Bharat Forge Makes a Play To Expand

[kurup]

A little known name in India’s defense sector — privately owned Bharat Forge — plans to become a major player, especially in the artillery and specialized vehicles segment.

The company, which belongs to the Kalyani Group, has acquired the gun manufacturing facility from Switzerland’s Ruag and has been given permission by the government to set up a joint venture with Elbit Systems of Israel.

The joint venture will be called BF Elbit Advanced. It will develop, assemble and manufacture defense systems, particularly artillery guns, mortar gun systems and ammunition.

Until 2011, private companies in India could not enter the defense sector.

Rajinder Bhatia, CEO of Bharat Forge, said the company has received requests for information (RFIs) for several high-tech projects in the past year, including the low-level quick-reaction missile system; medium-range, surface-to-air missile system; and long-range, surface-to-air missile system. Bhatia said Bharat Forge will concentrate mainly on the gun projects and will not participate in the RFIs offered.

“Kalyani Group has a very focused approach, and we intend participating in certain chosen segments which are aligned to our core competence,” Bhatia said. “Our competence is towards weapon systems which require high-tech manufacturing and in-depth knowledge of metallurgy and materials.”

The company has developed a 155mm/52-caliber gun and has teamed with Elbit Systems to co-develop and co-produce the mountain version of the gun.

The Indian Army has a requirement for a variety of 155mm/52-caliber guns worth more than US $3 billion. Yet, the Army has failed to acquire a single gun from the overseas market.

With Elbit, Bhatia said he sees an opportunity.

“Elbit is a very strong company with a wide ranging portfolio,” Bhatia said. “There are a number of segments like artillery systems, protected vehicles, precision ammunition and other high-end products where we can collaborate with each other.”


Overseas Tie-up ::
To tap into the $100 billion defense market — and encouraged by the government’s initiative to boost domestic defense companies — Bharat Forge plans several tie-ups with overseas companies, but isn’t ready to name them yet.

Analysts say domestic defense companies will need to partner with overseas companies aggressively to compete in several defense tenders being offered first to domestic firms as part of an unwritten Defence Ministry policy to boost the domestic industry.

“Without a doubt, [Bharat Forge] will need to collaborate with overseas companies for system-level know-how and will most likely get to start a build-to-print facility should they win the contract,” said Rajesh Narayan, a Mumbai-based investment banker. “However, should they aspire for the partnership to evolve into local system integration, they need to forge alliances and partnerships with Indian small manufacturing enterprises.”


Gun Facility ::
Bharat Forge’s acquisition of Ruag allows it to build self-propelled artillery guns and vehicles at Pune in India.

The facility has been manufacturing artillery systems, including M109 self-propelled tracked systems. The line was upgraded in 2004 to tackle artillery systems for 155mm/52-caliber guns. In addition, the line has also been used to upgrade tank systems from 105mm to 120mm artillery gun systems.

Another Bharat Forge executive claimed the company can manufacture a variety of guns, including 105mm, 130mm and 155mm/52-caliber naval guns. The facility can also upgrade armored systems, the executive added.

Some of Bharat Forge’s ongoing projects include upgrade programs for light multipurpose reconnaissance vehicles, light bulletproof vehicles and light strike vehicles.

Defence News - Bharat Forge Makes a Play To Expand

 

[IndoUS]

It is time for the government to allow private sector to play some role in the development of hardware for the military. The government run companies are already under pressure because of the work load. If we can let go of some development program to the private sector then it will help improve the ability of out government run agencies to at least provide essential equipment in a timely manner.

 

[confound thinker]

Was is so difficult in understanding that we don't even stand a chance in achieving the indigestion target of 70% without involving the private players on a larger scale..

 

[janon]

Look at the stupidity of our socialistic system :

1) Don't allow private enterprise, hope govt run institutes can deliver.
2) Govt run institutes can't deliver, so buy from abroad (Mostly from foreign private firms, BTW).

That's the warped logic of socialism - don't let domestic private companies prosper, even if that means sending Indian money abroad and fattening the paycheck of foreigners.

 

[Capt.Popeye]

It is time for the government to allow private sector to play some role in the development of hardware for the military. The government run companies are already under pressure because of the work load. If we can let go of some development program to the private sector then it will help improve the ability of out government run agencies to at least provide essential equipment in a timely manner.

It is inevitable and it is bound to happen. Not very long ago; the DIAT (Defence Institute of Advanced Technology) in Pune organised a joint meet with CII and Baba Kalyani the Chairman of Bharat Forge was the Keynote speaker. The MoD is seriously wooing major Industrial players to lend their expertise to the Defence Manufacturing Sector. This is a must, since the Defence PSUs have saturated. Only the RM and his RRM (in charge of Defence Production) should be able to resist the lobbying by the PSUs and their Unions. The DRDO has already woken upto the fact that they alone cannot create everything.

 

[sancho]

Was is so difficult in understanding that we don't even stand a chance in achieving the indigestion target of 70% without involving the private players on a larger scale..

