Boards (OFB) has around 41 factories across India manufacturing armoured
vehicles, artillery systems, guns, ammunitions , chemicals and other support systems for the armed forces
Bharat Electronics Ltd (BEL) - India’s leading defence electronics manufacturer supplying critical
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systems to Indian aircraft and missile programs

33. Options for industry to participate in Indian defence sector & opportunities for
ACMA members
Manufacture and supply of complete equipmentsIndian Production
Bid directly to Ministry proposals coming under Buy
& Make India, Buy (India) & Make categories under
the Defence Procurement Procedure (DPP 2013)
Indian Production
Agency (IPA)
(Buy & Make India &
Make Categories) ( )g )
Sub-systems such as structural assemblies, engines,
electrical, electronics & communication systems,
Systems supplier
(Tier1) to system
electromechanical and hydraulics systemsintegrators (IPA)
Military grade materials, castings, forgings, small
structural assemblies electronics parts wire harness
Tier 2/3 components
li t Ti 1 & structural assemblies, electronics parts, wire harness
etc to the Tier 1 players or OEMs
suppliers to Tier1s &
system integrators
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34. Revenue procurement by MoD
Revenue expenses present a large opportunity for Indian component players
Revenue Budget covers procurement of items and equipments to maintain and operate
already sanctioned assets in the service
Misc. charges
5%
Revenue
works
9%
Breakup of Revenue Expenditure Stores and equipment expenditure vs
Revenue expenditure
Pay &
allowances
Transportation
3%
9%
77
94 96
108 116 117
allowances
54%
Stores & eqpt
29%
13 16 16 8
20 20
• 70 80% of the equipment costs are in maintenance and upkeep of the equipment It is an INR
Revenue Expenditure Stores and Equipment Expenditure
Values in INR ‘000 Cr
• 70-80% of the equipment costs are in maintenance and upkeep of the equipment. It is an INR
~ 20,000 Cr opportunity which is increasing at a CAGR of 9%
• 15-20% is spent on Airforce MRO activities covering sub assemblies, components, spare parts
etc.
IAF’s BRD has an indigenization cell which encourages private players to develop and
supply the spare parts required for maintenance of the aircrafts in its fleet
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reserved.
Source: IDSA, KPMG analysis

35. Defence – Challenges need to addressed for successful participation of
ACMA members in “Make in India” for defence
Current purchase system makes it difficult for auto components players to actively
participate in Indian defence programs*participate in Indian defence programs*
A wait & watch approach
Auto component SMEs should understand the defence sector and analyze the low
hanging opportunities before committing large investmentsg g pp g g
ACMA ADR committee will be meeting the defence ministry officials to advocate
right policy changes to enable the contribution of its members
While defence is definitely a lucrative sector to invest, government need to come
out with ground level policy changes to encourage SMEs in the sector
The capabilities built around commercial aerospace sector can be leveraged to tap
the opportunities in defence once the business environment improves
There are few bright spots in defence such as supplying spare parts & MRO
services to the defence forces and these will be explored further
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International”), a Swiss entity. All rights reserved.
* Please refer the challenges section

37. 3. Automotive Vs Aerospace
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Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

38. Auto companies to diversify into aerospace & defence sector, it becomes
utmost important to realize the similarities and severities between the twop
Key parameters are similar in both but more demanding in aerospace & defenceKey parameters are similar in both but more demanding in aerospace & defence
Aspect Aerospace & Defence Sector Automotive Sector
P d ti
• Production volumes for most of the
components is comparatively low
Auto sector caters to much
broader customer segment andProduction
quantity
components is comparatively low
• Most items would be manufactured using
batch production techniques
broader customer segment and
larger volumes
Selection
Criteria
• Involves rigorous assessment by OEMs on
various parameters with zero tolerance levels
Strict assessment by OEMs but
number of parameters &
tolerance limits areCriteria tolerance limits are
comparatively less stringent
• Requires highly skilled resources High production volume can be
Resources • High component varieties and low volume
demands high manpower requirement
managed with a mix of skilled
and semi skilled resources
M i l V d di d t i tl it d C ti l l d diMaterial
Handling
Very demanding and strictly monitored Comparatively less demanding
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International”), a Swiss entity. All rights reserved.

39. Auto companies to diversify into aerospace & defence sector, it becomes
utmost important to realize the similarities and severities between the twop
Key parameters are similar in both but more demanding in aerospace & defenceKey parameters are similar in both but more demanding in aerospace & defence
Aspect Aerospace & Defence Sector Automotive Sector
• One machine can be configured to • This might be difficult due to high
l & t ti t i t
Product
produce multiple parts due to low
volumes
• More product varieties and
volumes & set up times constraints
• Product varieties are relatively
lesser and standardized acrossp
specifications models in a platform
P b k
• Long as it may take 4-5 years for a
li t t t ki
Comparatively shorter
Pay back
period
new supplier to start making
revenues after passing the
assessments
Penalties and
risk
Suppliers need to pay huge
penalties in case of product failures
Penalties are comparatively less
stringent
Globalized yet India centric due to
Supply chain Complex, globalized supply chain
Globalized yet India centric due to
large local demand & increased local
sourcing by OEMs
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International”), a Swiss entity. All rights reserved.

41. 4. Key considerations by
Aerospace OEMs & Tier1s while
evaluating their suppliers
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42. Key considerations by global OEMs for selecting their suppliers
Nine core parameters that govern the supplier selection
Aerospace
& Defence
experience
Training and
Human
Resource
IT System
and Process
experience
Quality
Resource
Broad supplier
Selection
Broad supplier
Selection
Broad supplier
Selection
Management
Intent
and strong
vision
Quality
systems/
certifications
Selection
parameters
Selection
parameters
Selection
parameters
Efficient
vision
Efficient
production
processes
Change
control system
Purchase
Material
Handling
Capability
Purchase
& Vendor
Management
techniques
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44. 5. Sector specific challenges
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45. Risks/Challenges - Aerospace
Nascent stage of domestic production1
Lack of focus: Aerospace OEMs and Suppliers - Until recently, there was an absence of a
focused sourcing strategy for India
a.
Attracting private aircraft manufacturers & Tier1s - Challenges still exist in attracting anchor
units of global OEMs & Tier1s
b.
focused sourcing strategy for India
Limited Indian players as large suppliers- Limited Indian players at the Tier 1 & 2 level
c.
Delays in indigenous aircraft programs - Programs such as Regional Transport Aircraft
development are yet to take shape
d.
Western domination in aerospace supply chain - Global sourcing volumes still dominated by
a.
Global competition2
Western domination in aerospace supply chain Global sourcing volumes still dominated by
clusters in Europe and North America
Assertive Middle East, China and other Asian Countries - Stiff competition for component
b.
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level sourcing from low cost countries such as China, South Korea, Thailand and the Middle East

46. Risks/Challenges - Aerospace
High entry barriers and low initial volumes3
Stringent Quality standards, Long realization times - New entrants may take 2-3 years to
perfect production methods, achieve certifications and qualify the stringent qualification process
a.
Material unavailability, Dependence on Imports - Unavailability of Aerospace grade materials
in India with a heavy dependence on imports
b.
Lack of trained manpower, High attrition rate - Lack of skilled manpower, skill development
programs & demand driven attrition
c.
Production volume, Pay back period - Pay back period is long term with initial low production
volume
d.
Ecosystem & Infrastructure - Nascent aerospace manufacturing ecosystem and supporting
a.
Other challenges4
Ecosystem & Infrastructure Nascent aerospace manufacturing ecosystem and supporting
infrastructure in the country
Material handling challenges, Lack of supporting facilities - Demanding process control
b.
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and material handling procedures, Inadequate supporting facilities for testing, certification etc.

