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Digital veena inventor who beefed up IAF’s firepower

An entrepreneur who has won a patent for a digital veena, and also designed a mechanism that fires rockets at a command from a computer aboard the Indian Air Force’s Jaguar aircraft? Incongruous but true. The entrepreneurial career of G Raj Narayan, 66, founder and managing director of Bengaluru’s Radel Group, has been guided by his twin passions – aerospace and music.

He spent 10 years as a design engineer at the state-owned Hindustan Aeronautics Ltd (HAL) before disillusionment turned the thoughts of this post-graduate from IIT Madras towards entrepreneurship. He finally left HAL in mid-1979.

Within three months he was sub-contracting for Bharat Heavy Electricals Ltd, supplying electrical coils after investing his savings of Rs 10,000 in a coil winding machine. Together, the group’s two companies – Radel Electronics Pvt. Ltd. (which makes security systems and musical instruments and accounts for 90 per cent of group revenues) and Radel Advanced Technology Pvt. Ltd. (the aerospace business) – employ 80 people and have sales revenues of Rs 10 crore.

Radel is still a small enterprise. But Raj Narayan is working with the aviation wing of the Indian Navy, and hopes to get business from the Army too, since Radel is one of the few Indian players to be certified by the Centre for Military Airworthiness Certification – a Defence Research and Development Organisation lab. “I am looking at 100 per cent growth in the next two years, possibly even 150 per cent, if ‘Make in India’ takes off.” Raj Narayan concedes that for nearly 10 years after he started in business, he continued with his “garage mindset”, and it was only when he won an award for electronics in 1987 that he thought, “I must shift to an industrial estate in order to become a bigger player.”

He has taken care to ensure that R&D is Radel’s core strength. “The R&D team gradually grew, but took a quantum jump when the company set up its facility in Electronics City in 1995. The team now has about 16 engineers who design the electronic circuits, the software, the printed circuit boards, the mechanical housings and structures, the plastic cabinets and everything else that contributes to complete product design,” he says.

The disadvantages of being small are repeatedly felt. Though his aerospace company alone has orders in hand worth Rs 1 crore, working capital is hard to get from public sector banks. However, Raj Narayan turned one such disadvantage into a business opportunity. He found it hard to recruit engineering talent. Moreover, new recruits, once trained, would soon depart for greener pastures. So he set up the Drona Centre for Excellence as a division of Radel, “primarily to produce trained and productive engineers out of fresh graduates”.

Since Radel also possesses core aerospace domain expertise, “Drona also offers training courses in avionics systems, besides electronic product design. This allows the trainees and engineers a hands-on exposure to live projects that they can also see physically implemented for a real client,” says Raj Narayan.

This finishing school is the group’s third revenue stream, and so far it has taken in two batches of 30 students each and trained them, after which they were free to leave and join other companies. The centre also holds short-term courses for engineering students during their holidays.
Though in his mid-sixties, Raj Narayan intends to continue at the helm of Radel for six or seven years more. “I am in the process of grooming a second line of leadership, who can take over when I retire,” he explains.

The original article appeared on Business-Standard

Role of Government to facilitate the active participation of SMEs

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The Government of India needs to nurture and assist SMEs with proven track records. SMEs who have specialised in their own domains which may be electronics,hydraulics, pneumatics or mechatronics and so on need to be provided facilities of interacting with government agencies, manufacturing establishments, DPSUs, so that they get familiar with defence technology and the specialization involved in those technologies. They would then be able to provide their services or products that can be integrated into the holistic platform. The government also needs to create a new classification of A&D SMEs. This is very important because, once a special classification of a defence SME or an aerospace SME is established, that SME could be entitled to special incentives, funding packages and so on.

The government also needs to create R&D funding facilities for those SMEs involved in design and development of products that will result in significant saving of foreign exchange, because ther imported equipment are very expensive, not only to import but also to support as a part of maintenance. The Government will then have to facilitate the formation of Defence clusters along with their own self-contained common facilities centres across the country. The Government should also simplify the import and export procedures because quite a significant amount of materials, especially electronic components are imported and the procedures of import by paying duties and then claiming the duty drawbacks etc. are very cumbersome. Finally the government would do well to provide some tax incentives to encourage the participation of SMEs into the priority sectors, that is, defence and aerospace.

