“MSMEs in the A&D space have survived through tough times over the years— given the trifecta of low volumes, high capital investment coupled with high cost of funding, and challenging payment terms—and during this time have imbibed certain niche capabilities and competencies. This is the opportune time to harness and nurture these capabilities towards the goal of achieving self-reliance”.
– Mr Kunal Sikka, Vice President, IDEF’17
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Incorporated in 1985, Sika Interplant Systems Ltd is an engineering driven company focused on providing products, systems and services to Aerospace, Defence & Space and Automotive sectors in India. Additionally, the Company‘s in-house capabilities in technology development and production are complemented by tie-ups with international partners. The majority of the Company‘s business is catered to serving the Aerospace, Defence & Space (AD&S) and Automotive sectors.
The company is actively involved in four main areas, namely, engineering (design and development); manufacturing, assembly and testing; projects and systems integration; and maintenance, repair and overhaul (MRO).
The company has presence in businesses like search and rescue (Rescue hoists/ winches; air ambulance/ EMS modules), Landing gear & hydraulics, interconnection systems (harness & looms, electro mechanical assemblies, etc.), handling systems (cargo hooks, cargo and marine winches, sonar winch, etc.). Within the Automotive sector, the company undertakes projects to supply critical capital equipment to a significant number of major automobile manufacturers across the country.
Certifications and accreditations:
The company is one of the selected private enterprises with design approval from the center for Military Airworthiness and Certification (CEMILAC). It also has Industrial license for Defence production from the Government of India, which enables it to undertake several projects and also qualifies the company for offset programs. It also holds approval from the Directorate General of Aeronautical Quality Assurance (DGAQA)
The company’s only plant/ technology center is located in Bommasandra Industrial Area, Bangalore.
What we like:
- Among the certified company for defense equipment production:
The Company is one of the select private enterprises with design approval from the Center for Military Airworthiness and Certification (CEMILAC).Sika has also been granted an Industrial License for Defence production from the Government of India, and also a qualified Indian Offset Partner with a license for Defence production from the Government of India-that provides advanced products and solutions to the Aerospace & Defence sector.
- The company plans to be debt free:
The company plans to remain debt free and grow on internal accruals. It wants measured growth rather than fast unprofitable growth. There seems to be a lot of openness in the current government to support the industry, but things could move faster. The company plans to take revenues to INR 200 crore in the next 4-5 years. It is happy to have margins at current levels and continue this growth – but margins should expand.
- New management is pivotal towards growth:
It is a three decade old company with major growth in revenue coming only in the last few years. The new management is pivotal to growth in revenues as seen in recent years. Also, the government has given priority to this sector and is pivotal to their ‘Make in India’ plans which has acted as a tailwind. One can also witness the swift moves taken by the management as the revenues have jumped two folds since the point they have taken charge.
- HAL has signed MoU with Sika Aerospace for SAR, medevac & aerial firefighting:
The MoU intends to leverage the existing business relationship between HAL and SIKA, utilising each company’s respective strengths, to generate mutually beneficial business outcomes while providing state-of-the-art solutions to customers. Further, the MoU envisages combining HAL’s experience in manufacture, integration, and upgrades of platforms together with SIKA’s expertise in supply and integration of SAR, CASEVAC, MEDEVAC and HADR equipment, and is consistent with the goals of the Government of India’s “Make in India” initiative.
Factors to consider:
- Most of the threats to the domestic A&D industry are rooted on the policy front, such as lengthy procurement and evaluation processes, controversies related to corruption, and disputes over shortlisting in competitive bids. These will serve to delay acquisition plans of the armed forces and impact the timing of execution of already long-dated projects
- In A&D business, the products and systems involved are typically of complex advanced technologies, often resulting in the approval and certification cycle extending for materially longer than originally planned. This can result in delays in production orders and consequent deliveries, affecting the timing of revenues.
Industry Analysis and Conclusion
Following the Covid-19 pandemic induced downgrade in the growth of the global A&D industry in 2020-21, the sector is steadily—if tentatively improving—following a bottoming out in early 2021 and a moderate improvement in the second half of 2021-22. However, downside risks remain—including from a possible worsening of the war, escalation of sanctions on Russia, a sharper-than-anticipated deceleration in China as a strict zero-COVID strategy is tested by Omicron, and a renewed flare-up of the pandemic should a new, more virulent virus strain emerge.
India‘s geopolitical scenario and compulsions, real or perceived, are continuing to drive the development of its A&D industry. The stand-offs seen in recent years on the Indo-China border have renewed the urgency to build capability and capacity for India‘s defense industry. The geopolitical situation in South Asia and the Indian Ocean region, as well as the wider theater of Southeast Asia and South China Sea, has important implications for the defense sector.
The last decade has seen India emerge as one of the most attractive A&D markets in the world given the Ministry of Defence‘s (MoD) continued emphasis on modernisation of the armed forces, which is expected to result in capital expenditure of about USD 250 billion over the next 10 years. There is a broad acknowledgement that while the man behind the machine remains motivated, some machines being manned need an upgrade.
With the world‘s third largest armed forces, the Government of India‘s (GoI) increase in the defense budget for 2022-23 to USD 70 billion also makes India the world’s third largest defense spender, behind the US and China. Crucially, the outlay for weapons and modernisation has been increased by nearly 19% for 2021-22, despite the continued pressures on the economy following the pandemic, which represents about 31% of the total defense budget
Cochin Shipyard Limited (NSE:COCHINSHIP) Q4 FY22 Earnings Concall dated May. 26, 2022 Corporate Participants: Madhu S Nair -- Chairman & Managing Director Jose V J -- Director Finance Analysts: Vastupal Shah
Can you guess the name of the company that was listed during the IPO frenzy in 2020 and is the second largest player in the Indian municipal waste management industry?
“Hey, how is the market doing today?” “Oh!, its falling tremendously since morning” I am sure news like these might be a common topic of discussion for you nowadays. Interestingly,