How Adani Defence Has Scaled Up In The Last Five Years
Within a span of five years, Adani Defence has acquired Alpha Designs and Air Works.
The Adani Group ventured into the defence space in 2017. It has used organic and inorganic route to create a portfolio of defence companies. Within a span of five years, the company has acquired two companies: Alpha Designs and now the aircraft maintenance and operations services provider Air Works.
Adani Defence and Aerospace Ltd.'s entry into MRO services will help expand its relationship with global majors like Airbus SE, Boeing Co. and Safran SA, some of whom are existing partners of Air Works.
One of the largest companies with most competent capability is Air Works which straddles general aviation, defence and also civil markets, Ashish Rajvanshi, chief executive officer of Adani Defence and Aerospace, told BQ Prime.
It has been serving customers for the last 70 years and also working with Boeing on the P8 type programme. It has been doing (covering) 60% of the general aviation market—the chartered planes and also the 737s and the heavy checks, he said.
Adani Defence will not just focus on line and base maintenance in the MRO business but also look to expand into component and engine MRO.
Air Works wanted a partner to take the company to the next level, said Rajvanshi.
The entry of Adani Defence is likely to be a pivot for the MRO segment which was slow to pick up due to tax issues forcing aircrafts to travel to Colombo, Singapore and Malaysia for aircraft maintenance.
The current market for MRO in civil is $1.7 billion and $2.5 billion in the defence MRO. A large part of the defence MRO is undertaken by armed forces themselves and defence PSUs.
The MRO civil business is expected grow to $5 billion in the next five years, said Rajvanshi.
But MRO is just one of the five strategic areas that the Adani Defence looks to expand in the few years. Within a span of five years, it has gradually scaled its foray into the defence segment.
According to Rajvashi, the group is clear on four to five areas that are important for India's future.
The first area is intelligence, surveillance and reconnaissance to look at the land border and naval border. This is something for the next generation of unmanned cyber and satellite capabilities within the country, said Rajvanshi.
"We have been pioneers in the UAV domain and now the UGV domain and counter drone domain, which has been a big focus area at Adani," he said.
Adani Defence pavilion at the 2022 Defence Expo on Ahmedabad. (Photo: BQ Prime)
The Russia-Ukraine conflict has brought to the forefront the crucial role of air defence through Javelins, stringers and other missiles.
The whole focus is on strengthening the air defence systems and working with DRDO to offer next-generation technologies in missiles and precision guided ammunition, said Rajvanshi.
This involves five programmes—The Long-range Guided Bomb, the VSHORAD, the ULPGM (UAV launched precision guided munition) and the next generation Anti Radiation Missile Rudram-1—are all part of this portfolio.
The first two strategic focus areas are forward-looking and the third strategic area is to solve the immediate need—small arms manufacturing.
"The requirement is huge if one needs to give a rifle in each hand," said Rajvanshi.
Over the last couple of years, they have been able to set end-to-end small arms manufacturing in volumes and now they are taking gun capability to the next level with howitzers, which include towed gun systems and mountain gun systems just to expand the portfolio, he said.
As part of the fourth strategic focus area, Adani Defence is investing in the Uttar Pradesh defence corridor. It will be setting up the largest defence ammunition complex, spread over 500 acres in Kanpur.
This will house everything from small- and medium to large-calibre ammunition, said Rajvanshi.
This will be an integrated complex, which will bring end-to-end range, all done within the country and with fully automated high quality for the customer.
While the Adani Group's defence strategy is based on captive requirements of the country, Rajvanshi said this is not just for the captive customer. Ammunition will also facilitate significant exports from Indian markets.
According to Rajvanshi, the people recruited are "with export mindset and trained along OEMs like for UAV programme Drishti-10, where the over 35 engineers trained at the OEMs to learn global processes and quality management systems".
The Adani Group is eyeing a 10,000-strong workforce across its defence portfolio in the next five years.
The facilities are ahead of time and the products export-ready, Rajvanshi said. "Once the country is ready to accept this we are happy to supply."
According to him, exports for the small arms, drones portfolio and ammunition will be a very very important chunk, rather than serving the local markets.
On whether Adani Defence will list soon, Rajvanshi said it's too early to bring it to the public market.
Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.