Making in India, for aerospace and defence

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As of 2013, aerospace and defence (A&D) offsets are reported to have generated business worth $3.5 billion. While it is true that in value-terms, most of this is accounted for by a relatively small number of SMEs, it is undeniable that a whole range of Indian SMEs now have genuine exposure to global markets and standards.

The fact that ‘build to print’ type of orders are growing for Indian SMEs shows that this segment of the A&D market has now matured to fulfill stringent global aerospace standards while remaining competitive on cost.

Given that A&D majors across the world are looking to pare costs by up to 20%, this is something that is obviously attracting the attention of many global players. Overall, although SMEs have benefited by engaging global value chains, it is now time for them to raise their capabilities to higher levels of value addition. This would enable them to penetrate deeper into the global market. As a by-product, it would also enable them to participate in a massive indigenisation push under the Make-in-India scheme.

Among today’s MSMEs, we see strong capabilities in precision CNC machining, electronics manufacturing, design of mechatronics, industrial product design, hydraulic valves and actuators, CNC sheet metal fabrication and forming, precision plastic moulding including design of moulds, software development, etc., not to mention the specialised advanced skills possessed by MSMEs already integrated into the supply chains of A&D establishments. The few Indian MSMEs doing business with global A&D companies are already certified AS9100 and are able to meet global quality and delivery standards. Indian firms in the automotive sector have established a solid international reputation for a while now. Some SMEs in India have already achieved noteworthy quality stamps by using practices like 5S, TQM, and JIT through their concurrent involvement in the automotive components industry.

The success of such SMEs has greatly improved the overall image of Indian SMEs. This has prompted global companies to look for outsourcing to India, with the obvious advantage of lower costs.

Now, the need is to elevate such SMEs to the A&D sector through orientation and exposure to the specialised stringent quality, procedures and standards. There are quite a few success stories involving SMEs in the A&D sector. One SME has indigenously designed and developed weapons control equipment for the Jaguar fighters of the IAF and many ground test jigs that would otherwise have been imported. A few other items indigenously developed by SMEs are Flight Data Recorder for fighter aircraft, precision hydraulic servo valves, multi-function displays (MFD), that form part of sophisticated aircraft systems, wire harnesses, etc. In spite of these achievements, SMEs are understood to be meeting only 20% of the indigenous content in our defence equipment. This points to either their under-utilisation or that the lead integrator, be it a DPSU or a large private-sector enterprise, withholds all the high value-addition to itself.

Tweet this: “The Make-in-India campaign adds a new dimension to the indigenisation programmes in the Indian A&D sector and increases the relevance of the SMEs manifold”.

This opens up opportunities for SMEs to learn from global experience and applying their new-found skills in the massive opportunity for indigenisation. The strong competencies across a wide spectrum of SMEs need to be leveraged via clusters for the A&D sector. In the past decade, the odd aerospace SEZ may have been formed in one or two locations. However, these do not comprise a group of industries with domain expertise across the entire spectrum of domains required for complete design and manufacture, either of the platform or its systems. Thus, the need is to move up the value chain from one-dimensional SEZ specialising in machined and fabricated parts, to the creation of multiple holistic A&D clusters encompassing all domains, across structures and systems that include avionics, hydraulics, pneumatic and electrical domains.

These are yet to be formed. It may come as a rude shock to many that a wide variety of screws, nuts, bolts, rivets, etc. are imported from abroad even to this day, although hundreds of SMEs have the capability to meet this requirement. This fact points to a lack of holistic approach to indigenisation and self-reliance.

However, even as SMEs have come a long way from being ‘garage’ operations they need serious government support in terms of priority lending dovetailed to mitigating the risks associated with design, engineering and R&D efforts. Innovation and design capabilities, though crucial to stay in the game in the aerospace sector, might entail large expenses, relative to the size of SMEs. Timely availability of capital on favourable terms will make future SME growth prospects much brighter.

