'Aequs Engagement With Airbus To Exceed $50 Million'
Indian aerospace industry growth indicates that the country is rapidly building capabilities to emerge as a preferred destination to support the global aerospace supply chain, says Aravind Melligeri, chairman and CEO of Aequs
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In September 2015, Aequs set up a 250-acre dedicated facility to manufacture aerospace machined components for Airbus at its Special Economic Zone (SEZ) in Karnataka. It can house up to 150 CNC machines and generate in excess of $75 million revenue annually. Aravind Melligeri, chairman and CEO of Aequs, talked to BW Businessworld about the new engine option programme of Airbus and Indian aerospace and defense sector.
What is Aequs-Airbus A320neo titanium (new engine option) programme?
Since 2009, Aequs has been supplying parts directly to Airbus. However, this recent order is the first large order for titanium parts to be placed with an Indian supplier. The contract calls for Aequs to deliver over 100,000 titanium machined parts on an annual basis for the A320neo (new engine option) programme. These detailed machined parts will be delivered to Airbus' plant in Toulouse, France, where they will be assembled into the pylon structure, which mount engines on the aircraft wing.
When will Aequs begin manufacturing A320neo titanium parts?
First articles are already underway with production parts to begin the manufacturing phase in fourth quarter of this year. We have 14 CNC machines in the new facility generating over $500,000 in revenues per month for Premium Aerotech (PAG), an Airbus Tier 1 subsidiary. Machines will continue to flow into the new facility at a rate of about 2 per month to achieve full rate production. Aequs inaugurated one exclusive manufacturing facility for Airbus at its SEZ in Belagavi last year.
What has been the progress since then? What has been your output so far?
Aequs is involved in a number of projects with Airbus. In February 2015, we signed an agreement with PAG for machined detail parts. Under the agreement, over 200 structural components for Airbus aircraft will be supplied by Aequs. Over the next 7 years, Aequs engagement with Airbus will exceed $50 million in the delivery of precision machined parts for A320, A350, and A380 programs.
Tell us about your relationship with Airbus
Aequs has a long-standing relationship with Airbus having produced detail machined parts for its single aisle, long range, and large aircraft since 2007, including wing leading edge subassemblies for its A380. It was in 2007 that Aequs delivered its first parts for the Airbus 380.
In 2009, Aerospace Processing India Pvt Ltd (API), a joint venture between Aequs and Magellan Aerospace started operations with approvals from Airbus. In 2014, the first delivery of A380 panels and fairings were delivered from AAI (Aerostructures Assemblies India Private Ltd), a joint venture between Aequs and Saab.
Aequs' quality and delivery track record along with its ability to invest has positioned it to support Airbus’ India sourcing strategy. Aequs’ commitment to produce aircraft subassemblies has also generated significant opportunity to support future Airbus needs.
Could you outline the range of your products and services for the aviation sector?
At Aequs, our business model is to create efficient, manufacturing ecosystems, consisting of a series of integrated and/or co-located facilities that support the entire manufacturing values stream. Only then can we maximize efficiency and optimize logistics while offering competitive value-added services. We have built facilities and infrastructure to closed die forging, precision machining, assembly, and to special processing for the aerospace industry. As such, we are able to deliver over 90 per cent in-country value add for many parts compared to just 30 per cent a few years ago.
Who are your key clients and what work is being done for them?
Either directly or through our joint ventures, Aequs manufactures and supplies parts, components and sub-assemblies to aerospace majors. Eaton Aerospace became Aequs’ customer in 2008. In 2009, Honeywell, Airbus and UTAS were added as our key customers. Aequs became the first Indian aerospace company in the private sector to expand into North America by acquiring T&K Machine Inc, an aerospace component maker based in Paris, Texas. This acquisition provides Aequs with the ability to offer the local-global economy to Boeing, Spirit AeroSystems, UTAS, Triumph and other customers in the North American market.
Further, the acquisition of SiRA group based in France has brought highly complementary capabilities to our global aerospace ecosystem in the areas of precision machining, assembly, landing gear, and aircraft actuation components. This development expanded our relationship with key customers in Europe such as Dassault, Safran (multiple divisions), and United Technologies Aircraft Systems.
What new business opportunities do you see in India?
The Indian Aerospace and Defense (A&D) industry is expected to offer business opportunity to the tune of $200 billion over the next 15 years. Until recently, the Indian aerospace industry had been dominated by government-owned R&D organisations, aircraft development and manufacturing units that focused only on domestic defence needs. However, it has now opened up to private sector participation through various government policies. Supported by low cost labour and high-level science, India is slowly emerging as a key player in the A&D sector.
What is the vision of Aequs by 2020 in aerospace and defence sectors?
India’s aerospace industry growth indicates that the country is rapidly building capabilities to emerge as a preferred destination to support the global aerospace supply chain. Innovation in manufacturing is becoming critical for India to be a credible player in the global Aerospace industry by 2020.
Globally commercial aerospace manufacturing is $100 billion opportunity per year; India exports only $250 million, which is negligible. This is expected to grow to about a billion dollar business by 2020. We will continue to expand our capabilities by bringing in new technologies to our global ecosystem and aim to become $300 million company by 2020.