ana Analysis of Incian Aerospace and evolving vale chan structure FROST @ SULLIVAN Analysis of Indian Aerospace and evolving value chain structure by Ket Mahan, Research Associate, Aerospace & Defense Practice, Frost &Suliven, South Asia, Middle East and North Africa The aerospace value chai sbaseallycharactevaed by Research and Development, Hngineering Design, Manufacturing Assembly /testing and AMermarket Services (29R0), se shown blow: igure 1s Acrospace Value Chain, ‘With inressng seraxpce activities in Indi aetoqase OEMsare moving fom vertically integrated manufacturing todesign and aystem integration, andtheindaery structacehas changed intoa terhased system ofsepplirs Roles ifernt perticipsnts fr scommercilsercepase program i nds “Table 1 Rote of different partici ts for «commercial neroepace programm Primer [Pre erator, such az Boeing and Arbus,| Design assem, retain complete control of the production| Integration and services process ining design, selection of suppliers, etaled development & manufacturing. of erica equipment and nal eee Wert —[ these vendors maintain responsiblny ter] Aerostrutures, aero prowding equipment and systems to the| engines, amones systems, primes. Thsincudes design assembly, sences| acraft inter os, landing He sgesrand actuators Tier | These vendors manufacture and develop the] Aerostructure, ero required ports according to the specications engines, avons systems, provided by OER and Tier | vendors. Tier 1] ara inerors, landing venders aso deal wth providng aftermarket | gear, actuators components andservies Subsjstems andsub eesembiy “Tier These vendocs ae responsible for he suppy of Components ana pars basic products and components to Tier | and Teri venders ‘All ndusrin actu theaerapace value catn hold slgnficnnt potential inthe Indian aernpace marke, These industiee are continuoualy graving with increasing omestic reat demand les requirements, «eng domes manslactaring bot, ca advantage, the liberalisation of evil aviation paces, anda liberal Special esnomie Zane iv that prorisettractiv teal dees er developers and manatactnrers However, als f investment and ce pleity ca bo man in bth areepace nmanvftcuring and maintenance busines, ad thee haves competitive advantage dan subeatinent, Major gba! and indian players are investing in thee 2 Busines activities tereaine their emerging pterial inthe india aerpace marke. ‘Trends n Acroopace Manufacturing/Outoourcing activities Priae 192000, serespace manuficturing abd outsourcing ctivities wee strctly limited togloba companies duet India's Tow techasogy expertise and its inability to test mandi at ith private sector enwoagenent eset ith 106 erent Fon atomatie rexel al arcsec ar Wale serve sinduty -Acrampce manufacturing busines in mdi stargeted towards indian defence service requirements with HAL belng the lade fer producing and servicing defence freral'and helicopters However, HAL has tarted contracting for OPMe~Airbos td Boing. Due olay radactin fat, the masufacturing fyariovscem mercial ‘ireraft component (panslean bea) ie being obteaoodt indi "Export faeroapace camponent fm India bar ainasen dramatic growth inthe pst few yeurs. Many Indian companies inthe sruapace industey are succesfully participating slveringloeally produce’ components os efthe rere camponentlikeaerastrocturesastemblies, compote componente an partanre Ding {evelopedand preduced under pubieprivate partnerships Aording tothe Cente fr Asia Pcie Aviaton (CAPA) norethaa USA bil of seroepac enUtacting ‘work expec tobebraughttoladia by the Basing Company by 2017, [Not only pure play engineering service providers, arcus automanufacturrs and If companieshaveclsoshown lateres i aerospace manufacturing and designing stile Thee Working ede tats lram metal reduction tosaware design and dev lopmeat Mos ofthe inden private companies have enterelinvoaerspuce manufacturing business by sng up jan ventures with frign players Fr example, Tata Groups with Augusta Weeland for aseblng helicopters; and Mabindea & Mahindra 3V with Aerodaff Atstealia and Gipprand Aerennutct a building aerspace components 46211681 we won