QuEST launches SEZ to focus on aero-engine components and sub-systems, 8ak interview

23 Nov 2009 8ak: At last week’s U.S. Aerospace delegation event Dr Dinesh Keskar, President, Boeing - India, said that the market for Indian defence offsets will be about $7 to $8 billion. Aravind Melligeri, Co-Founder and Chairman, QuEST Global, said that the global commercial aerospace market opportunity is worth US$80 billion a year and India is expected to have 4% of the global fleet. In this light it is surprising that outside of public sector HAL, there has been no dedicated effort to address the growing aerospace market. But now QuEST has launched the first Aerospace SEZ in Belgaum to focus on aerospace components and sub-systems by building a precision engineering and manufacturing end-to-end eco-system. The company has signed MOUs with 3 major players in the aerospace manufacturing space:

• SABCA, Belgium: Airbus A-350XWB Flap track mechanism metallic parts manufacturing and assembly work from S.A.B.C.A
• Magellan Aerospace: to evaluate setting up an aero-engine focused manufacturing facility with annual revenues of $50m
• Farinia SA: MOU to evaluate the establishing of an aerospace forging facility

The SEZ was formally launched on Nov 14 by the Honourable Chief Minister of Karnataka, Shri B.S. Yeddyurappa and Honourable Union Minister for Civil Aviation, Shri Praful Patel. Manu Sood, Editor 8ak asked Aravind Melligeri some questions:-

8ak: SEZ’s in India have been a failure, why do you think Quest will succeed?
Melligeri: Some SEZ’s in India had land acquisition problems and most of the others turned out to be real estate players by people who had minimal domain expertise and interest in increasing India’s manufacturing capabilities. QuEST has been in engineering business for around two decades and aerospace manufacturing for over three years. We are building this SEZ around our existing business and based on existing capabilities. For example, other than HAL, QuEST’s JV with Magellan Aerospace, API is the only Boeing and Airbus approved facility for key surface treatment facilities. No one else can lay such a claim. We are thus capable of offering a JV for OEMs or Tier-1’s who may not want 100% exposure in their first venture in India.

8ak: Is 300 acres not too small for a manufacturing eco-system?
Melligeri: Currently this is enough to support our business needs what we see on the horizon for next decade. Based on our experience, we believe that each acre can generate close to US$30 million in revenue. Based on this, we expect potential of just under US$1 billion in annual turnover once the SEZ is fully operational. We are not planning to build an entire aircraft from scratch. We are very focused in what we are doing. Also, as Chief Minister B.S. Yeddyurappa said that the state government was creating a land bank of 50,000 acres so there will be no shortage of land as the industry grows.

8ak: What about competition from other companies who are planning Aerospace and Defence SEZs much larger than QuEST’s?
Melligeri: With the government’s increased weapons acquisition’s budget and evolving offset policy we can reasonably expect that the aerospace and defence market to show robust growth in the coming years. There is room for many more players and each will find their own profitable niche based on their capabilities. As additional SEZs come up our own ecosystem will expand so that there is an interchange of components and services to each other. So we don’t see others as a threat, rather as a pre-requisite that the Indian market develops. We welcome initiatives which will propel the aerospace capabilities of India to the global market.

Comments

[Jason Verdugo]

I hope they are successful.