, the whole indigenisation theory has brought us in this mess, not govern vs private. Here a private company gets the rights to produce foreign stuff, slighly modified possibly, or in the best way, to jointly develop things, with the foreign partner being the prime developer. If that would had been the way for India since years, we would be on a whole different level today, but we wanted to make everything alone and failed.
The government had realised that and therefor allows far more joint developments and offers than in the past, take the self propelled howitzer competition as an example, where foreign companies had to team up with Indian once to provide their arms. Denel's Howitzer with Tata, is not an indigenous howitzer, but gives us the chance to get a ready developed system in a fast way, with produced in India, with some Indian modifications and Bharat Forge does the same by taking over foreign companies or teaming up with Elbit, but again, that has nothing to do with indigenisation.

 

[confound thinker]

, the whole indigenisation theory has brought us in this mess, not govern vs private. Here a private company gets the rights to produce foreign stuff, slighly modified possibly, or in the best way, to jointly develop things, with the foreign partner being the prime developer. If that would had been the way for India since years, we would be on a whole different level today, but we wanted to make everything alone and failed.
The government had realised that and therefor allows far more joint developments and offers than in the past, take the self propelled howitzer competition as an example, where foreign companies had to team up with Indian once to provide their arms. Denel's Howitzer with Tata, is not an indigenous howitzer, but gives us the chance to get a ready developed system in a fast way, with produced in India, with some Indian modifications and Bharat Forge does the same by taking over foreign companies or teaming up with Elbit, but again, that has nothing to do with indigenisation.

Yes I agree that private players should focus on defense products right from the design stage itself rather than just manufacturing them
But a few months back there were reports that bharat forge(or some other private company)is fully ready with a 155mm Howitzer prototype but they are unable to test it due to the government not giving them permission to use firing ranges.I was talking about this king of total neglect which the MOD has towards Indian private players irrespective of the degree of the indigenous content in the product which is causing a total vacuum which is in turn filled by import causing huge losses in foreign reserve and jobs

 

[sancho]

Yes I agree that private players should focus on defense products right from the design stage itself rather than just manufacturing them

No, they focus on what gets them the highest benefit in return. There is no nationalistic thinking here, they want to sell arms not develop something Indian and the fastest and easiest way for that is, to team up with experienced foreign partners. But this team up from the start is the key, not trying to develop things on own (Kaveri, LCA radar...) and when that fails, asking foreign partners for help. MoD must push our government own companies also to more joint developments, only then we will improve ourselfs.
Take the basic trainer issue. Why is it PC7 vs HTT40? Why didn't we bound the one with the other? A competition for of the shelf trainers + the team up to jointly develop the HTT 40!
That would have gave IAF the badly needed fast induction of trainers + a faster development of an indigenous trainer, most likely with more commonality to the PC7 to ease maintenance and shorten development time, instead of developing a new trainer and all parts from the scratch, just to put a MADE IN INDIA stamp on it.
Same could be done with the LUH competition and HAL's LUH, or Rafale and AMCA, P75 subs + first indigenous SSK's...
We make the mistake to look at the extreems only and not in between, we don't want to be dependent on Russia only and want to develop stuff indigenously instead, but that takes a lot of time and a big learning curve, while joint developments gets us both less dependance and indigenous developments. We just have to keep the pride factor out!

But a few months back there were reports that bharat forge(or some other private company)is fully ready with a 155mm Howitzer prototype but they are unable to test it due to the government not giving them permission to use firing ranges.I was talking about this king of total neglect which the MOD has towards Indian private players irrespective of the degree of the indigenous content in the product which is causing a total vacuum which is in turn filled by import causing huge losses in foreign reserve and jobs

That might be an issue, but there are more problematic once, the bribery issue in IA, which caused the huge delays of howitzer procurements since decades, the fact that Indian competitions are way too complicated and decisions are made very slowly only. When all that is sloved, we can talk about providing firing ranges for privat companies, that might sell these weapons to foreign countries and use the ranges for their own benefit too.
And jobs can't be lost, when there is a licence production and the MoD keeps on with their re-investment strategy. Infact, with every import, we also support local industry by far, since billions came back too.

 

[confound thinker]

No, they focus on what gets them the highest benefit in return. There is no nationalistic thinking here, they want to sell arms not develop something Indian and the fastest and easiest way for that is, to team up with experienced foreign partners.

Sure that teaming up with foreign partners is the fastest and easiest way in the short run but I think that the companies are very much aware that in the long run to make killer profits they should have their own designs with the IPR and all other rights like the US companies and the other foreign private companies operate.So if we increase the FDI in defence,it will be a major boost to foreign partners of the Indian firms to bring in more cutting edge technology into the partnership which the Indian firms can use later for building their own products.

But this team up from the start is the key, not trying to develop things on own (Kaveri, LCA radar...) and when that fails, asking foreign partners for help. MoD must push our government own companies also to more joint developments, only then we will improve ourselfs.

