Thursday, February 2, 2012
Samtel poised to take off with air force fighter fleet
After bagging a Euro 1.47 billion (Rs 9,600 crore) contract for upgrading the Indian Air Force’s fleet of 51 Mirage-2000 fighters, French defence electronics giant, Thales, is now an 800-pound gorilla on the Indian defence scene. And its Indian partner, Samtel Display Systems (SDS), is emerging as a company to watch as it swoops alongside Thales onto India’s burgeoning aerospace market.
Thales’ offset liability from the Mirage upgrade contract amounts to Rs 441 million Euro (Rs 3000 crore). That induces Thales to source from SDS a significant share of the avionics (aviation-electronics) for upgrading the Mirage-2000. SDS, with whom Thales has a joint venture company, Samtel Thales Avionics, is poised to meet that requirement. SDS already supplies Hindustan Aeronautics Ltd (HAL), India’s sole aircraft manufacturer, with cockpit displays (multi-function displays, or MFDs) for the Sukhoi-30MKI fighters that are built at HAL’s Nashik plant. The Ghaziabad-based company is also competing to build avionics for the IAF’s forthcoming Sukhoi-30 MKI upgrade.
And if the Rafale fighter --- built by Dassault with a large avionics component from Thales --- is chosen by the MoD as the IAF’s new medium multi-role combat aircraft (MMRCA), SDS could benefit enormously from another wave of offset-driven orders for display systems and other avionics in the 126 MMRCA.
“We are looking at a turnover growth from Rs 60 crore in 2011-12, to about Rs 500 crore in 2015-16,” Puneet Kaura, Executive Director of SDS, told Business Standard.Samtel Thales Avionics (Thales 26%; Samtel 74%), which was incorporated in 2008, is Thales’ only joint venture in India. The French company is currently setting up another JV with Bharat Electronics Ltd (BEL) for manufacturing radar components.
“Thales wants to build on our maturing relationship to make us a major supply source for avionics. They are looking at India very seriously, given the size of the deals they have signed or are contemplating,” says Puneet Kaura.
Thales shares Kaura’s optimism. Eric Lenseigne, who heads Thales India, says that India is a key market, both in defence and in the civilian areas of transportation, signalling, communications and automatic fare collection systems. Thales fare collection systems are installed on the Delhi Metro.
“We are keen on growing our joint venture in India, Samtel Thales Avionics. Samtel has key capabilities, and the capability to grow. We do not rule out their becoming a part of our global supply chain… provided they develop the way that we would like them to develop,” says Lenseigne.
So far, SDS’s key technological breakthroughs, such as the Su-30MKI displays, have been achieved indigenously. But now, as it progresses to cutting edge avionics the company requires technology infusion. For this, Samtel Thales Avionics, is a key vehicle.
An example of the futuristic avionics that SDS hopes to supply is the Infra Red Search and Track (IRST) System, which is standard kit in the Rafale as well as the Eurofighter Typhoon. This passive sensor detects enemy aircraft at ranges of 60-70 kilometres through the heat (infrared) that they emit. Unlike a fighter’s airborne radar, which gives away one’s own position by emitting an electronic beam, an IRST is entirely stealthy since it emits nothing.
Thales plans to offer the IRST to the IAF on a “Buy and Make (Indian)” basis. This category of procurement (specified in the Defence Procurement Procedure of 2011, or DPP-2011) requires an Indian partner to absorb critical, high-end technologies and develop capabilities within India. Thales has told the IAF that Samtel Thales Avionics would do 50% of the design and development work in India.
Both Samtel and Thales tell Business Standard that they will enhance Thales’ share of the
JV, if the foreign direct investment (FDI) limit is raised from the current 26%. “If the
FDI cap is raised to 49%, we have agreed that Thales’ holding in the JV will go up to 49%, while we will come down to 51% This is not a written agreement, but we have an understanding,” says Kaura.