47. Risks/Challenges - Defence
Private sector at a disadvantage1
Uncertainty around India’s procurement programs
• Long delays and uncertainties in defence procurement programs
a.
g y p p g
• Examples are India’s artillery procurement programs, Helicopter programs, Future Infantry
Combat Vehicle (FICV) program, Submarine acquisitions etc.
Lack of level playing field for Private players
• Current FDI cap of 49% discourages global OEMs to share IP with Indian players
I di P i t t l k R&D d f t i bilit t ti i t t i t t
b.
• Indian Private sector lacks R&D and manufacturing capability to participate as system integrators
Technology intensive
A&D f t i i hi hl t h l i t i i ll i OEM d Ti 1 l l
c.
• A&D manufacturing is highly technology intensive especially in OEM and Tier 1 levels
• Average R&D time of 8-10 required to develop products and compete globally
d.
Domination by Indian Defence Public Sector Units (DSPUs)*
d.
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* Explained in the next slide

48. Risks/Challenges - Defence
Domination by DPSUs2
R&D and manufacturing infrastructure - Domination by DPSUs such as HAL, BEL, BDL
and Shipyards, Ordinance Factory Board (OFB) and DRDO
a.
System development capabilities - Private players lack the system development capabilities
to compete with DPSUs
b.
py , y ( )
to compete with DPSUs
Tax/Duty Structure
• Structure benefits DPSUs rather than private players
c.
C t l I di C t ll d b DPSU ith ti i ti f
d.
• Structure benefits DPSUs rather than private players
• Govt. has recently taken few steps to address this issue
Control on Indigenous aerospace programs - Controlled by DPSUs with participation from
private sector limited to components level
Challenges for private players working with DPSUsChallenges for private players working with DPSUs
• L1 system of selection & Long pay back period
• Limited order quantity & Uncertainty of orders
Delay in procurement programs
e.
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• Delay in procurement programs

49. Risks/Challenges - Defence
Regulatory challenges3
Incentives and supporting Infra - Delays in creating word class infrastructure and
supporting incentives to promote manufacturing
a.
MSMEs - Lack of support for MSMEs in A&D sector
b.
FDI cap of 49% - Discourages global OEMs and Tier 1s in setting up facilities in India
c.
d
Export restrictions, Practical hurdles in offset policy - Restrictions hurting Tier 1 and
OEM Investments, Offset policy limitations holding back A&D investments
d.
Process hurdles - Sharing of IP and product development knowledge between the DPSUs
a.
Lack of Coordination between DPSUs and Industry4
Process hurdles Sharing of IP and product development knowledge between the DPSUs
and the Private sector
Procurement process by DPSUs Discourages competent players from participating
b.
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Procurement process by DPSUs - Discourages competent players from participating

51. 6. Roadmap & challenges
during the journey
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52. Roadmap for the aerospace sector foray
A five step approach to TransformationA five step approach to Transformation
Phase 3: Implementation
GlobalGlobal
Aerospace
Supplier
Diversification into Aerospace
2 – 4 years
4 – 6 years
Diversification into Aerospace
Stage 4:
Certifications
Stage 5:
Moving up
the Value
Chain3 – 12 Months
12 Months –
2 years
2 4 years
Stage 2:
Building the
Stage 3:
Securing the
initial order
Certifications
& Expansion
Chain
0 – 3 Months
3 – 12 Months
Stage 1:
Taking the
right step
forward
Building the
Infrastructure
forward
The journey to evolve as a preferred partner for global aerospace players will be tough with
challenges. Indian auto component players have the required capabilities and need to adopt
th i ht h t h th il t
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International”), a Swiss entity. All rights reserved.
43
the right approach to reach the milestone