I think what is preventing the foreign companies to join from the start rather than the design phase is the limit on FDI.Thier stake in the team up will be limited to 26% and at this rate there is not sufficient incentive for them to bring in the designing technologies and hence they take this easier way of joint manufacturing.So if we increase this limit the we may be able to lure them into team ups in the design phase itself with us getting all the technologies.

Why is it PC7 vs HTT40? Why didn't we bound the one with the other? A competition for of the shelf trainers + the team up to jointly develop the HTT 40!
That would have gave IAF the badly needed fast induction of trainers + a faster development of an indigenous trainer, most likely with more commonality to the PC7 to ease maintenance and shorten development time, instead of developing a new trainer and all parts from the scratch, just to put a MADE IN INDIA stamp on it.
Same could be done with the LUH competition and HAL's LUH, or Rafale and AMCA, P75 subs + first indigenous SSK's...

This is a great idea.....I wonder why the MOD didn't think of it if not in the PC-7 tender then atleast in the 20 billion MMRCA tender???By this the Kaveri engine could have been saved....
I wonder if there are any genuine difficulties in this kind of deals or that it was the usual bureaucratic impotency or the corrupt practices of the officials which prevented deals of this kind till now.

That might be an issue, but there are more problematic once, the bribery issue in IA, which caused the huge delays of howitzer procurements since decades, the fact that Indian competitions are way too complicated and decisions are made very slowly only.

No what I'm saying is that inspite of all there major issues when someone has come up with a finished product that too at the time of dire need,just a supportive attitude from the MOD may be able to solve a a lot of issues(if not all the issues).

When all that is sloved, we can talk about providing firing ranges for privat companies, that might sell these weapons to foreign countries and use the ranges for their own benefit too.

I feel that the fear that the company might sell the product outside or they might use it for their own benefit should not hold us back from giving them the permission.
Even if they export the product ,we only get to gain by being an exporter of arms to some scale and also it brings in much needed foreign reserve and also bridges the CAD.
And they are only going to test in the presence or in some form of association with the end user i.e the army.But if that is not the case then the MOD could have easily given the permissions with certain conditions like strict monitoring of the testing process or some thing of that sort.

And jobs can't be lost, when there is a licence production and the MoD keeps on with their re-investment strategy. Infact, with every import, we also support local industry by far, since billions came back too.

Yes but the offset is just 30% of the total amount.On the other hand if there is a joint venture by an Indian private firm with a foreign firm(even if it is just for manufacturing of their product) the Indian firm is going to have 76% stake in the venture.Even in case the MOD increase the offset in future to 49% the no of jobs generated and and the money invested in India will be much more than the licensed production method in the present offset route.So either we have to increase the offset clause drastically or encourage the private firms to come up with their own products(ideally their own design) even if in a joint team up with a foreign firm.

 

[sancho]

Sure that teaming up with foreign partners is the fastest and easiest way in the short run but I think that the companies are very much aware that in the long run to make killer profits they should have their own designs.

Not necessarily, because that requires a lot of investments and teaming up with partners and share the costs is the cheaper way too.

I feel that the fear that the company might sell the product outside or they might use it for their own benefit should not hold us back from giving them the permission.
Even if they export the product ,we only get to gain by being an exporter of arms to some scale and also it brings in much needed foreign reserve and also bridges the CAD.

The government is not responsible to support the exports of privat companies, especially if the product is not necessarily suitable for their own needs. If a product that was developed for and sold to the forces, will be exported, support in exports is a different thing and is provided (see PR tours by IAF for Dhruv in foreign countries).

Yes but the offset is just 30% of the total amount.On the other hand if there is a joint venture by an Indian private firm with a foreign firm(even if it is just for manufacturing of their product) the Indian firm is going to have 76% stake in the venture.Even in case the MOD increase the offset in future to 49% the no of jobs generated and and the money invested in India will be much more than the licensed production method in the present offset route.

That's not correct, the 30% is the figure of a complete deal that has to be re-invested, for example via parts for the P8Is and that will be spread over different Indian companies, which is actual work.
The Team up, no matter what % we talking is only the share of the JV and doesn't mean actual work, but that the rights of the product mainly belongs to the Indian side, it doesn't say anything about the workshare though. Again the Tata / Denel howitzer, Tata might have the rights to produce it under licence, but will benefit only if it is selected and only then jobs in India would be generated. On the other side, they create jobs with every part they produce for P8Is, C17s, or even the products they build for Boeing and Sikorsky that are not sold to Indian forces (S92, Blackhawk, or AW helicopters).
The increase of FDI only makes it more interesting for foreign companies to invest in India, since they will have more control of the JV's, but giving privat companies control, that aims on money making and not on the best for the country, is not always the best idea, there has to be a compromise in between.

 

[Bhai Zakir]

I have full confidence over the capabilities of Bharat Forge.

Bharat Forge is the 2nd largest forging company in the World.

It has nine manufacturing plants in India, Germany, Sweden, United States, Scotland, United Kingdom and mainland China.