Tata Motors’ defence business bets its future on FICV

The making of the much-awaited Fighting Infantry Combat Vehicles (FICV) will be a game-changing lift for the defence business of Tata Motors Ltd, according to Vernon Noronha, vice-president, defence and government business of India’s largest auto maker by sales.

In an interview at the DefExpo 2016 on Wednesday, Noronha said, irrespective of winning orders from the ministry of defence, Tata Motors is now contemplating to export FICV as there are at least 50,000 combat vehicles in the world that are facing replacement.

The much delayed FICV contract, contenders for which include Larsen and Toubro Ltd (L&T), Mahindra and Mahindra Ltd, Reliance Defence and Engineering Ltd (formerly Pipavav Defence) and Titagarh Wagons Ltd, could result in orders worth about Rs.60,000 crore over the next few years.

The company is making no mistakes to secure the contract.

“Tata Motors is bringing synergies leading Tata Group such as Tata Advanced Systems Ltd, Tata Advanced Materials Ltd, Titan Industries Ltd, Tata Technologies Ltd and TAL as FICV needs to marry 32 critical technologies,” Noronha said.

The FICV is mobility oriented and is established by the fact that three of the five core technologies and 19 of the 34 critical technologies are mobility related, such as engines, transmission and running gear, which are core to Tata Motors. The company, which is leading the consortium, has years of experience of integrating key technologies needed in the armoured mobility segment.

The FICV is mobility oriented and is established by the fact that three of the five core technologies and 19 of the 34 critical technologies are mobility related, such as engines, transmission and running gear, which are core to Tata Motors. The company, which is leading the consortium, has years of experience of integrating key technologies needed in the armoured mobility segment.

“We are chasing at least Rs.4,000 crore a year worth domestic defence opportunity in land systems. With combat vehicles, the defence business could contribute at least 15% of total revenues of Tata Motors from the current 3%, as the margin of defence projects are extremely attractive,” Noronha said.

What are the three things that can change defence business of Tata Motors?

“Three things that can change Tata Motors’ defence business could be potential down selection of the company for FICV, selection of strategic partnership of Tata Motors for armoured vehicles and potential acquisitions of global technology companies that can complement Tata Motors defence business,” he said.

Noronha did not divulge details about acquisitions, but added that the proposed buyouts will complement existing defence business.

Noronha claimed that Tata Motors is a natural choice for the ministry for being a strategic partner in land-based mobility solutions, citing the company has demonstrated its capabilities of building armoured vehicles through manufacturing of Kelstrel within 18 months.

Down selected as the development agency of state-run Defence Research and Development Organisation (DRDO), the ICV Kestrel was jointly developed by Tata Motors with DRDO, in a competitive tender process, in a record period of 18 months. The wheeled ICV Kestrel platform will now be offered by the DRDO to the mechanized forces of the Indian army, for UATT (User Assisted Technical Trials).

However, Tata Motors will be confined to mobility, he clarified.

Tata Motors has been associated with the country’s off-road defence and security forces, since 1958 and has supplied over 110,000 vehicles to the Indian military and paramilitary forces so far.

For FICV, Tata Motors is a formidable bidder, irrespective of its stand-alone or consolidated balance sheet, Noronha said.

Last year, the ministry of defence, through a notification, had clarified that it will consider only a company’s domestic operations for shortlisting companies for the FICV project. In other words, the key support from UK-based unit Jaguar Land Rover (JLR) for Tata Motors will not be considered in evaluating the firm’s commercial strength and eligibility.

But Tata Group is unperturbed.

Noronha said Tata Motors can qualify for the FICV programme on stand-alone basis or consolidated basis.

The company recently joined hands with Bharat Forge Ltd and General Dynamics Land Systems to develop a complete FICV solution.

In combat support, the company recently announced bagging an additional order for 619 6x6 high-mobility multi-axle vehicles, with material handling crane, from the Indian Army, based on an earlier order received for 1,239 units of the same vehicles a year ago.

In combat vehicles, apart from the Kestrel and FICV, Tata Motors has also developed a light armoured multi-role vehicle (LAMV), a reconnaissance vehicle, combining vital operational prerequisites of mobility, protection and firepower.