53. Way forward for commercial aerospace
Taking the right step forward – Stage 1Taking the right step forward Stage 1
Stage 1 (0- 3 Months)
Pl it i htPlan it right
Understand
your key
strengths &
Preliminary
interaction
with Tier 1
Develop
robust vision
d bj ti
Identify key
product
segments to
d
core
competencies
with Tier 1
and OEMs
and objective
segments to
focus on
forwardghtstep
Map critical
Identify key
focal Create Devise entry
ketherig
Map critical
gaps and
ways to
address them
focal
person(s) to
spearhead
sectorial
initiatives
Create
dedicated
business
vertical
Devise entry
strategy and
investment
plan
Tak
initiatives
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54. Way forward for commercial aerospace
Build partnerships & infrastructure – Stage 2Build partnerships & infrastructure Stage 2
Stage 2 ( 3 - 12 Months)
Build the Infrastructure
Focus on
Participate in
Build the Infrastructure
catering to
global supply
chain through
focus products
Participate in
aerospace
events and
forums
Build a focused
team for
aerospace
Identify anchor
customers and
build rapport
ure
p
Train core team
on key
Create
dedicated
Production
strategy to Initiate process
rastructu
y
expectations of
aerospace
players
dedicated
line/facility for
aerospace
gy
manufacture in
house &
outsource
p
to purchase
right machines
rightinfr
Establish
process and
controls as per
Focus on
customer
Discuss with
sourcing teams
of OEMs such as
Airbus Boeing
eatether
controls as per
aerospace
standards
customer
requirements
Airbus, Boeing
UTC etc. to sync
with their India
plans
Cre
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55. Way forward for commercial aerospace
Approvals and Certifications – Stage 3Approvals and Certifications Stage 3
Stage 3 ( 12 Months – 2 Years)
Win the initial orderWin the initial order
order
Identify & reach
out to right
customers Prepare facility Choose the
einitialo
customers
based on
identified
component
t i
Conduct B2B
meetings and
plan site visits
Prepare facility
for formal
assessment by
customers
Choose the
right
components to
pilot
owinthe
types, sourcing
needs etc
The component Conduct pilot
stepsto
The component
should align the
company’s
capabilities and
involve simpler
Set up special
process &
material
sourcing tie ups
Conduct pilot
trials and
reviews by the
customer till
achieving first
Secure order or
assurance from
customer
heright
involve simpler
processes
sourcing tie ups achieving first
right part
Prepare facility
Taketh
Prepare facility
for AS9100 and
other quality
audits
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56. Way forward for commercial aerospace
Securing the first order and scaling up – Stage 4Securing the first order and scaling up Stage 4
Stage 4 ( 2 – 4 Years)
Certification and ExpansionCertification and Expansion
Scale up
scaleup
Get the
required
certifications
and other
Scale up
facility and
processes to
meet the
i d
Win confidence
of the first
t
Discuss on
other
opportunities
( t )
nsands
and other
customer
approvals
required
volume and
quality
customer (components)
with customer
tification
Gradually add
new
Plan for
btaincert
Develop
healthy
portfolio of
components
Expand
customer base
components
and customers
without
compromising
Plan for
additional
approvals, audi
ts, quality
requirements
Ob
p p g
quality and
reputation
requirements
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57. Way forward for commercial aerospace
Moving up the value chain – Stage 5Moving up the value chain Stage 5
Stage 5 ( 4 – 6 Years)
Move up the value chainMove up the value chain
Develop clear
vision and
strategy to
move up from
Build capability
by working
ith t
Look for global
players (JVs,
A i iti ) t
Target Indian
and other
global players
h h
move up from
component to
sub assembly
manufacturer
(Tier 2 level)
with customers
to identify right
assemblies
Acquisition) to
propel the
transformation
who have
defence
manufacturing
bases in India
chain
(Tier 2 level)
hevalue
Develop
capability and
oveupth
capability and
approvals to
supply sub
assemblies to
k l b l
Mo
key global
aircraft
programs
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58. Way forward for Defence
Build the capability and wait for the right opportunity and timeBuild the capability and wait for the right opportunity and time
Preparatory Stage ( 1 - 3 Years)
Build Capability and Look for the right opportunities
Understand the D l t
Build Capability and Look for the right opportunities
time
Understand the
sector, regulatory
processes & pipeline
opportunities;
Develop connects
with key
stakeholders:
DPSUs, Defence
Scout for low hanging
opportunities with a
herightt
Build your
complimentary
capabilities from
commercial aero
private sector
OEMs, Indian business
groups bidding for
programs
opportunities with a
low risk factor
aitforthtyandwcapabilit
Look for any defence
offset opportunities
that can be catered
Empanel your
company with
Defence HQ DPSUs
Apply for industrial
license required for
Buildc
through investments
in commercial
aerospace
Defence HQ, DPSUs
to keep track of
opportunities
identified defence
products
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59. Key Challenges during the journey (1/3)
Nascent supply chain & Lack of
sectorial understanding
Choosing the right business
segment
Long gestation time &
B i f t k h ld
Plan (Stage 1)
g g
uncertainties Buy in from stakeholders
Skepticism amongst OEMs and Reluctance of global suppliers to
Tier 1 players on Indian suppliers
g pp
partner with Indian component
playersBuilding the
Infra (Stage 2)
Investment in machines & infra
without order security
Talent identification and training
on global processes
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g p

60. Key Challenges during the journey (2/3)
Adapting to high quality
expectations consistently
Preparing and training the team on
aerospace manufacturing approach
Winning the
Successfully clearing pilot trials, getting Identifying right components to
initial order
(Stage 3)
y g p , g g
the OEM approvals and securing order
Identifying right components to
start with
Adhering to strict processes Strict audit process by certifyingAdhering to strict processes St ct aud t p ocess by ce t y g
agencies
Certification &
Scaling Up
(Stage 4)
Adhering to timelines & choosing the
right component to scale up
Building scalable
production, material handling &
lit t
( g )
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quality set ups

61. Key Challenges during the journey (3/3)
Maintaining traceability & Production setup with higher
tolerances, higher product variety, low
Handling logistics & supply chain
material handling variety,
volume etc.
Handling different grades ofProduction Handling logistics & supply chain
issues pertaining to special processes
Handling different grades of
aerospace raw materials & inventory
Production
(Stage 4)
Retain & train talent; Strict adherence to
additional audits from OEMs & Tier1s
To Build capability to position as
a sub assembly player (Tier 2)
Competition from established players in
Europe & North America
Moving up the
value chain
(Stage 5)
Uncertainties & delays in Indian
defence programs
Developing R&D & technical
capability( g ) p g capability
Cautious approach from global Managing supply chain ; Export
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pp g
players
g g pp y ; p
restrictions, ITAR & IP controls

63. 7. Key activities by ADR
committee & Outcome
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64. Activities & Outcome (1/2)
Reached out to
ACMA 38 companies Exercise to collate the
A capabilityACMA
members to identify
Interested companies
38 companies
had expressed
interest
capability
details of the
38 companies
A capability
database of 38
companies
Interactions with Profiles of
I t ti ith
Efforts to
select
OEMs & Tier 1s*
ACMA
members
shared
Interactions with
Trade organizations
& embassies**
Facilitate
global
partnerships
Airbus has shortlisted 14
companies for visit & assessment
GKN, UTC, Rolls Royce are in the
process of shortlisting &
selectionselection
* Airbus UTC GKN aerospace Rolls Royce Sirkosky Lockheed Martin Bell Helicopters Boeing
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** Business France (French Embassy), UKTI, US embassy commercial services
Airbus, UTC, GKN aerospace, Rolls Royce, Sirkosky, Lockheed Martin, Bell Helicopters, Boeing

65. Activities & Outcome (2/2)
Aircraft OEMs & ACMA – Partnering to build the Indian aerospace supply chainAircraft OEMs & ACMA Partnering to build the Indian aerospace supply chain
OEMs & Tier1s want to develop new suppliers from the current Indian
manufacturing and services supply base to support their global aerospace suppliermanufacturing and services supply base to support their global aerospace supplier
chain A Collaborative Model
ACMAPotential Companies shortlisted by the OEMs
& Tier1s and other interested players
Building a robust
s ppl chain in Indiasupply chain in India
with ACMA members as
the preferred partners
Aerospace
OEMs &
Trade
Organizations Airbus, Boeing, GKN, UTC etc.
Business France, IFCCI, UKTI,
ADS US trade bodies etc Tier1s
Organizations
The planned approach is to jointly work with the OEMs & Tier1s to establish a joint task
, g, ,
ADS, US trade bodies etc..
e p a ed app oac s to jo t y o t t e O s & e s to estab s a jo t tas
force with Trade organizations of key supply bases in USA & Europe
The Trade organizations will work with potential ACMA companies to identify right Joint
Venture partners and investment targets with support of the OEMs
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Venture partners and investment targets with support of the OEMs

