Public sector defence and aviation major Hindustan Aeronautics Ltd (HAL) has gross sales of over Rs7,000 crore ($1.75 billion), but its exports are a miserable Rs250 crore; less than 4 per cent of turnover. With a target of achieving sales of over Rs12,000 crore ($3 billion) by 2011, will HAL's exports continue to lag behind?
The surprising thing is that a large chunk of HAL's exports - in fact, the fastest growing segment - comprises civilian rather than defence goods, produced by the aircraft division located at Bangalore. This unit accounted for more than Rs100 crore of HAL's exports in 2006-07.
Last year, the aircraft division managed to increase the manufacture of 'shipsets' - aviation parlance for a set of right and left hand doors - for the Airbus A320. From six each month, production went up to 20 and peaked briefly at 22 a month.
An agreement for orders worth Rs320 crore ($80 million) from Airbus Industrie for HAL to supply 1,000 shipsets by the end of 2008 was signed. The company makes 50 per cent of all Airbus A320 and A319 doors, and is looking forward to getting 75 per cent of the orders in the near future. HAL is also hoping to win an order for the supply of emergency doors for the long-haul Airbus A340.
The division also makes packages used to convert Boeing 737 passenger aircraft into cargo freighters. Recently, it delivered 15 cargo doors, each priced at around Rs60 lakh ($150,000).
The Boeing deal has a great future. By 2025, an estimated 3,000 Boeing 737 aircraft will have to be converted into cargo versions or dumped, as they will be too old to fly passengers. HAL is ideally placed to grab the cargo conversion market.
At present, the cargo doors are supplied to Israeli Aerospace Industries Ltd, which integrates them with the aircraft in Israel. But HAL hopes to handle these conversions in Bangalore, as soon as it completes setting up a comprehensive maintenance, repair and overhaul facility.
The business of business
Another export avenue is HAL's arrangement with Gulfstream Aerospace Corporation, a General Dynamics subsidiary that manufactures business jets, based in Savannah, Georgia. HAL supplies the rear fuselage for Gulfstream's new G-150 mid-size, high-speed business jet that can fly from New York to Los Angeles in under six hours.
HAL will supply Gulfstream 200 shipsets over a four-year period; each set is priced at around Rs60 lakh ($150,000). The company will start delivering rear fuselage sections to Gulfstream from March 2008. Won in the face of tough international competition, this is the first time that HAL is working on such a complex assembly, which has to be built to exacting Federal Aviation Administration (FAA) standards.