R.K. Tyagi took over as the Chairman of Hindustan Aeronautics Limited (HAL) in March 2012. In an interview with SP’s Aviation, Tyagi spoke very optimistically about hal’s future plans

SP’s Aviation (SP’s): Can you briefly describe the size and the span of activities of the premier Indian aerospace major Hindustan Aeronautics Limited (HAL)?

R.K. Tyagi (Chairman): HAL is a premier aeronautical/aerospace company in Asia with 19 production divisions and ten research and development (R&D) centres in India. HAL’s expertise encompasses design, production, repair, overhaul and upgrade of aircraft, helicopters, aero-engines, accessories, avionics and systems. The company’s sales turnover has crossed Rs. 14,000 crore for the year 2011-12. HAL today provides one stop solution for all the design needs of aircraft and helicopters in airframes, airframe systems, avionics, mission and combat systems using advanced design tools. All manufacturing divisions of HAL are equipped with modern infrastructure for production of aircraft and also helicopters. The company has over 32,000 employees of whom 50 per cent have over a decade of aircraft industry experience. HAL has diversified into manufacture and repair/overhaul of industrial and marine gas turbine engines. It also manufactures structures for aerospace vehicles.

SP’s: How do you see the roadmap ahead for HAL?

Chairman: HAL has been registering steady growth in term of financial parameters over the last ten years. The sales have grown from Rs. 8,625 crore in 2007-08 to Rs. 14,204 crore in 2011-12. The trend is expected to continue during Twelfth, Thirteenth and Fourteenth five year plans with new programmes such as fifth-generation fighter aircraft (FGFA), multi-role transport aircraft (MTA), HTT-40, light combat aircraft (LCH), light utility helicopter (LUH), Indian multi-role helicopter (IMRH), etc. The company has drawn a long-term perspective plan to realise its cision “to become a significant global player in the aerospace industry” by covering the period from 2010-2022 (i.e. up to Thirteenth Plan). This document outlines the roadmap for HAL’s march towards the vision, through analysis of current position, defining strategies to be adopted to overcome challenges and to sustain growth. Detailed plans for technology induction, modernisation, manpower, collaborations, etc are being prepared in line with the overall strategy brought out in the perspective plan.

SP’s: Is HAL exploring business opportunities in the global market?

Chairman: HAL is exploring business options including joint ventures, with different original equipment manufacturers (OEMs) in niche/critical technology areas like the active electronically scanned array (AESA) radar, software defined radios, avionics, ultra light/heavy helicopters, small gas turbine engines, etc. The US and major European countries, which constitute nearly 70 per cent of the global defence expenditure, are witnessing reduction in military spending. This change is forcing the major OEMs of the industry to change their business strategy towards expanding and strengthening their positions in the emerging markets like India, Brazil, South Korea, Saudi Arabia, UAE, etc. It is assessed that due to this shift in focus on the emerging markets, the market would witness more aggressive competition and further streamlining of cost structure is likely to take place. In this scenario, HAL is looking for opportunities of entering into strategic alliances with major foreign OEMs in niche/critical technology areas by leveraging HAL’s strength in Indian market. HAL is also exploring to partner with the OEMs to be part of their supply chain offering gains of cost economics.

SP’s: Offset of 30 to 50 per cent in future aircraft deals will translate into enormous workload for HAL. What steps have been taken to draw the private sector into a partnership arrangement to cope with the huge increase in work orders?

Chairman: With regard to the offset opportunities, HAL is pursuing closely with all the major vendors to enter into collaboration for offset liquidation, showcasing its capabilities and infrastructure set up, to provide services like design packages, work packages, forgings and castings, etc. Outsourcing is being planned in a big way and HAL has drawn up plans to outsource up to 30 per cent of the manufacturing task. This strategy would enable HAL to add and use the capacity more optimally on high value addition jobs or new business opportunities.

SP’s: Has HAL taken any steps in anticipation of the medium multi-role combat aircraft (MMRCA) project?

Chairman: HAL has initiated the project planning activities for establishment of manufacturing facility of MMRCA at Bangalore.

SP’s: Can you please provide an update on the indigenous programmes?

Chairman: HAL is currently involved in the design and development of the advanced light helicopter (ALH), the light combat helicopter (LCH), the light utility helicopter (LUH), the intermediate jet trainer (IJT) and the basic trainer aircraft. HAL is also the major partner to Aeronautical Development Agency (ADA), the nodal agency for the design and development of the LCATejas and its variants. The initial operational clearances (IOC) of the IJT and the LCA are expected by the end of this fiscal. On the rotary front, the Dhruv Mk-4 (Christened ‘Rudra’) is now in the last lap of certification and first delivery is expected by this year. LCH flight evaluation trials are in progress on the two prototypes and areas of improvement have been identified and these are planned to be addressed in the third prototype to be built by HAL. LUH, an ab-initio design is slated to have the highest level of indigenous content of any helicopter made by HAL.

SP’s: What steps has HAL taken to foster capability growth of the aerospace industry in the private sector?

Chairman: HAL is encouraging partnerships with the private industries in the areas of production and design and development. Many private industries are moving up the value chain, from being suppliers of components to suppliers of packaged assemblies and systems to HAL. In order to explore the opportunity for long-term relationships and strengthen the supply chain, HAL recently organised a Global Business Partners meet of its vendors in Bangalore. We received direct feedback from the vendors and this should improve the business relationship.

However, to gain advantage of this competitive industry scenario with increased capabilities of the private industry in manufacturing of defence equipment, HAL has planned to outsource non-core manufacturing/ design jobs through the tiered level of supplier base.

SP’s: What would be your strategy to ensure that HAL contributes effectively in the nation’s pursuit of self-reliance in defence related technology in military aviation?

Chairman: Self-reliance in aerospace and defence is one of the key indicators in defining the economic and military strength of any country. Market dynamics ensures that no company can become a global player without having its own products and innate technological and design strength. HAL has identified research and developemnt (R&D) as a thrust area and has established ten R&D centres co-located with production divisions for enhanced coordination. HAL has involved itself in design and development of ALH (utility and weaponised version), LCH, LUH, IJT and is a partner to ADA for the LCA programme. All these projects are at various stages of development and certification. Future R&D programmes on the anvil are FGFA, MTA, HTT-40 and the IMRH. On successful completion of all the said projects, HAL would have achieved self-reliance over a range of products in various categories of aircraft/helicopters.

SP’s: Does HAL have any focus on civil aircraft?

Chairman: HAL has already manufactured 116 Dornier DO-228 and 89 Avro HS 748 aircraft at its facility at the Transport Aircraft Division (TAD) at Kanpur. Of these, 14 DO228 and 22 Avro HS748 were delivered to civil customers. We have also exported part of these products to countries such as Mauritius and Germany. TAD Kanpur has signed a long-term agreement with Ruag Aerospace Germany for manufacture and supply of complete structural assemblies of DO228 aircraft including fuselage, wing sections and control surfaces. So far, eight sets of these assemblies have been delivered to Ruag. TAD Kanpur is the only agency in India to have received EASA certification for supply of these work-packages. It is also the only production facility in the country equipped to undertake manufacture and maintenance of transport aircraft.