66. Going Forward
Interaction with other stakeholders as and when required1 q
ACMA’s 2nd A&D conference in 2016 -172
Submit a note to defence minister (expectations to support “Make in India” for defence &
aerospace)
3
aerospace)
Arrange meetings with senior officials on Ministry of Defence & Ministry of Civil Aviation4
Interaction with Airforce HQ officials to explore opportunities in supplying spare parts
& MRO
5
& MRO
Study visits for ACMA members to the Indian facilities of global and Indian aerospace
players6 players
Coordinate with Airbus and organize visits to aerospace clusters in France & UK7
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68. 8. Broad policy measuresp y
required to support aerospace
component manufacturingp g
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69. Key policy measures to boost component manufacturing eco system
(1/3)
Developing aerospace clusters1
(1/3)
Developing
aerospace
Clusters unlocks value through
synergies Need to develop 3 to 4
Role of
central
Govt. needs to work in tandem
with States and global OEMs foraerospace
clusters
synergies. Need to develop 3 to 4
focused clusters for aero structures,
landing gear, engine components
etc. to attract global investments
central
government
g
conceptualizing and developing
such clusters
Plug & Play infra2
Common
Infra
Govt. should develop common
infra to support component
f i l i h
Plug &
Play Infra
Focus should be to create plug and
play infra where power, water, water
g y
manufacturing players in the
sector
y
treatment, constructed factory, office
and housing premises/complexes
would be present
Includes special process and
testing facilities, warehouse for
inventory storage, training centers
etc
Provision of hassle free land banks for
future expansion should be
considered/provided
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etc considered/provided

70. Key policy measures to boost component manufacturing eco system
(2/3)
Fostering skill development
(2/3)
3
Structured Govt. with the support of global
Creation of
cross
A cross functional team comprising
of industry bodies such as ACMA,
g p
skill
development
program
aerospace & defecne players
should spearhead structured skill
development program for SMEs
functional
skill
development
t
OEMs, NSIC, Ministry of MSME,
MoD, MoCA should be formed to
create an action plan for developing
aerospace skill developmentteams aerospace skill development
centers across India
Government: Govt should consider according ‘Infrastructure’ status to the A&D industry and provide
Reduction & simplification of taxes4
Government:
Tax
Structure
Govt. should consider according Infrastructure status to the A&D industry and provide
concessions/benefits in the form of tax incentives (indirect and direct tax) so as to
augment domestic production
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71. Key policy measures to boost component manufacturing eco system
(3/3)
Financial support
( )
5
SME Funding Govt. should encourage public and private banks and other financial institutions to provide
funds for SMEs in aerospace manufacturing
SME funding is a challenging issue even for advanced aerospace ecosystems such as
Toulouse aerospace cluster in France
Govt corpus combined with support from banks and financial institutions would make forGovt. corpus combined with support from banks and financial institutions would make for
a healthier component eco system in India
Defence Offsets6
Joint Ventures Provide offset multipliers to defence OEMs and Tier 1s for commercial aerospace sourcing
and investments through JVs by their suppliers in India
Support Indian JV companies to produce defence components and systems for globalpp p p p y g
markets
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73. 9 Case Study of select Indian9. Case-Study of select Indian
players in the sector
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74. 1) Aequs (earlier Quest Global)) q ( )
About Aequs Key Financial Information
Company Info 2006 as an offshoot of Quest
Global
Rebranded to form Aequs in
2014
■ Group Turnover FY14 – ~ INR 155 Crores
■ Aerospace and Defense revenues – About 50%
comes from aerospace
2014
Head Quartered : Belgaum, India
Key Industries
served
Automotive, Oil & Gas, Aerospace
Key Partnerships and Alliances
Partner Details
Additional Info:
served
Manufacturing
Plants
Belgaum, Bangalore, Houston
Key Product Precision machined aero engines
Partner Details
Aerospace
Processing
India Pvt Ltd
API is a JV of Aequs and Magellan
Aerospace for providing aerospace
surface treatment solutions in IndiaKey Product
Categories
Precision machined aero engines
and aero structure components
Aluminium machined parts for
A 380 floor assembly
India Pvt Ltd surface treatment solutions in India
Aerostructures
Assemblies
India Pvt Ltd
JV between Aequs and SaaB AB of
Sweden. Company specializes in
build-to-print assemblies for
Steel machined parts for Boeing
777 and Boeing 767 landing gear
Titanium machined parts for
Boeing 777 wing
d a d bu d o p asse b es o
commercial and defense aircraft
SQuAD
Forging India
JV between Aequs, Aubert &
Duval SA and Setforge SocieteBoeing 777 wing
Key Customers Airbus, UTAS, Honeywell, Eaton
Aerospace, GE, Magellan
Aerospace, Rolls Royce
Forging India
Pvt Ltd
Duval SA and Setforge Societe
Nouvelle SAS for developing aero
structural parts, landing gear, and
braking system components
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Source : Company Wesbite, Annual reports, KPMG Analysis
Aerospace, Rolls Royce

75. 2) Astra Microwave Products Ltd.)
About Astra Microwave Products Ltd. Key Financial Information
Company Info Head Quartered :Hyderabad,
India
Founded in 1991
A division of Godrej & Boyce
■ Group Turnover FY15 – INR 644 Crores
■ Aerospace and Defense revenues – ~ INR 580
Crores
A division of Godrej & Boyce
Limited
Key Industries
served
Defense, Space, Telecom,
Meteorology, Satcom, Security
Key Contracts
Additional Info:
served Meteorology, Satcom, Security
Manufacturing
Plants
Medak, Rangareddy (Telangana)
Key Product Radar
AMPL won a major order from Israel-based ELTA
systems, the execution of which saw exports rise
six-fold and revenue more than double in FY2014
Key Product
Categories
Radar
Data and video telemetry
transmitter systems
Ground based and surveillance
Bagged offset related export order worth more than
INR 3500 million by the end of FY12
Receivers
Coherent frequency generators
Low power microwave sub-
systemssystems
Key Customers DRDL, DEAL, LRDE, Hindustan
Aeronautics, ISRO, Defense
Avionics Research Establishment
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o cs esea c s ab s e
Source : Company Wesbite, Annual reports, KPMG Analysis

76. 3) Bharat Forge) g
About Bharat Forge Key Financial Information
Company Info Head Quartered : Pune , India
Established in 1961,
Flagship company of the Kalyani
Group
■ Group Turnover FY15 – INR 7,625 Crores
■ Aerospace and Defense revenues –Expected to
reach USD 100 million in 5 years
Group.
Key Industries
served
Automotive, Power, Oil & Gas,
Locomotive, Marine, Aerospace,
Construction & Mining
Key Partnerships and Alliances
Partner Details
Additional Info:
Construction & Mining
Manufacturing
Plants
Pune, Baramati, Mundhwa
Key Product Wheel lever forging
Partner Details
Rafael
advanced
systems (JV)
Missile technology, remote weapon
systems and advanced armour
solutionsKey Product
Categories
Wheel lever forging
Fan forging
Main leg forging
systems (JV) solutions
Elbit
Systems,
Israel (JV)
Advanced artillery and mortar
systems to the Indian military
Key Customers DRDO, Indian Ordinance Factories,
HAL, ISRO, L&T, Walchandagar
( )
SAAB (JV) Land and air defence systems
Safran
Forged and machined components
for commercial aircraft applicationsSafran for commercial aircraft applications
to Safran's global affiliates
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Source : Company Wesbite, Annual reports, KPMG Analysis

