We will be opening another facility in Telengana soon, says the Kalyani group chairman

Kalyani Rafael Advanced Systems (KRAS) said on Thursday it has bagged a $100-million (about Rs 690 crore) contract to supply 1,000 Barak-8 MRSAM missile kits for the Indian Army and Air Force. Baba Kalyani, Chairman, Kalyani Group, talks to ETNOW on what kind of opportunities he sees in the defence sector.

KRAS has bagged $100-mn order from Indian Army and Air Force for 1,000 Barak-8 MRSAM missile kits. What next? 

This is the beginning of opening up of the defence sector but what we are doing is in an area which is very specific. The defence sector is much larger and therefore opportunities are much larger than this. This is exactly the way you are going to go forward and open up this sector to much larger opportunities.

The next one will be bigger than $100 million, the third one will be bigger than that so you know this is how we will build up this business and capability in India within the Make in India confines.

How ready is Bharat ForgeN to participate in Kalyani Rafael Advanced Systems (KRAS)? 

In KRAS we have already made investments two years ago. We set up a plant in Hyderabad near the airport. We have been producing very sophisticated hardware there which has been used by our services. Some of it has been exported but it has not been to the scale that this opportunity is. This opportunity has taken us to the next level.

I am hoping that as this door opens and we start doing this by next year there will be more opportunities that will come which will take us to a higher level. One thing that we need to understand here is, we are not just assembling a product, we are actually manufacturing it. So we have to have the know-how, the technologies that we have to use, get the people trained to create those technologies, create our supply chains etc. We have a lot of vendors within this region who will supply some subsystems to us and we will make some of those things ourselves and put it together and make a whole system.

Any ballpark figure of the investment you have made and what is slated to be made? You spoke about one more facility in Telangana?

Yes, we will have to create one more facility because right now what we do is cold. Now, every weapon system has a hot portion attached to it. Now the hot portion cannot be done where the cold is being done because there are rules and regulations. So, we want to create another facility for the hot integration processes.

What kind of investment will that entail?

I do not want to get into the investment numbers...

Can you give us a ballpark larger figure of KRAS investment?

It is very difficult to give you a figure because we will have to invest every year as programmes go on because we need to create more and more capacity, more and more capability in the system. Let us just leave it at that.

How big is the export market in this area? How are we really looking to explore that market?

The government of India, MOD has already set an export target; Rs 25,000 crore or something like that. We are looking at much larger export numbers.

How big a pie are we looking at?

Five years from now-- we should be looking at at least 5% of that target or 10% of that target. In any country, you are not going to have more than 8-10 major players in the defence sector.