Hindustan Aeronautics ties up with Gulfstream

Hindustan Aeronautics Ltd. has entered into a business alliance with Gulfstream Aerospace Corporation, the Georgia (America) based wholly owned subsidiary of General Dynamics that manufactures business jets. The deal entails HAL supplying component packages including for the rear fuselage, which are to be fitted on Gulfstreams' new mid-sized, high-speed business jet, G-150. The Gulfstream deal is a part of HAL's ongoing strategy to sew up a number of deals in the civilian airline sector, as the aviation major attempts to ramp up its sales turnover from the present $1billion to $3billion by 2011. HAL has realised that if it is to increase its sales turnover, and become a global aviation player, it will have to abjure the tendency to tie most of their business to India's defence budget, increase share in the civil market and exponentially push up exports. Today, hardly 10 per cent of HAL's business comes from the civil aviation sector, and exports in 2005-06 were a miniscule Rs. 190 crore.

But HAL's Director (Finance) D. Shivamurti says that this is about to change. "Our exports will cross Rs. 215 crore during this financial year and we have entered into a number of business deals either by way of joint ventures or as sub contractors. We have entered into tie-ups with the Israel Aerospace Industries (IAI) Limited to manufacture and supply kits for the conversion of Boeing 737-200 passenger aircraft into cargo versions, with Pratt and Whitney for the supply of 45 different kinds of engine components from our Koraput division, with Airbus Industrie for the supply of 1000 doors for the Airbus 320 and 319, and we have established a joint venture with French engine manufacturer Snecma to produce engine components." While for the IAI deal, HAL will initially produce 25 kits (out of the 200, Boeing 737-200s that could need conversion) each costing around $1 million, the $ 4 million Pratt and Whitney contract could eventually touch around $ 10 to 12 million.

HAL's deal with Airbus for aircraft doors that is worth around $ 80 million ends in 2008, by when HAL will be supplying over 20 doors every month. Says Mr. Shivamurti, "Currently we supply 50 per cent of all Airbus' A320 and 319 doors. We want to increase our share to 75 per cent. We are also expecting some orders from Airbus, Germany." According to Mr. Shivamurti, HAL is also in talks with Boeing which is looking to outsource some keys components, Honeywell International, the U.S. aerospace major, which is thinking of transferring a production line of its smaller transport aircraft engines to India, and with major players such as Pratt and Whitney and Singapore Technologies Engineering Ltd. to set up a maintenance, repair and overhaul facility for both engines and airframes in Bangalore. Helping HAL tap into business opportunities in both the civilian and defence sectors is the Union Government's "offset policy," which stipulates that every major defence deal over Rs. 300 crore required the defence export manufacturer to offer at least 30 per cent in direct offsets to Indian companies.

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