77. 4) Dynamatic Technologies) y g
About Dynamatic Technologies Key Financial Information
Company Info Head Quartered : Bangalore,
India
Entered Aerospace Market in
1995
■ Group Turnover FY15 – INR 1611 Crores
■ Aerospace and Defense revenues – INR 261.7
Crores
1995
Key Industries
served
Aeronautic, Automotive,
Hydraulic and Security
applications
Key Partnerships and Alliances
Partner Details
Additional Info:
applications
Manufacturing
Plants
Bangalore, Chennai, Nasik in
India, Swindon, Bristol in UK,
Erla in Germany
Partner Details
Spirit Aero MOU for the production of aero
structures (Airbus A320, A330)
y
Key Product
Categories
Airframe Structural assemblies
Precision Aerospace
Components
Bluebird
Aero
System
(Israel)
Technical collaboration for the
assembly, marketing and manufacturing
of Mini and Micro Tactical UAV
Key Customers Honeywell, Boeing, Airbus, GKN
Aerospace, Magellan Aerospace,
GE Aviation, Lockheed Martin,
A t W tl d DRDO HAL
(Israel)
Bell
Helicopter
MoU to become sub-contractor for Bell
407
B i M U d M d l P h C t t tAugusta Westland, DRDO, HAL,
Bell
Boeing MoU and a Model Purchase Contract to
manufacture assemblies for CH-47F
Chinook
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Source : Company Wesbite, Annual reports, KPMG Analysis

78. 5) Godrej Aerospace
About Godrej Aerospace Key Financial Information
Company Info Head Quartered :Mumbai, India
Founded in 1985
A division of Godrej & Boyce
Limited
■ Group Turnover FY15 – INR 9,324 Crores
■ Aerospace and Defense revenues – Less than
10% of group
Limited
Key Industries
served
Aerospace
Man fact ring M mbai
Key Contracts
M d t d b ISRO t d i i
Additional Info:
Manufacturing
Plants
Mumbai
Key Product
Categories
Spacecraft components - made
of exotic alloys
1
Mandated by ISRO to produce semi-cryogenic
engines for its products
2
Supplied the Vikas engines for ISRO’s rockets
GSLV Mk IIICategories of exotic alloys
Adaptor assembly
Antenna
Space engines
GSLV Mk III
3
Supplier of BrahMos missile air‐frame
assemblies in batches since 2009 till date
D l t l d lif l t fEngines tubing and accessories
Air frame
Key Customers GE, ISRO, Brahmos, DRDO,
B i Ai b R f l I di
4
Development, supply and life cycle support of
Mobile Autonomous Launchers (MAL) for the
BrahMos missile
Contributed to Chandrayan 1 through itsBoeing, Airbus, Rafael, Indian
defense forces
5
Contributed to Chandrayan-1 through its
partnership with ISRO
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Source : Company Wesbite, Annual reports, KPMG Analysis

79. 6) Investment & Precision Castings Ltd (IPCL)) g ( )
About Investment & Precision Castings Ltd
(IPCL)
Key Financial Information
(IPCL)
Company Info Head Quartered : Bhavnagar,
Gujarat, India
Established in 1975
■ Group Turnover FY15 – INR 74.1 Crores
■ Aerospace and Defense revenues – About
3% of group
Established in 1975
Key Industries
served
Automobile, Defence, Power
Generation, Dairy & Food Processing,
Earthmoving Machinery Air-conditioning
Key Highlights
Additional Info:
Earthmoving Machinery, Air-conditioning
& Refrigeration, Printing, Textile
Machinery, Atomic Energy
Manufacturing Nari Road, Bhavnagar, Gujarat, India
Accreditations & Certifications: ISO 9001:2008,
ISO 14001:2004, EN 9100, TS/16949 : 2009,
OHSAS 18001
Manufacturing
Plants
Nari Road, Bhavnagar, Gujarat, India
Key Product
Categories
Gimbal Box & Pedestal Unit for Multi
Mode Radar for Light Combatg g
Aircraft "Tejas“
Various components for Space
Shuttle - GSLV D5
Parts for radars & navigationalParts for radars & navigational
instruments for aerospace
Key
Customers
Honeywell, Boeing, L&T, HAL,
RAFAEL MBDA ISRO
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Customers RAFAEL, MBDA, ISRO
Source : Company Wesbite, Annual reports, KPMG Analysis

80. 7) Lakshmi Precision Screws Ltd.
About Lakshmi Precision Systems Ltd. Key Financial Information
Company Info Head Quartered : Rohtak
,Haryana, India
Established in 1972
f
■ Group Turnover FY14 – INR 351.3 Crores
■ Aerospace & Defence revenues : Not Available
Key Industries
served
Wind Energy, Automotive, Defense,
Electronic & Communication,
Construction, Agriculture, Tool & Die,
Oil & Gas
Key Partnerships and Alliances
Partner Details
Additional Info:
Oil & Gas
Manufacturing
Plants
Manesar and Rohtak (Haryana)
Key Product Aerospace and Defense fasteners
Partner Details
Bossard AG,
Switzerland
State of art fastening solutions and
latest inventory management system
technique through logistic supportKey Product
Categories
Aerospace and Defense fasteners
and machining components
Key Customers GE, Airbus, Honeywell, Bombardier,
DRDL TBRL Bharat Dynamics Ltd
q g g pp
Global
Fastener
Alliance
The alliance helps the company in
improving competitiveness via
cooperation in manufacturing,
DRDL, TBRL, Bharat Dynamics Ltd.,
ISRO
technical capabilities
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Source : Company Wesbite, Annual reports, KPMG Analysis

81. 8) Larsen & Toubro
About Larsen and Toubro Key Financial Information
Company Info Head Quartered :Mumbai, India
Key Industries Shipbuilding, Defense Systems,
■ Group Turnover FY15 – INR 92,000 Crores
■ Aerospace & Defence revenues : Not Available
served Aerospace
Manufacturing
Plants
Kattupalli, Hazira (Shipbuilding)
Powai, Hazira, Ranoli, Coimbatore,
T l (H E i i )
Key Partnerships and Alliances
Partner Details
Additional Info:
Talegaon (Heavy Engineering)
Key Product
Categories
Missiles & Radar systems
Electronic Warfare & C4I
systems
Partner Details
ERDE,DRDO Build radars for the Army and IAF
TATA Modernize the 155mm Bofors
Howitzers and produce the Multisystems
Precision Engineering
Heavy & Civil Engineering
constructions like warships,
Howitzers and produce the Multi-
barrel rocket launcher
Airbus
defence
Focus on components used in
electronics warfare radars avionics
submarine ships
Key Customers DRDO, Indian armed forces
defence
(Cassidian)
electronics warfare, radars, avionics
and mobile systems
Thales
Software
Avionics
Software
India
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Source : Company Wesbite, Annual reports, KPMG Analysis

