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Tata Group to raise investments in defence business

business Updated: Mar 17, 2016 12:53 IST
Nachiket Kelkar
Nachiket Kelkar
Hindustan Times
Tata Group

From left: Vernon Noronha, vice-president, defence and government business, Tata Motors; Rahul Chaudhry , CEO, Tata Power SED; Mukund Rajan, brand custodian and member, group executive council, Tata Sons; and Sukaran Singh, MD & CEO of Tata Advanced Systems (TASL) in Mumbai on Wednesday(PTI photo)

The Tata Group expects revenue from its defence and aerospace business to touch Rs 2,650 crore for 2015-16 fiscal (up 7.5% from a year ago) with substantial investments going ahead coupled with a strong push on the Make in India initiative.

“Already we are seeing revenue grow at a compounded rate of 18% over the last five years . It is a very promising space. Clearly, there will be substantial new investment, expansion of facilities, more jobs been created…,” said Mukund Rajan, member – group executive council and brand custodian, Tata Sons.

Several Tata Group companies including Tata Motors, Tata Power Strategic Engineering Division (SED), Tata Advanced Systems, TAL Manufacturing Solutions, Tata Technologies, Tata Elxi, Tata Consultancy Services and Titan’s precision manufacturing division have at least some business in the defence and aerospace business.

Many of these companies are working with global defence and aerospace players such as Boeing, Sikorsky, Rolls Royce and Lockheed Martin on various projects.

“We would be open to possibilities of strategic acquisitions, particularly in areas where technology can be absorbed,” Rajan said.

Some of the group companies that have stepped up investments include Tata Power SED, which is setting up a new factory at Vemagal in Karnataka with an initial investment of Rs 500 crore. The unit is expected to start operations next year. “In the second phase it will invest Rs 200 crore more,” said Rahul Chaudhry, CEO, Tata Power SED. It has earlier invested Rs 500 crore in its facility in Bangalore.

Defence is one of the 25 thrust areas under the NDA government’s Make in India initiative. It has also eased foreign investment norms to 49% through automatic route.

“The government has increased its pace of floating request of proposals for defence procurement,” said Vernon Noronha, vice-president defence at Tata Motors, adding that the follow-up process behind each project and the field trials of arms and combat vehicles are also being expedited.

Tata Motors, is one of the bidders for the estimated Rs 60,000 crore Future Infantry Combat Vehicle programme (FICV) and has recently roped in Bharat Forge and US-based General Dynamics Land Systems as its partners in the consortium.

“The future of Tata Motors is clearly in the combat vehicle range,” said Noronha, adding he expects a compounded growth of 10-12% in the defence business.

Tata Motors is likely to get a fresh order to supply 619 high mobility 6X6 multi-axle trucks to India’s armed forces. It had last year won an order to supply 1,239 such trucks to the Army.