Further, there has to be greater integration of SMEs with domestic OEMs in the A&D space. This would greatly strengthen the delivery capabilities and market reach of A&D SMEs in India. Currently, two SME exchanges are being set up to facilitate easier access to capital and an ‘India Opportunities Venture Fund’ worth Rs 5, 000 crore is being created through the Small Industries Development Bank of India. While these are necessary steps in the right direction, more needs to be done if the Make-in-India push has to deliver a globally competitive Indian A&D sector.

The Original Article appeared on Financial Express

Tie up with Indian SMEs with proven track record at Aero India 2015

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The Indian Aerospace and defense manufacturing sector is at the cusp of change today, with the entry of large private players and strategic alliances, mergers and buy-outs being the order of the day. Aerospace giants like Airbus, United Technologies Corporation, Lockheed Martin and Dassault Aviation have been closely looking at the Indian market and companies they can partner with. As these companies look to build an ecosystem of Indian firms whom they can outsource their global work at competitive rates and through whom they can cater to the domestic market when orders from the Indian Armed Forces materialise, they can no longer afford to depend on the monopoly public sector giants or a few large players.

In fact, it is in the interest of these global corporations to recognise early that these form the tip of the iceberg and hundreds of Small and Medium Enterprises in India support public sector organisations like HAL and contribute significantly to India’s Aerospace and Defense manufacturing sector.

With the increase in the FDI limit to 49%, global leaders in A&D manufacturing are now eager, more than ever before, to add Indian suppliers to their global supply chain. This would definitely benefit them as they are likely to find some robust partners in small and medium sized Indian enterprises that have executed indigenous projects and have proven expertise, spanning many years.

Digging a little deeper will unearth a few such hidden gems, correcting the misconception that SMEs operate at the lower end of the value chain. There are a few Indian SMEs who are not just component manufacturers but are seen adding value at multiple stages including design, development and high value manufacturing in the aerospace sector. In addition, several Indian SMEs now have the strong technological base to meet global demands and standards, an international business outlook, a competitive spirit and a willingness to restructure which makes them a perfect partner to look out for.

Large domestic players are also broadening and strengthening their competencies and resource base through the process of acquisitions and mergers. They are also looking to forge partnerships with key suppliers in the 2^nd tier. The Make in India campaign has undoubtedly added impetus to their growth aspirations. It is important that SMEs take stock of this paradigm shift and gear up to leverage the opportunity.

Seven essentials to look out for in an Indian SME partner:

Proven track record in the Aerospace domain.
Capability to design and fabricate jigs and fixtures required for production and testing.
Evidence of a strong and robust quality assurance culture built into the organization.
An organizational culture that encourages learning and training of its employees and managers.
Passion and sincerity of purpose among its main promoters in the field of A&D.
Adherence to committed delivery schedules.
Professionalism and high ethical standards in their communication and operations.

To truly leverage the combined potential of a liberal offset policy, India’s advantage in skilled manpower, and relatively low cost manufacturing, it is essential to integrate SMEs into the ecosystem. Aero India 2015 could just be the right opportunity for the industry to move in this direction.

Indian Aerospace SMEs ready to match Global Quality Standards

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This is the most appropriate time for our prime minister’s campaign of Make In India. We need to manufacture not only our own consumer durables and industrial products, but also the products required for the Aerospace & Defence sector. In fact it’s more appropriate for Make In India to be applied to the Aerospace and Defence since it involves the security of our nation and the self-reliance of our nation to defend and use our own equipment. We have been talking about self-reliance for more than five decades now.

But it’s unfortunate that we have not been able to extend the indigenous content of our arms and equipment including aircraft and battle tanks beyond 60%. It’s therefore high time that we all put our heads together. There is no dearth of talent, there is no dearth of knowledge, there is no dearth of man power, in fact India boasts of the largest engineering manpower talent and our engineering manpower is catering to the needs of global companies for application of their ideas and capabilities in products that are developed abroad. So why not we do it for ourselves? It’s therefore essential that the Indian SMEs are integrated into this whole plan of action.

“The Indian SMEs had proven themselves beyond any doubts by their contributions in the automotive sector and we have now reached a stage where Indian automobiles and their parts are exported globally”

So why can’t we do this for the Aerospace sector too? The Indian SMEs have their own core competence in their domains such as hydraulics, pneumatics, mechanical machining, fabrication, electronics, etc.