82. 9) Mahindra Aerospace) p
About Mahindra Aerospace Key Financial Information
Company Info Formed in 2008
Part of Mahindra Group
Head Quartered : Kolar
Taluk Karnataka India
■ Mahindra Group Turnover FY15 – INR 76,015 Crores
■ Aerospace and Defense revenues: Expects ~ INR 1800
crores in 3-4 yearsTaluk, Karnataka, India
Key Industries
served
Aerospace
M f t i K l T l k (K t k )
Key Partnerships and Alliances
crores in 3 4 years
Additional Info:
Manufacturing
Plants
Kolar Taluk (Karnataka)
Australia – Morwell, Port
Melbourne
Key Product Manufacture of Aircrafts
Partner Details
GippsAero,
Australia
Mahindra bought a 75.1% share in
Gipps Aerospace
Key Product
Categories
Manufacture of Aircrafts
Aero structure
components
Key Customers GE (Aero structures)
Aerostaff, Australia Acquired Aerostaff in 2009
Boeing
Aerostructure
Company acquired machineries from
Boeing’s Aerostructures plant inKey Customers GE (Aero structures) Aerostructure
Factory
Boeing s Aerostructures plant in
Australia during 2011
Aernnova, Spain &
Premium Aerotech,
MoU with Aeronova
MoU with Premium AerotechPremium Aerotech,
Germany
MoU with Premium Aerotech
National Aerospace
Laboratories (NAL)
MoU with NAL – 5 seater aircraft
production
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( ) p
Source : Company Wesbite, Annual reports, KPMG Analysis

83. 10) Mahindra Defense Systems) y
About Mahindra Defense Systems Key Financial Information
Company Info Head Quartered :New Delhi,
India
Key Industries Defense Land & Naval systems,
■ Group Turnover FY15 – INR 76,015 Crores
■ Aerospace and Defense revenues – INR 77.3
Crores
served Aviation simulators
Manufacturing
Plants
Chakan Pune, Palwal and Prithala in
Faridabad near Delhi NCR Key Partnerships and Alliances
Additional Info:
Key Product
Categories
Armoring solutions for Light
Combat Vehicles, Multi-Utility
Vehicles, Sport Utility Vehicles
Torpedo launchers and decoy
Partner Details
Saab
(Through Tech Mahindra)
Battlefield Management
System (BMS) for the
Torpedo launchers and decoy
launchers, State of the art training
simulators for land forces
Mobile surveillance platforms for
(Through Tech Mahindra)
Indian Army
BAE Systems (Currently
JV is suspended)
Futuristic Infantry
Combat Vehicles
the Army and BSF, Weapons and
ammunitions for the Army and
Navy
K C t I di N I di AKey Customers Indian Navy, Indian Army,
Paramilitary and State police forces
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Source : Company Wesbite, Annual reports, KPMG Analysis

84. 11) MKU Private Ltd.
About MKU Key Financial Information
Company Info Head Quartered :Kanpur, India
Founded in 1985
Key Industries Military (Protection & Armoring)
■ Group Turnover FY14 (approx) – INR 350 Crores
■ Their revenues are primarily from defence
served Made forays into other business
avenues such as aviation
aerodynamics and technology
Man fact ring Kanp r
Key Partnerships, Alliances and
Contracts
Additional Info:
Manufacturing
Plants
Kanpur
Key Product
Categories
Personal protection
Platform Protection
Partners Details
EIS Electronics
GMBH
The $5 million USD JV will focus
on cable harness productsCategories Platform Protection
Electro Optics
Key Customers NATO, Indian Armed Forces,
Ministry of Home Affairs Republic of
GMBH on cable harness products
Concord Safety
Solutions (Pvt)
Ltd
Partnership to create a new
company to produce lightweight
armoured vehiclesMinistry of Home Affairs, Republic of
Ecuador
Ltd armoured vehicles
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Source : Company Wesbite, Annual reports, KPMG Analysis

85. 12) PYN Precision Components
About PYN Precision Components Key Financial Information
Company Info Head Quartered :Faridabad,
Haryana, India
Established in 1961
Now part of Northern Tools and
■ Group Turnover FY14 – INR 40 Crores
■ Aerospace and Defense revenues – INR 4.2
Crores
Now part of Northern Tools and
Gauges Pvt Ltd
Key Industries
served
Automobiles Components,
Aerospace
Key Products
A C
Additional Info:
served Aerospace
Manufacturing
Plants
Faridabad and Bangalore
Key Product Satellite/ Payload Parts
Aerospace Components:
Structural, Payload, System, avionics and control
parts for Aerospace, Precision parts for defense
sector Radars, Microwave, CommunicationKey Product
Categories
Satellite/ Payload Parts
Propulsion Components
Avionics Composts
Key Customers Aerospace & Defence:
sector Radars, Microwave, Communication
Hardware
Key Customers Aerospace & Defence:
Bharat Electronic Ltd., ISRO,
Hindustan Aeronautics Ltd.
Automotive:
CCarraro, American Axle, Daimler
India Commercial Vehicles,
Mahindra CIE, Forbes Marshall
Group
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Group
Source : Company Wesbite, Annual reports, KPMG Analysis

86. 13) Rane Group) p
About Rane Group Key Financial Information
Company Info Head Quartered : Chennai,
India
Established in 1959
■ Group Turnover FY15 – INR 3200 Crore
■ Aerospace and Defense Revenues are around
2% of company revenue
Key Industries
served
Auto components, Aerospace and
Defense products, Trading of auto
components
Key Partnerships and Alliances
Partner Details
Additional Info:
Manufacturing
Plants
Hyderabad, Rudrapur, Chennai,
Puducherry, Tiruchirapalli, Mysore,
Bangalore, Bawal
K P d t Wi i h
Partner Details
SasMos Wiring harness for space applications
and Echo simulator used for testing
Radar
Key Product
Categories
Wiring harness
Electro-mechanical
assemblies and Unit
Integration products in
Radar
g p
aerospace, defence &
maritime
K C t H ll B i L&T HALKey Customers Honeywell, Boeing, L&T, HAL,
RAFAEL, MBDA, ISRO
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Source : Company Wesbite, Annual reports, KPMG Analysis