frost. com/sublibispley-market wight-top doana Analysis of Incian Aerospace and evolving vale chan structure port duties thet are incueed in baying a sree ra felgn manutacturers ‘andieera manufacturing. Tals will eliminate the bigh ‘Trendsin Aerospace MRO Maintenance, Repair and Overhael (MRO) activities in India provide competitive adrantagotovarioas lol anda layers with rapidly growing areraf feet and the increasing age of indian sera, Aerorace MRO segment strats ex inveaiment nteehnaogs an facies a eam pared other serosacesibgment, The BRO sector latypcally divided atofous major segments which include Airframe heu?y malntenance and medication, Ragine maintenance, Line afstenance and Alelinesin mda ctsource MRO work worth $700 mon toternatanslGemsevery year. According tomedla reper, label MRO fens such 2 SIA Boginering and Latthane Techoik gener sas percent other revenues from the MRO vertcalsandareexpandiog ther reach nada, MRO vervicn see great penta athe Indian market with continue growth ots pereeat on an sama bass Indien weroepe MND snarl i demianteby independent service providersthet mas oly on aiseraf miatenuncesctivties However, hese sompabies my fase ‘tough campervan with theexcrance ofmajr Origihal Equipment Manfactorees (OEMS such as Bang, Lockheed and General Hleti Aistnesin india spend clase to shoot 191015 percent oftheir revenseon sintenance, In terms. cut, engine maintenance contcutesa major portion ofthe MRO ‘hain, Mos ofthe main vera et const of Airbus and Boxing aitratsmanusueture in Europe and USA, which are own ouside Ina for maintenance malty to {he UAE, UX Singaporeand Malaysia, Competition ‘Toreseuctore the soppy chaie and oadéras ies like increning raw materiel prices, ising ead mes, sed changing global and ceomiecontions slabs aerampace [OfMeaze eager tomaintana strong pple base across the globe rd over with ow-cont mansaererorein emerging markets Inn, China and Bazi) Thos OFMe ‘se various selection eters ar deciding whelher ot auto atsource. These acude the supplier expert toreduce cal, buying eapubitis sal of bane labor cos {echudogialnvestnente nd many more, With thie low lecknolagy experiiae and lw seal ef anes, lndian aereqpaceindatry i facing competition front various “her eomtries Phew areas flows = i mar Suppler for several OEMS and where ANIC, te state ‘china | owes) manufacturer had a several-decades head start in manufacturing mltary and civil aera Presence of major Tir 1 supplies Ive Tapas MASUD HeaWp Industries and Kawasaki Heary Industries that match the *4p2" requirement of lage arrat manufacturers Ike Boeing to expand {hair busines in Japan, Presence of various malrtenance, repr and overhaul firms with Singapore a large global presence such as ST Aerorpace Further, these countries (China, pen and Rusa) are als giving competition tolndlen aerospace industry by attracting regional alrerat market leaders (ATR, ombardiee and Embraer) to:aves in them coustier with sang upper ‘cometuston Indian aerospace industry has undergone significant changesin the lest fow years hawever,ismaintenance and maesfacturing acities have not Kept pace wi overall aerepace industry development This isdriven by busines complenty,ctplus mentality and uber tradiionl business practices Mt Indian companies Provideservieasn ine particular aren ofthevalse chin (deign/ manufturing/tsing rein Indl seroace marke ‘aces Yaris challenger in techy Funding, certention provones ifrastructore and varivestaxstroctres that noosa be bridge inthe nes few years Goverameat help required atthe regulatory requcements and increase private tor periipton, fea needtocreatetnehuman andtechnoloy inftanrerare Moc aeccpnee activites te highly labor intensive and require huge eshnolgial investment. Ths th Fequlred fallow glbal quality managemeat ssn, 0, tocffer services from design to maintenance o aerospace products. Further, te nd. aerospace industry (8, and'TS these would help Indian companies potion themselvesin the plaka sersspce arena. der aur @front.com F491 9940141714 Fe forthe Information contact, Ravinder Kaur, Corporate Communications E: av won frost. com/sublibispley-market 2