R&D Activity Increases When There Is A Business Model To Create New Products: Baba Kalyani

The Kalyani Group has been steadily raising its profile in India’s military-industrial landscape over the years. Under the leadership of Baba Kalyani, its Founder and Chairman, the Kalyani Group has graduated from being a key supplier of components and sub-systems to one that is now offering entire platforms. Delhi Defence Review’s (DDR’s) Senior Editor Sriram Thiagarajan and Head, Special Projects Chandrashekhar Bhattacharyya caught up with Baba Kalyani on the sidelines of Aero India 2021 to talk about the group’s defence sector activities and more…

DDR: First off – What is your opinion of this year’s budget? What would you have liked to see in it?

Baba Kalyani: The Honourable finance minister and her team and the Honourable Prime minster and his team, must have done a lot of work to come up with a concept that says ‘let’s increase expenditure’. And thereby create a momentum for growth. Nothing can be greater music to anyone’s ears than to hear about an increase in expenditure on infrastructure. When you spend money on infrastructure, whatever kind of infra – health, roads, highways, ports, airports, it results in a multiplier effect on the economy. And I think that is what is likely to happen in India. And I think that gives a tremendous amount of energy to entrepreneurs thereby unleashing their animal spirits and enabling them to move forward.

Of course, everything is not hunky dory. We have to understand that we have plenty of speed breakers on the way. One of things is that we make plans, fantastic plans, in terms of what has been outlined in the budget. There have been multiple mini-budgets before that which came out. Honourable Nirmala Sitharaman outlined defence policies in May 2020 along with other things. There have also been production linked production schemes that have been announced. These are huge amounts, nearly ₹1,97,000 crores. That is even bigger than a mini-budget. So, there have been successive reforms that have taken place.

Image: Baba Kalyani (Centre) flanked by Team DDR members & Kalyani Corporate Communications team.

DDR: Tax benefits for defence R&D have been declining over the past few years. What do you think should be the government’s approach to engender quality R&D from not just big companies like yours but smaller ones as well?

Baba Kalyani: As a businessman and in charge of a profit-loss account, I would like to see as many incentives as I can get. But, let’s face reality. Having incentives for R&D expenditure may be a necessary condition for increasing R&D activity in the country, but would not be sufficient by themselves. That is to say, such activity does not necessarily increase because there are incentives. R&D Activity increases when there is a business model to create new products. To create new products you need R&D. In today’s world, which is technologically very challenging, not the least because tech changes at a very fast pace, you have to be highly competitive because there are a lot of people who may be able to do things better than you. So, you have to be on your toes, there is no choice. As such, I don’t think you are going to have any slowdown in R&D. If the demand side of the equation is dealt with as it has been dealt with in the budget and the mini-budgets that came prior to that, I think the supply side of the equation which is R&D, creating new products, technology all that, will fall into place. Otherwise, you will disappear like a dinosaur. Demand drives products which drive R&D.  Like how the lockdown has driven demand for software that enables video conferencing.

DDR: Would you say that for an established and large-sized group as yours, it would be a good strategy to hunt for small agile companies that develop tech and absorb them?

Baba Kalyani: In our core business of supplying to the auto industry, we are seeing a major churn because of the entire EV concept – connected vehicles, autonomous vehicles. LIDAR tech etc. Elon Musk has come out of nowhere to the top of the auto industry. His market cap is now greater than that of all the major auto makers today while making a fraction of their numbers because his technology is ahead of others and people are buying his products. The same thing will happen in India. Some new guy, some young kids who have smart ideas will just create a disruption and that in turn will create new kinds of opportunities and challenges along with it.

DDR: Could you please talk a bit about your small jet engine development programmes? What platforms are these engines meant for?  HAL also has a couple of engine development programmes at the moment, are you working with them on the same? Are you also in talks with DRDO to collaborate on their major engine programmes?

Baba Kalyani: In the aerospace business, you can get multiple levels. The highest level is to build aircraft like HAL does and the Tatas want to do. We are not at that level. As far as aircraft are concerned, we are in the business of supplying components and sub-systems. We supply blades, engine components, gears to HAL, and that is one part of things. The second part of our business is the basic question of disruption. There is a lot of  upcoming requirement for smaller gas turbine engines. Whether it be for expendable targets, for UAVs, for other applications, even for small ships and patrol boats going forward. So, our focus with respect to engine tech is concentrated in this area.

Images: Small jet engines developed by the Kalyani Centre for Technology & Innovation. 160 kgf-class engine (Left). 120 kgf-class engine (Right).