87. 14) Samtel Group- Samtel Avionics & Defense System
About Samtel Group- Samtel Avionics &
Defense S stem
Key Financial Information
Defense System
Company Info Head Quartered :New Delhi,
India
Founded in 1983
■ Group Turnover FY14 – INR 150 Crores
■ Aerospace and Defense Revenues: Not
Available
Founded in 1983
Key Industries
served
Avionics and military
M f t i G t N id
Key Partnerships and Alliances
Additional Info:
Manufacturing
Plants
Greater Noida
Key Product
C t i
Multi-Function Displays (MFDs),
SMFD C l A i i T b
Partner Details
Hindustan
Aeronautics
Developing indigenous next-
generation avionic display systems
Categories SMFDs, Color Avionics Tubes
(CAT) for commercial aircraft
Head Up Displays (HUDs),
Helmet Mounted Sight Displays
Ltd.
g p y y
for HAL's star programs
Thales Local development, production,
sale and maintenance of HMSD,g p y
(HMSDs)
Operator Consoles, Optronics
Built-to-print (BTP)/Built-to-Specs
(BTS) parts
IRST
DRDO Signed an MoU with Defense
Avionics Research Establishment
(BTS) parts
Key Customers Honeywell, Thales, SAAB,
Hindustan Aeronautics Limited
(HAL) DRDO
(DARE) to indigenize cockpit
displays under the aegis of DRDO
Lab's DARE
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(HAL), DRDO
Source : Company Wesbite, Annual reports, KPMG Analysis

88. 15) Sansera Engineering Pvt Ltd.
About Sansera Engineering Key Financial Information
Company Info Head Quartered : Bangalore,
India
Established in 1987
■ Group Turnover FY15– INR 800 Crores
■ Aerospace and Defense revenues – INR 20
Crores
Key Industries
served
Aerospace, Automotive, Heavy
Commercial Vehicles, Two Wheelers
Manufacturing
Pl t
Bangalore, Pune, Pantnagar,
M (7 l t )
Key Highlights
Additional Info:
Plants Manesar (7 plants)
Key Product
Categories
Precision forged and machined
components
Seating systems
Sansera has been recently approved by
Airbus for supplies of machining parts
Accreditations & Certifications: AS 9100CSeating systems
Cargo systems and cargo
system parts
Lighting system parts
Accreditations & Certifications: AS 9100C,
NABL, ISO / TS 16949: 2009, ISO 14001:
2004, OHSAS 18001: 2007, ISO 17025: 2005
Sensors
Structures
Key Customers UTC, GKN, Airbus, Magellan,
M itMeggit
76© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source : Company Wesbite, Annual reports, KPMG Analysis

89. 16) Tata Advanced Systems Ltd. (TASL)
About TASL Key Financial Information
Company Info Head Quartered :
Hyderabad, India
Founded in 2007
A wholly owned subsidiary
■ Tata Group Turnover FY15 – INR 665,185 Crores
■ Aerospace and Defense revenues FY 15 -
INR 2500 CroresA wholly owned subsidiary
of Tata Sons
Key Industries
served
Aerospace and Defense Key Partnerships and Alliances
Partner Details
Additional Info:
served
Manufacturing
Plants
Hyderabad
Key Product Missile Systems and sub
Partner Details
Sikorsky Manufacturing 4000 parts for the S92
helicopter cabins
Key Product
Categories
Missile Systems and sub-
systems
Radar Systems and sub-
systems
Lockheed
Martin
Assembly of aero-structures
ELTA MoU - Radar, Electronic Warfare,
Aero structures
Unmanned Ariel Systems
Optronic Systems
Homeland Security
Systems Homeland and surveillance systems.
Cobham MoU - Air-to-air refueling equipment
RUAG Critical aero-structure assemblies forHomeland Security
Solutions
Key Customers Sikorsky, Lockheed, Indian
armed forces
RUAG
Germany
Critical aero structure assemblies for
Dornier aircraft
Pilatus Aero structures for PC-12
Airbus group To build transport aircrafts for defence
77© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Airbus group To build transport aircrafts for defence
Source : Company Wesbite, Annual reports, KPMG Analysis

90. 17) Walchandnagar Industries) g
About Walchandnagar Industries Key Financial Information
Company Info Head Quartered :Mumbai, India
More than 100 years
manufacturing heavy
engineering products and EP&C
■ Group Turnover FY15 – INR 6,382 Crores
■ Aerospace and Defense revenues – INR 150
Crores
engineering products and EP&C
services
Associated with the Indian Navy
since 1967
Key Partnerships and Alliances
Additional Info:
Key Industries
served
Energy, Defense, Aerospace,
Nuclear power, Industrial & Marine
Transmissions, Propulsion systems
Partner Details
DCNS MoU to supply critical submarine
component for the Scorpene contract,
t d P j t 75 b th I di NManufacturing
Plants
Mumbai, Satara, Dharwad, Dahej
(4 plants)
Key Product Flight motor casings
termed Project 75 by the Indian Navy.
MDL WIL is a subcontractor of MDL supplying
high-end structural requirement of
ScorpeneCategories Nozzles
Heat shields for various stages
of space launch vehicles
Gear boxes for marine
Scorpene
Masson
Marine
Marine Gear Boxes
Gear boxes for marine
Ti & Al alloy bridges
Missile casings & launchers
Key Customers ISRO, HAL , DRDO
78© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Key Customers ISRO, HAL , DRDO
Source : Company Wesbite, Annual reports, KPMG Analysis

91. 10. Select JVs
79© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

92. Case Study 1: Tara Aerospace Systems Ltd (Tata – Sikorsky JV) (1/2)
Aerostructure Assemblies
JV partners &
■ Tata Advanced Systems Ltd (TASL) – 74%, Sikorsky Aircraft company, USA – 26%
Aerostructure Assemblies
JV partners &
Ownership
Structure
■ Two production facilities under the JV - One for assembling the S-92 helicopter cabins
and other for producing around 4000 aero structural part required for the cabins
F t it li th I di ilit d i ili h li t t iti
Objectives
■ Focus to capitalize on the Indian military and civilian helicopter opportunities
■ Alternate supplier/location to replace Mitsubishi, Japan and decided to choose India
■ To emerge as a facility that assembles fully built helicopters for Indian and global
customers
■ TASL investment in aerospace and defence business - INR 500 Cr in its over 5-7 years
since 2007
Investment
since 2007
■ Investment in the JV - ~ INR 100 Cr
■ TASL - Manufactures the semi finished structural cabin assembly for the S-92
Responsibilities
& work share
y
Helicopters and machines around 4000 parts that goes into the cabin assembly
■ Sikorsky - Integrates the structure into its final helicopter assembly line in USA
■ Plan to build the entire Naval multi role helicopters (NMRH) in India once the approval
& work share ■ Plan to build the entire Naval multi role helicopters (NMRH) in India once the approval
process are through
80© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source – Media reports, KPMG Analysis

