In a detailed interview with ET, Rajesh K. Dhingra, President, Reliance Defence & Aerospace shares the latest on the Dassault Rafale fighter aircraft deal, the company’s plans for the naval and aerospace sector and updates on its discussions with the US Navy to undertake service and repair for naval warships. Excerpts:
With the Strategic Partnership policy now ready, what will be the focus areas for Reliance Defence among the four sectors opened up?
Reliance Defence is looking at full spectrum of Defence platforms – Aerospace, Land and Naval. We will decide on our priority based on the Program requirements to be included in the RFPs. However, Submarine and Aerospace will have higher priority given the substantial investments made and the infrastructure we have.
Can you share an update on the ongoing project for the Navy being executed by the shipyard. When are trials expected to start for the offshore patrol vessels?
We are working on multiple programs for the Navy and Coast Guard. These include five Offshore Patrol Vessels, Fast Patrol Vessels and the Training Ship. Price bids for 4 LPDs are due on 22 Jun and we expect contract award by Q3, 2017. This will be the largest Defence contract to a Private Sector Company in India till date, valued over Rs. 25,000 Cr.Similarly, Price bids for 16 ASW Shallow Water Craft are due for opening shortly and we are very competitively placed. Cost of 8 Crafts, maximum to be allotted a bidder, would be more than Rs. 10,000 Cr.
With the EOI expected for short listing of SPs for submarine shortly, process for P-75i Program will start. This Program, with 10 years PBL, is expected to be worth more than Rs 75,000 Cr. In addition, Indian Navy is looking at Next Generation Missile Vessels, Corvettes and Frigates. All together, the pipeline is more than Rs 2,00,000 Cr with close to Rs 1,00,000 Cr worth of contracts to be awarded in next 12 months.
There has been a lot of buzz about the Dassault Reliance JV to execute the offsets for the Rafale deal. What has been the progress on ground in terms of building capacity, when do we expect components to start being manufactured in India?
Huge progress has been made on the Dassault Reliance Aerospace Limited (DRAL). Detailed project reports have been submitted for necessary approval. The Joint Venture Company has been incorporated with Reliance having 51% stake and 49% with Dassault.
Master design for the entire Aerospace Park at MIHAN, Nagpur are being finalised as also detailed drawings for the facilities. Ground breaking is planned in July and we expect the first article to roll out in Q1, 2018. Currently, first batch of our team is undergoing training at Dassault facilities in France.
Eco system we are creating at ‘Dhirubhai Ambani Aerospace Park’ will be comparable with the best in the world.
With the IAF requirement of 100 plus single engine fighter, at least 90 twin engine fighters and 57 carrier borne fighters for the Navy, the opportunity size is more than Rs. 2,00,000 Cr. Then we have requirement for more than 700 helicopters in different categories, with Program size in excess of Rs. 50,000 Cr.
Overall there are large opportunities to be addressed in near term, which will result in paradigm shift in production capabilities in the Private Sector.
Reliance is in talks with French partners (Dassault) to bring in the highest ever FDI in defence to India, can you share when this is likely and what will this be used for?
Dassault will emerge as a single largest FDI investor in the Defence Sector. It will far exceed all FDI till date in the Defence Sector in India. The cumulative FDI in the Defence sector in India till date is of the order of USD 6 Mn.
A major contract for building LPDs in India has Reliance Defence as a contender, what edge do you see over the competition?
For the LPDs we have the Global leaders DCNS France and STX France as our partner. Also, we have most advanced infrastructure with second largest dry dock in the world. This will enable us to undertake construction of two LPDs simultaneously , a unique competitive advantage. Therefore, even though the Program size is close to Rs. 20,000 Cr, our incremental Capex would be negligible. This will further give us a competitive edge.
When do we expect to see US warships at the Reliance Defence shipyard for repair and overhaul as per the agreement signed with the Pacific Command.
We are in discussion with the US officials and we expect to have the first ship in the current financial year. As you are aware, RDEL is the only shipyard qualified in India by the US Navy. RDEL is the only shipyard in India to have received Master Ship Repair certification to undertake servicing and repair of about 100 vessels of different types of US Navy’s 7th Fleet. This is a true recognition of world class facility, processes and the high standard of capacity of Reliance Shipyard.