How Anil Ambani Bet Big on Defence

Announcing a partnership between the Reliance Group and Maharashtra State Government  in 2015, the Reliance Group Chairman, Mr. Anil Ambani was quoted as saying,  "We are deeply committed to defense sector. Our first acquisition, the Pipavav, Project at Mihan - which has since gained popularity as the Mihan Project - would be the largest Greenfield project not only in India but in South East Asia." Talking about the project, Mr. Ambani  stated that plans were a foot to set up Dhirubhai Ambani Aerospace Park (DAAP) at Mihan - the site allotted for the project. He attributed the selection of the site to easy availability of resources such as infrastructure, skill, and most importantly, the size of the land and space for testing. DAAP promised to set up manufacturing assembly lines for production and repair of aircraft components. The 6500 crore project spanning 289 acres is indeed a massive undertaking - even for an industrial giant like Anil Ambani led Reliance group.

The Story so far

In their 2017-18 annual report, the second generation business tycoon reports that they have established themselves in the defense industry through global tie-ups with equipment suppliers like the French Dassault Aviation - with 51% holding - and marketing partners like LIG Nex1 of South Korea, Strata of UAE, DCNS and Thales of France, covering both procurement and sales - the two most significant areas of business. The contract size with Dassault Aviation - for setting up Dassault Reliance Aerospace Limited (DRAL) - is 30,000 crores and projected investment in marketing opportunities over the next 5 years is to the tune of 1,00,000 crores.

Another joint venture with the Israeli company Rafael Advanced Defence System - Reliance Defence and Engineering Limited (RDEL) has bagged the US Navy contract for repair and maintenance of their 7th fleet - no mean feat that! Three years down the line RInfra - Reliance Infrastructure - the parent company of DRAL (Dassault Reliance Aerospace Limited) finds itself in debt to the tune of 9000 crore. But there is no cause to worry says the man behind the mission. The Annual Report projects future focus on Land Systems, which though requiring further investment would nevertheless rake in large profits in the long run.

What the Future Holds

The alliance with Dassault Aviation is in part a contribution of Reliance Group's contribution towards Make in India and Skill India schemes of the government of India. DRAL - as a part of Reliance group with proven success in the technology sector - plans to facilitate technology transfer in the aerospace sector as a result of this alliance. As a part of the purchase agreement between the Indian and the French government, DRAL will be a key factor in fulfilling the obligation of the Indian Government. DRAL will form a part of the Mihan DAAP project, not only sharing space but forming a comprehensive eco structure that facilitates manufacture thorough integration of MSMEs in the aviation sector.

Through a strategic alliance with ANTONOV of Ukraine, for Maintenance Repair and Overhaul (MRO), Reliance Defence Limited plans to fulfill requirements for 50 to 80 seater passenger aircrafts as well tangential needs like transport, patrol, and more. In yet another alliance - an MoU with Mubadala Aerospace of Abu Dhabi, RDL has roped in expertise in carbon fiber aero structures.

Apart from aerospace, Reliance Industries has also forayed into the naval, defense equipment, land systems, and defense infrastructure. In the naval arena, RDEL is the first private sector company win a contract for design of a warship for IAF. As of 31st March, 2018 - as per the annual report - 70% progress has been achieved on the first two offshore patrol vehicles and 30% on the remainder. A contract for building 14 fast patrol vehicles has also been awarded to RDEL.

In the Land Systems space too, several partnerships and alliances have been affected with OEMs around the world for manufacture of weapons, platforms, ammunition, and equipment  as well as armored vehicles and artillery. RDL has also ventured into manufacture of specialized platforms like armored tracked and wheeled tracked vehicles, Main Battle Tanks (MBT), Turrets, Optronics, C-Ram (Counter  Rocket,  Artillery,  and  Mortar), and more.

In fact, the great visionary, Mr. Anil Ambani - with a single step - has taken the defense sector by the storm - sailing forth on all fronts - land, sea, and air. Mr. Anil Ambani is a chip off the old block displaying traits of the late Mr. Dhirubhai Ambani - a true visionary and leader.