93. Case Study 1: Tara Aerospace systems Ltd (Tata – Sikorsky JV) (2/2)
Aerostructure AssembliesAerostructure Assemblies
Current
■ TASL Annual revenue: ~ INR 400 Cr
Current
revenues/profits
■ Order book: ~ Rs 4,500 crore of the total Tata group defence order book of Rs 8,000
crore.
■ US and other export market
Target market
■ US and other export market
■ Indian Military and civil helicopter market
■ Tata’s core strengths in manufacturing, quality & engineering processes, R&D proved as
h i f th JVa game changer in success of the JV
■ Tata deployed its key manufacturing experts from other business verticals thereby
reducing the learning curve in absorbing the technology
Key Insights ■ The JV has been strategically formed for converting the facility to a full fledged
helicopter assembly unit for India and export market
81© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source – Media reports, KPMG Analysis

94. Case Study 2: Tata Lockheed Martin Aerostructures (Tata–Lockheed Martin JV)
Aerostructures for C-130J aircraftAerostructures for C 130J aircraft
JV partners & ■ Tata Advanced Systems Ltd (TASL)– 74%, Lockheed Martin Corp – 26%
Ownership
Structure
■ The JV was established in 2011 to build aerostructures for C-130 Hercules and C-130J
Super Hercules at TASL Hyderabad facility
■ To create high quality, low cost and built-to-print manufacturing capability in India
Objectives ■ Critical aero-structural assemblies ( Centre wing box and empennage for Hercules
aircrafts)
Investment ■ Tata - ~ INR 100 crores; Lockheed Martin - ~ INR 50 crores
Investment
Responsibilities
& k h
■ Centre-wing box spares, leading edges and tail empennage sections for the C130J
Super Hercules Transport Aircraft
C tl P d t th (t il bl ) f th L kh d M ti& work share ■ Currently Produces two empennages per month (tail assembly) for the Lockheed Martin
C-130 and plans to increase up to four a month as required
Target market ■ Lockheed Martin and its clients in US marketg
Key Insights
■ First JV of Lockheed Martin in India, and second JV for Tata in Aerospace components
space
■ By the end of 2015, Tata will become the sole supplier to Lockheed Martin for theKey Insights y , pp
empennage section
82© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source – Media reports, KPMG Analysis

95. Case Study 3: Bharat Forge Elbit Advanced System Private Ltd (1/2)
Project based JV for participation in Indian army artillery program
JV Partners &
O hi Bh t F 74% Elbit S t I l 26%
Project based JV for participation in Indian army artillery program
Ownership
Structure
■ Bharat Forge– 74%, Elbit Systems, Israel – 26%
■ Approved by FIPB in Sep 2013
K f I di ’ USD 12 14 b Fi ld A till R ti li ti P
Objectives
■ Key focus - Indian army’s USD 12 – 14 bn Field Artillery Rationalisation Programme
(FARP) to up grade its obsolete artillery systems
■ To bid for India’s current 155mm 52/39 gun programs and future artillery programs such
as Advanced Indian Gun Systemas Advanced Indian Gun System
■ To produce shells for the guns and armoured vehicles upgrades
Investment
■ Bharat Forge has made an investment of INR 100 Cr for expanding its defence
b i
Investment business
Responsibilities
■ Bharat Forge’s existing production facility will be used for prototype and mass
production after winning the orderResponsibilities
& work share
production after winning the order
■ Elbit will share its expertise in developing products such as ATHOS 155/52 Towed Gun
System, the ATMOS 155/52 Mounted Gun System etc
83© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source – Media reports, KPMG Analysis

96. Case Study 3 : Bharat Forge Elbit Advanced System Private Ltd (2/2)
Project based JV for participation in Indian army artillery programProject based JV for participation in Indian army artillery program
Current
revenues/profits
■ The JV is not making any revenues as they are yet to win any orders
■ Bharat Forge as a whole is expected to generate around USD 100 mn from aerospace
and defence business by 2020
■ Bharat Forge had a strong expertise in forgings which is very critical in manufacturing
these artillery systems.
■ The JV has enabled Bharat Forge to mature as a system integrator from being a
li
Key Insights
component supplier
■ The expertise from JV might help Bharat Forge to bag global orders for manufacturing
sub components (forgings) for artillery systems
84© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source – Media reports, KPMG Analysis

97. Case Study 4 : Multiple JVs of Aequs (formerly Quest Global) (1/2)
Manufacturing Aerostructures
■ Aero structures Assemblies India Pvt Ltd - Aequs – 74%, SAAB, Sweden – 26%
Manufacturing Aerostructures
JV Partners &
Ownership
Structure
■ SQuAD Forging India Pvt Ltd – Equal equity distribution between Aequs , Setforge
Auburt Duval, ERAMET,FARINIA, France
■ Aerospace Processing India Pvt Ltd – Aequs – 74%, Magellan Aerospace, Canada –
26%Structure 26%
■ Established during 2011/2012 at Aequs private SEZ at Belgaum , Karnataka
■ The focus of the three JVs formed by Aequs is to build its capability in aero structure■ The focus of the three JVs formed by Aequs is to build its capability in aero structure
manufacturing across different manufacturing processes.
■ Aequs – SAAB JV – Focus on aero structure details parts and sub assemblies for
SAAB’s global plants and also for other customers
Objectives
SAAB s global plants and also for other customers
■ Aequs – Magellan JV – Aerospace surface treatments
■ Aequs – Setforge JV - Aero structural parts, landing gear, and braking system
components in aluminum steel titanium or nickel base alloyscomponents in aluminum, steel, titanium or nickel base alloys
■ To emerge as India’s leading private sector player in precision machining, sheet metal
fabrication, assembly, forging, and special processing
Investments
■ Aerospace SEZ – Total investment around INR 150 Crores
■ Aequs – SAAB JV - Total investment INR 55 Crores
■ Other JVs: approx 50 – 70 Crores each
85© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
pp
Source – Media reports, KPMG Analysis

98. Case Study 4 : Multiple JVs of Aequs (formerly Quest Global) (2/2)
Manufacturing Aerostructures
Responsibilities
■ Aequs has set up a state of the art aerospace SEZ in Belgaum, Karnataka housing all
the supporting infrastructure required for aerospace manufacturing
Manufacturing Aerostructures
Responsibilities
& work share
the supporting infrastructure required for aerospace manufacturing
■ The global JV partners will bring with them the expertise in multiple domains such as
machining, sheet metal, surface treatment and forging
CurrentCurrent
revenues/profits
Aequs - SAAB JV - Targets revenues over INR 265 Cr in five years
Target market Global commercial aircraft programs
■ Aequs through these strategic JVs and global acquisitions has positioned itself as a
Key Insights
leading aerospace supplier to global OEMs & Tier 1s
■ The company has chosen its partners to build its capabilities across a broad spectrum
thus capitalizing the global sourcing opportunities
86© 2015 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source – Media reports, KPMG Analysis