So it’s only a small quantum jump that they need to take to integrate themselves into the Aerospace & Defense sector and provide the most reliable, most cost effective and made in India products for not only the Indian market, but also export them abroad.

Challenges – Design and manufacture in A&D

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Design and manufacture of civilian aircraft differs significantly from that of Military aircraft in that the certification processes are completely different. Military aircraft are certified as airworthy by CEMILAC, a wing of the DRDO, whereas civil aircraft are certified by DGCA. The standards applicable for each of these categories are also vastly different since safety is of paramount importance in the case of civil aircraft that transport civilian passengers. Further, civil aircraft would need to be meet certification requirements of FAA and EASA in case these aircraft are to fly internationally. Since Indian aerospace companies have very little experience in civil certification procedures coupled with the fact that the civil aircraft manufacture is literally non-existent in India at the moment, this would be a much tougher proposition to tackle than military aircraft.

The aircraft industry needs to adopt the consortium approach rather than have individual companies going it alone.

Aircraft design, development and certification is a highly complex, technology and capital intensive and long gestation industry that can stretch beyond 10 to 15 years or more. It is therefore, highly unlikely that the private sector would be willing to risk investments into this business all by itself. The best approach would be for the formation of a consortium of large, medium and small companies with proven expertise in various domains that can pool resources and synergise competence. Even the government-owned Hindustan Aeronautics (HAL) needs to adopt this model to create a win-win situation among its customers, vendor partners as well as itself.

The Union government will have to provide some incentives either as grants or subsidies to facilitate and nurture the growth of not just one, but a few such consortia. This would ensure that there is a competitive environment that prevents complacency or cartelization. In addition, these consortia can be rated on their successful contributions which will entitle them to more grants for future projects. This support even for a limited period of 5 or 10 years could foster the growth of clusters and consortia, beyond which they would be self-sustaining.

The original article appeared on The Times Of India.

Bengaluru Company develops technology for IAF

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Bengaluru-based aero defence equipment maker Radel Advanced Technology (RATPL) is eyeing huge opportunities in the defence sector this year and is developing a series of Indigenous technologies for the Indian Air Force (IAF).

“An Electronic Line Replaceable Unit (LRU) for the Dornier (maritime reconnaissance) aircraft is under development and has successfully undergone functional testing at Hindustan Aeronautics Ltd (HAL). It is now in the qualification testing phase”, the company’s managing director, G. Raj Narayan, told IANS.

Also, the company is awaiting integration and flight trial reports from the IAF for an electronic bomb-release controller used on fighter aircraft. “Once this is completed, the unit will enter serial production,” Narayan said.

RATPL has increased the life span of the Jaguar fighter aircraft by indigenizing the distributor used on its rocket pod. The IndianSME has used modern electronic systems to replace the original, which is now obsolete.

“This unit has undergone successful certification following into serial production,” Narayan said.

The company is also working on the repair of a high voltage power supply component of the Indian Navy’s helicopters.

“The project involves reverse engineering and design of a new power supply module using current electronics technology. The project is nearing completion and the finalized unit will be delivered to the Navy in a couple of weeks,” Narayan said.

The company is certified by CEMILAC (Centre for Military Airworthiness Certification) and has executed 20 Indigenization projects for HAL and the IAF.

It has already designed, developed and supplied a number of ground rigs for testing the avionics on board the indigenous advanced light helicopter (ALH) and the Sukhoi Su-30MKI combat jet. Multiple numbers of these have been supplied to HAL and are operating across IAF bases.

“Repeat orders for these are being periodically executed by us to meet the needs of HAL, “Narayan said.

The original article appeared on Business Standard.

Make in India Campaign and Indian SMEs: The Fine Line

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The biggest highlight of the year for the aerospace manufacturing industry and Indian SMEs without any doubt has been the announcement of the ‘Make in India’ campaign by our Prime Minister Narendra Modi. Not only has it galvanized the industry in India, but it has also given a renewed confidence to foreign player,s resulting in increased interest from foreign investors to invest in local manufacturing. The Make in India initiative has given new hope to the Indian SME sector and has come as a boost to the sagging morale of Indian SMEs and Manufacturing industry. After the introduction of the Make in India campaign, the industry has started seeing visible changes to the functioning of bureaucracy across the country.