DDR: I think you’ve talked about the need for a consortium approach to develop an indigenous jet  engine ( low-bypass turbofan) to power the advanced medium combat aircraft (AMCA). Will you be part of such a consortium and what role do you see for your group there?

 Baba Kalyani: I still believe that India needs to this. We will be part of that consortium. A major fighter-class jet engine is not something that you can design and make ready in 2 or 3 years. It is a big program. We have organizations like ADA, GTRE, DRDO, HAL, NAL in Bangalore that are involved in it. I think the missing link there is a production partner. They need several production partners not just one. Our core strength is in materials, forging etc. and jet engines are of course full of such parts. Making products out of exotic materials like Ti, Ni alloys, we are good at that. That could be our contribution to the system.

Images: Accessories gear developed by BFL (Left). Low-Pressure Compressor Disc developed by BFL-Aerospace (Right).

DDR: Building on that, metal working is your forte. While metals will most likely never go away, composites are becoming increasingly important in the aerospace industry. What are you doing in this area? How do you plan on developing expertise in it?

Baba Kalyani: There will be a lot of metal replaced by metal. Lot of composites replaced by metal matrix, as well. This churn will keep going on. We have a small composites company in Kolhapur, a startup that we have launched.

Images: Turbine Disc Assembly from BFL-Turbomachinery (Left). Fan Blade from BFL-Aerospace (Right).

DDR: You have a seeker program currently. Could you talk a bit about it? Is it specific to any project being run by, say, DRDO’s Research Centre Imarat? Are you planning on expanding into the defence electronics side of things in a bigger way?

Baba Kalyani: It (i.e. the seeker programme) is for developing talent and knowledge in this arena. Once you develop the talent and knowledge, the opportunities to use that in very specific programs and other things is pretty high. These are the kind of technologies which are not widely available today.

The question then comes up is whether you want to branch out into defence electronics. In defence, you cannot build systems without the ability to do control and automation. Even in a gun system, you need control & automation. This relies on two basic technologies. One is power systems and the second is embedded systems where you need pretty sophisticated software. A combination of these two creates the control electronics as far as a lot of defence and aeronautical systems are concerned.

If you look at seekers, then you have a third level of technology based on radio frequency – Ku band, X-band, optical, infrared seekers etc. A multitude of technologies, all of which rely on embedded systems and power electronics. Just that it keeps getting smaller and smaller while becoming more powerful.

Images: Safety Arming Mechanism from Analogic Controls Limited (Left). Netra Seeker from Bharat Forge Hyderabad (Right).

DDR: There are a few established players in this field who are already working with DRDO labs.

 Baba Kalyani: We are not competing with those companies but only developing our base. We believe that these capabilities are important for us if we want to grow our business.

Images: Products from the Indo-Israeli joint venture Kalyani Rafael Advanced Systems. SPICE-2000 guidance kit with warhead (Left). Derby III beyond visual range air to air missile (Right).

DDR: Coming back to the question of developing a low-bypass turbofan for India’s future combat aircraft, one of the main problems with India’s setup has been a lack of funding and a cohesive approach. Even if the consortium happens, funding will always be a question. Would you pitch in for an engine test-bed?

Baba Kalyani: You can’t do engine development in a piecemeal manner. All these things, in terms of infrastructure and ecosystem, are available at GTRE and ADA and other places. Some of it is even available in HAL. I think we need an approach that is similar to how India tackled the aftermath of the COVID-19 issue when we broke all the silos in the government and everybody worked together and overnight we started producing PPE kits. We were importing them before along with masks. We started making these, ventilators etc. We should have a similar approach, break  silos, make it a national infrastructure effort where everything from wind tunnels, test-beds, CFD analysis capability, all of it, is brought together. The knowledge base in Bangalore is unbelievable. We can make it happen, with the right push.

Images: Inducer from BFL-Aerospace (Left). Combustion Chamber for 40 kgf-class jet engine from Kalyani Additive -3D Printing (Right).

DDR: Turning to your artillery programs. How do you rate the support you are getting today in terms of range time and ammo availability?

Baba Kalyani: The support is outstanding. Tremendous support from DRDO. ATAGS is a DRDO program. I am very impressed as to where we have come.

Image: The 155 mm/ 52 caliber  Advanced Towed Artillery Gun System (ATAGS) developed by DRDO in collaboration with the Kalyani Group.

DDR: Speaking about the ATAGS, can we expect to see orders for it anytime soon?

Baba Kalyani: It should have happened already. But that is not in my hands. Our ultra-light howitzer (ULH) went for testing, came back. The problem with our procedures is that there are multiple procedures. As far as the ATAGS is concerned, we are going to Sikkim for a third time. We are hoping that something will happen with respect to procedure-related issues so that things get speeded up.

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