Kalyani announces JV with Rafael for defence systems

Industrial conglomerate Kalyani group is setting up a joint venture with Israel's Rafael Advanced Defense Systems near Hyderabad in Telangana to manufacture missiles, remote weapon systems and advanced armour solutions.

"The joint venture (JV) is in line with the government's 'Make in India' initiative to indigenise development and production of defence equipment," Kalyani chairman and managing director Baba Kalyani told reporters here Thursday.

The 51:49 JV will have the technology transferred from Rafael to manufacture Spike missiles for the Indian armed forces for which the government is slated to float a tender soon.

"This is one of the first JVs in the defence sector after the NDA government increased the Foreign Direct Investment (FDI) cap in defence to 49 percent from 26 percent in July 2014," Kalyani said on the margins of the Aero India 2015 trade expo at the Yelahanka base of the Indian Air Force (IAF) on the city's outskirts.

The multiple-utility missiles will be supplied to the Hyderabad-based state-run Bharat Dynamics Ltd (BDL) for integrating with weapons systems of the three Indian defence services.

"The JV will also manufacture weapons systems and advanced armour solutions for Indian and subsequently global customers of Rafael," Kalyani said on the occasion, but did not disclose the proposed investment by both partners.

The group has set up a special vehicle purpose for the JV, to be christened soon, with modular production capacity to scale it up on securing orders proportionately.

"We see Kalyani Group as an ideal partner to expand our business opportunities in India, where we have been engaged with the defence ministry and state-run enterprises like BDL and BEL (Bharat Electronics Ltd)," Rafael chief executive Vice Admiral Yadida Yaari (retd) said on the occasion.

As a multinational conglomerate with high technology, engineering and manufacturing capabilities, the $2.5-billion diversified Kalyani group is present in engineering steel, automotive, industrial, renewable energy, urban infrastructure and specialty chemicals.

The $2.1-billion Rafael, which designs, develops, manufactures and supplies a range of high tech defence systems for air, land, sea and space applications, was set up as part of the Israeli ministry of defence over seven decades ago.

"We have an order backlog of $4.3 billion for delivering products according to the soldier-specific requirements in the battlefield," Rafael chairman Brigadier General Itzhak Ghat (retd) said in a statement here.

As Israel's second largest defence firm, Rafael offers its global customers an array of innovative products ranging from underwater systems through naval, ground and air superiority systems to space systems.

At a Confederation of Indian Industry-organised interactive session on defence offsets, Defence Minister Manohar Parrikar said offsets are the means to kick-start defence manufacturing, the CII said in a release.

"Defence offsets are the catalyst to kick-start defence manufacturing in any country," Parrikar said.

The Kalyani Group-owned Bharat Forge has signed a multi-year contract with Boeing for supply of wing components for the next-generation 737 and 737 MAX planes, the aircraft manufacturer announced Wednesday.

"We are pleased to welcome Bharat Forge into our supply chain as they have an impressive record of performance across many industries," said Kent Fisher, vice president and general manager, supplier management, Boeing Commercial Airplanes.

Under the agreement, Bharat Forge will begin supply of pre-machined forgings from its facilities in Pune and Baramati to Boeing in the first quarter of 2016.

The company said the titanium parts will be heat-treated, shaped in a forging press, and machined by Bharat Forge before being shipped to Boeing Portland for finish machining into components.