The Union Government has been making all the right noises and is also demonstrating the willingness to take all steps to improve the economy on every front. Works and policies initiated and proposed by the new government in its first few months in power have been very encouraging for the aerospace manufacturing sector.

Several Indian SMEs have overcome the long gestation period associated with the Aerospace & Defence sector and now look to take a leap forward with more prestigious projects.

Tweet this: “The Make in India’ campaign, both in the industrial as well as the A&D sectors, is bound to open up huge opportunities for SMEs with strong design and development capabilities. Radel hopes to capitalize on these and grow into a nationally recognized organisation.”

The successful flight testing of an in-house designed product of Radel in a Jaguar aircraft of the IAF, leading to its certification for regular use in all Jaguars, was the high point of Radel’s performance in 2014. Radel hopes to repeat the above success with another product, which is currently under an advanced stage of testing for the IAF, in 2015. Overall, Radel hopes to grow by at least 60 percent and look for opportunities in the global A&D market.

Demand creation is also a big expectation. While consumer demand will get generated with inflation getting under control, it is critical to jump-start infrastructure, which can and should be the engine of growth for some years to come. Big steps like labour reform and land acquisition would be areas of high importance. They might get addressed this year if the stakeholders come together to work towards the common good.While it will be incorrect to expect all of that to happen in one year, it is encouraging to see a clear sign of a strong beginning of this cycle in 2015.

Indian SMEs set to battle it out for Rs 18,000 crore defence pie

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A $3 Billion opportunity for Indian SMEs and Defence MSMEs has been created by Defence Procurement Policy 2013 and the Make In India Campaign. Numerous offsets in the three wings of the armed forces are expected to be executed in the next five years.

According to defence MSMEs, the two key initiatives have opened up an estimated Rs. 90,000 crore business opportunity, identified as the offset opportunity for defence players in public sector undertakings (DPSUs) and also for the MSME sector over the coming five-year period. It is reported that prospective business worth Rs.72,000 crores has emerged from IAF (Indian Air Force), with the Indian Navy presenting another Rs.13,500 crore possibility. The prospect from the Indian Army would be around Rs.4500 crore. In the last few years the total value of defence offsets contracted in the last few years is valued around Rs.28,800 crore. The Indian Air Force has signed contracts worth approximately Rs.21,600 crore, the Indian Navy worth Rs.5,064 crore and the Indian Army Rs.144 crore.The MSME sector could expect business worth of Rs.18,000 crores, which would be 20 percent of the Defence sector’s overall projection.

The most promsing area that should encourage SMEs in the defence segment is the indigenous manufacture of parts and
sub-assemblies to replace obsolete original equipment (the MRO sector). It includes the design, development and manufacture of complete equipment as a replacements. Serious efforts have to be made to attract SMEs into this obsolescence management sector. In turn, SMEs should rise to this occasion by raising their standards of quality and reliability of parts and assemblies that are manufactured by them, as supplies to larger players. Large organisations can then outsource in parallel to multiple efficiently managed MSME organizations.

This kind of involvement will certainly reduce the cost and the time of execution of projects, which are chronically plagued by delays today.

Factors and Challenges Related to the Growth of Indian SME

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Indian SMEs have been a hot topic of discussion during last couple of months and have attracted the attention of entrepreneurs, bureaucrats and industrialists. India’s Defence budget has been growing year after year and has reached Rs.2,290 billion for 2014-2015. As a result, the opportunities for Indian SMEs (Small and Medium Enterprises) have also grown, leading to increased focus of policy makers and Indian Aerospace SMEs on this sector.

A significant thrust has been indicated in the union budget 2014-15 for the growth of Indian SMEs. After agriculture, the major contribution to the GDP (40 percent) is byMSMEs, who also have the largest workforce. MSMEs in all sectors are known for specific distinctive advantages like low-cost operations, unique skill sets, innovation, flexibility and agility. Indian SMEs nowadays are considered to be competitive and focused.

There has been active participation of Indian SMEs in the last decade in the defence arena. MSMEs play a major role in the defence ecosystem by producing sub-systems and components.

It has been estimated that the Indian defence sector currently comprises over 6,000 MSMEs which are fast integrating themselves into the supply chains of national and international majors including the PSUs.

