In The News
06 Mar 2014

Airbus sourcing from India grows rapidly

Mar 6, 2014, 01.16PM IST TNN[ Sujit John ]

Airbus has been sourcing doors for its single aisle aircraft family from Hindustan Aeronautics Ltd (HAL) for several years now.
BELGAUM: Airbus management committee member and head of procurement, Klaus Richter said the aircraft maker was sourcing over $300 million (Rs 1,850 crore) of products and services from India every year.

This is an over 50% increase from the $200 million sourcing reported in 2011-12.

"India is providing us very competitive offers. Our procurement is no longer because of offset obligations; it's the free market at work," Richter said.

Richter was in Belgaum on Wednesday for a function to mark the rebranding of Quest Global SEZ, a 250-acre facility focused on aerospace component manufacturing and assembly.

Several components for the A320 and A380 are manufactured at the Belgaum facility. Airbus has been sourcing doors for its single aisle aircraft family from Hindustan Aeronautics Ltd (HAL) for several years now. It sources engineering services from two Bangalore-based companies — Quest Global Engineering and Cades. It sources flap track beams (used on the wings) from Bangalore-based Dynamatic Technologies. Several of Airbus's global suppliers like United Technologies do engineering for Airbus in India, as also manufacture parts.

Aravind Melligeri, founder and chairman of the Belgaum SEZ, now renamed Aequs, said he had been in talks with Richter for the past four years to visit the SEZ. "The fact that he is here now shows that we have demonstrated the infrastructure, scale and quality necessary for people like him to want to come here," he said.

In 2011, Richter was at the aerospace park in Devanahalli for the ground-breaking ceremony of Dynamatic Technologies' 35-acre site there.

Aequs, which has seen an investment of Rs 250 crore, is expanding rapidly. It has a machining facility, it has a surface treatment facility in a joint venture with Magellan Aerospace of Canada, it has a forging facility in a joint venture with two French companies, Albert & Duval and Setforge, and it has a joint venture with Saab Aerostructures for the manufacture and supply of aerostructure assemblies. Some 1,200 different parts are made in the SEZ.

"Customers love the fact that we have so many facilities — machining, forging, surface treatment, assembly — in one space, all managed by one entity. We provide at least 20% cost savings, without which they would not come here," Melligeri said.

Aequs will end this financial year with revenues of Rs 100 crore, up from Rs 60 crore last year, and will turn profitable for the first time since it was established in 2009. "We should be able to double our revenues next year. Getting orders is not a problem at all; our only challenge is to ensure we have trained people to execute those orders on time," Melligeri said.

The branding change is also expected to help by bringing sharper focus to the manufacturing business. Melligeri and his long-time friend Ajit Prabhu had established Quest as an engineering outsourcing services firm in 1997. The manufacturing venture came later, largely because of Melligeri's passion for it. But the two businesses were vastly different — services were not capital intensive and the payoffs were quick, while manufacturing was exactly the opposite.

"Having the same branding for both businesses confuses investors and customers," said Melligeri, who along with his family, fully owns Aequs. Aequs also has a holding in the $250-million Quest Global, the engineering services arm, where Prabhu and private equity firm Warburg Pincus are the other big shareholders.
Source: TOI