HAL may get to make half of Eurocopter’s choppers

In line for orders worth over €8 billion from Indian military and civil defence authorities, leading European helicopter maker Eurocopter is looking to outsource 50% of its helicopter production to the public sector Hindustan Aeronautics Ltd (HAL) over the next few years.

The  €4.5 billion company, a 100% subsidiary of the European Aeronautic, Defense and Space Company (EADS), is also looking to set up three new maintenance, repair and overhaul (MRO) centres in India.

These will help it meet the service requirements for some of these contracts and other business that it may win in India. Eurocopter already maintains an MRO at Noida to service its civilian fleet, run by its Indian distributor, Vectra Aviation. It has signed an MoU with the public sector helicopter operator Pavan Hans, to whom is has supplied 27 Dolphin helicopters, to set up an MRO in Mumbai.

It is scouting for an Indian partner to set up another MRO close to Delhi. Rainer Farid, vice president, sales and customer relations told DNA Money the third new MRO could be a JV with HAL in Bangalore.

The total investment on the MROs may add up to  €150 million ($195 million).
Currently, there are five major deals from the Indian defence, paramilitary and civilian authorities that Eurocopter is competing for.

The most immediate is the contract for 197 reconnaissance surveillance helicopters (RSH), for the Indian Army and Air Force. The Russians and the British-Italian company AugustaWestland are also competing for the order, which industry sources said be worth $1-2 billion. Eurocopter is pitching the AS 550 Fennec, a lightweight, multipurpose military helicopter.

Then there are two of HAL’s projects for making 380 Indian multi-role helicopters (IMRH) of 10-12 tonnes in the class of Russian Mi-17 helicopters, and 187 light utility helicopters (LUH), in which Eurocopter is likely to be a partner. While the IMRH is a co-development, co-production project, the LUH is a co-development initiative.

 This apart, tenders are out for 22 attack helicopter for the Indian Air Force and 16 multi-role helicopters for supply to the Indian Navy.

 On the civilian side, Eurocopter is negotiating 20-odd deals for supply of various kinds of helicopters with corporate and state governments, Farid said.
With Eurocopter slated to be a prominent player in some of these projects, it has already signed MoU with 50 Indian companies, including L&T and Infotech Enterprises, to outsource work such as software development, engineering, aero structuring, and component manufacturing, as mandated under the offset programme of the Union government.

It is estimated that India’s imports of military hardware and software could reach a cumulative $30 billion by 2012 and Indian companies are in line to get offset orders from global military equipment makers worth nearly $10 billion in the same period.

While for the RSH project, the stipulation is 50% of the value of the contract over the supply period, for the other projects, the mandatory outsourcing ranges from 30-40%.

HAL is already a member of Eurocopter’s global supply chain systems and is currently making one aero structure per day for supply to the European company. “We are planning to shift 50% of our entire production to HAL,” Farid said. This would mean anywhere close to 350 helicopters per year, given that Eurocopter supplied close to 700 helicopters last year.

“Overall we are selling to stay here and are open to 100% technology transfer to HAL”, Farid said, adding the group was thinking to incorporate Eurocopter India Ltd, on the lines of the EADS India Ltd, given its long-term plans.