Although the majority of them produce items of low value addition, a few small enterprises have proved their potential by producing sophisticated high quality products at competitive prices.

The Opportunities

The Defence Procurement Policy 2011 had encouraged indigenous manufacture of defence equipment. Further changes in DPP 2013 have been made, to give preference to ‘Make in India’ across all categories. Indian enterprise should take indigenous design and manufacture as a challenge to grab the multi-fold business opportunity. This may bring a change – from dependence on imports to self-reliance. It will certainly yield technology spin-offs to various other fields such as automobile and consumer sectors.

Nearly 50 percent of defence equipment that are held by IAF are obsolete. They either need replacement or upgradation to extend their useful life. An opportunity of around US$10 billion exists in this segment. Obsolescence management is a key area where Indian MSMEs can play a major role. A few Indian SMEs have developed indigenous sub-assemblies as part of obsolescence management, for both defence forces and defence PSUs.

The Challenges

Constraints faced by majority of MSMEs referring to the A&D sector are

Lack of awareness and exposure to stringent performance requirements such as high quality, reliability, efficiency and ruggedness to perform in harsh environments.
Lack of knowledge of military systems and platforms.
Lack of design skills for development of these products or their components.
Lack of training facilities for skilling the workforce, including engineers, in this specialised domain.
Lack of access to specialised raw materials and testing facilities associated with this sector.
Lack of funding to tide over the long gestation period characteristic of this sector.

Need for an A&D classification for MSMEs

The decision to bring out a new policy for MSME by our Union MSME Minister, Kalraj Mishra will open up new opportunities for all stakeholders. Committees have been formed by Ministries of Finance, MSME and RBI to address all issues relating to the sector and it is hoped that they will provide a comprehensive policy that will reflect the changing business environment. Considering all the problems faced by entrepreneurs in this sector, a special category to classify ‘A&D MSME’ s would encourage more entrepreneurs to enter the sector.

Special schemes for SMEs in Aerospace and defence sector

A few steps that can be taken to encourage MSMEs in the sector are:

1. During the procurement process, whether of PSUs or armed forces, SMEs with aerospace/ defence skills, experience and proven track record, should be given weightage.

2. SMEs with proven track record in a particular field (such as machining or electronics or hydraulics, etc.) but lacking experience in the A&D arena, to be given exposure to specialised processes and requirements of this sector.

3. Commonly used materials and standard parts (For example, fasteners) of approved grades and quality that either need to be imported or manufactured within the country can be consolidated by creation of a raw material bank, operated and managed by NSIC or a similar organisation.

4. This sector is known for the long cycle time, from order to realization of sales. Special funding schemes taking this factor into account, would be a major step in mitigating one of the main elements discouraging MSMEs in this sector.

A&D MSME Clusters — the way forward

MSME clusters for the high technology A&D sector has to be facilitated. Government should encourage, promote and nurture these clusters through funding, training and support schemes. These clusters could also be virtual which form a supply chain for PSUs and defence organisations. Members in virtual cluster will be able to interact and share business and ideas mutually. There is no need for them to be co-located as a cluster. Members of the clusters would then be able to be use their skills to design or manufacture different parts of equipment. Growth of every individual in the clusters can be increased by pooling of complementary domain expertise. This would go a long way to establish the eco-system which is essential for successful and holistic implementation of indigenisation programs.

For indigenous defence industry

As an extension of the cluster model described in the preceding paragraph, a PSU such as HAL or BEL, or the maintenance wings of the armed services could financially partner with a cluster for mutual benefit. This could be a successful implementation of the PPP model that many governments have talked about in the past. This PPP model would be able to address many of the problem areas elucidated above, including the issue of exposure and training in specialised domain areas of A&D. The PPP eco-system will provide the much required impetus to the MSME sector.

While the new PM’s objective of turning the country from a major defence importer to an exporter opens up a much larger opportunity for the MSMEs, going far beyond the cause of self-reliance, there are challenges aplenty. However, these are not insurmountable if all the stakeholders come together and synergise for the common good.

India is today the world’s largest military equipment buyer. This situation can be converted into a multi-fold business opportunity if indigenous design and manufacture is taken up as a challenge by Indian enterprises!