Watch Ashish Saraf, a man who was driving the #MakeInIndia initiative and is currently head of Airbus Helicopters in India talk about his journey at the #LeadingEdge2019.
#AshishSaraf #AirbusHelicopters #AirbusIndia #Business #OutlookBusiness #OutlookMagazine #OutlookGroup
#AshishSaraf #AirbusHelicopters #AirbusIndia #Business #OutlookBusiness #OutlookMagazine #OutlookGroup
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NewsTranscript
00:00 Before I introduce our next speaker, ladies and gentlemen,
00:03 here's something I want you to take a look at.
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02:27 That, ladies and gentlemen, is the bespoke experience
02:45 by Airbus corporate helicopters.
02:47 And to talk to us more about that,
02:49 I'd like to invite on stage a gentleman who
02:52 was driving the Make in India initiatives by Airbus
02:56 and is currently head of Airbus Helicopters in India.
03:00 Please help me welcome Mr. Ashish Sarath.
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03:08 Thank you.
03:17 Thank you, Outlook.
03:21 Some of these birds already flying in India
03:23 and some of those about to be launched.
03:26 So a lot of reasons to get excited.
03:29 So let me start by congratulating Outlook
03:35 for another year of hosting this prestigious event.
03:40 The event has certainly gained eminence and altitude
03:45 over the years.
03:46 And we wish that your Outlook business flies higher and higher
03:54 in the years to come.
03:56 And I am extremely proud and humbled
03:59 to be speaking at this event.
04:03 A lot of you have been or are entrepreneurs in this room.
04:08 And I'm here to talk about the opportunity in aerospace
04:12 and what can entrepreneurs do to actually take
04:17 advantage of this opportunity.
04:20 There has been good news flying in
04:23 from all sectors of the economy.
04:26 But the one sector that stands out is the aviation sector.
04:31 Any report that we analyze predicts significant amount
04:35 of growth in the aviation sector.
04:38 Currently, we are clocking about 20% year-over-year growth.
04:43 The civil aviation minister touched upon some of these points earlier.
04:47 And the prediction is that by 2022, we'll
04:51 be the third largest aviation economy in the world.
04:54 And then by 2030, the largest.
04:57 And also, the next 20 years, we will be clocking aviation growth
05:03 year-over-year double than the world's average.
05:08 So and this is quite made possible thanks
05:12 to increased competition, low-cost carriers,
05:15 a relentless focus by our government on policy favorability,
05:20 infrastructure push to provide us modern airports, open skies policy,
05:27 as well as focus on regional connectivity.
05:32 Airbus's own global market forecast, GMF,
05:35 predicts that the country will need about over 1,600 aircrafts
05:42 in the next 15 to 20 years.
05:46 And currently, Airbus itself is delivering about one aircraft
05:53 a week to the country.
05:55 And this is going to continue for the next 10 years.
05:58 That's the amount of backlog we have.
06:01 And that clearly talks about the kind of growth
06:03 we are going to experience in the aerospace sector.
06:08 Airbus Helicopters is the world's largest helicopter maker
06:13 in the civil and parapublic segment, with a market leadership
06:17 percentage of about over 50%.
06:20 In India, we just surpassed our closest competitor
06:23 to be the largest market shareholder and market leader,
06:27 specifically in the civil and parapublic segment.
06:30 And there is no stopping.
06:33 We are just getting started.
06:35 Look at it this way.
06:36 We have a middle class of about 350 million.
06:40 And 1% of it is flying currently.
06:45 So that talks about the size of the opportunity
06:48 that we have in front of us.
06:51 Now, what does this translate into?
06:54 It translates into more jobs, more opportunities, clearly
07:00 more connectivity opportunities in the aviation sector,
07:04 opportunities in the services sector,
07:06 like tailored service packages, including
07:09 for cargo, logistics, ground handling, and support.
07:12 So on the supply chain side, I would
07:18 like to start by referring to two pieces of news that
07:23 were published recently.
07:25 One is Airbus decided to award a contract of about 100,000
07:32 titanium parts-- these are super speciality machine parts--
07:35 to a supplier in India called Aecus.
07:38 And another one is Airbus decided
07:40 to award the flap track beams of our Airbus A330 airplanes
07:46 to a company called Dynamatics.
07:49 The reason I quote examples of these-- and these are not
07:52 very large houses.
07:54 Yes, there are large houses like the Tatas and Mahindras
07:58 who obviously work with us at a large scale as well.
08:02 But I take these examples because these
08:04 are companies that are driven by entrepreneurs.
08:07 These are companies that were started very small.
08:10 They are entrepreneur-driven companies.
08:13 And still, they manage to succeed
08:16 in not only working with us, getting into a tiered supply
08:20 chain, and rose to a level where now they
08:23 are an inseparable part of our supply chain.
08:26 And they are actually tier one to Airbus,
08:30 which is quite significant.
08:32 So they managed to crack the code of not only entering
08:36 the Airbus ecosystem or aerospace ecosystem,
08:40 be a supplier to Airbus, and then obviously
08:42 have expanded beyond Airbus into other programs
08:47 with other OEMs as well.
08:50 Making India is central to our strategy.
08:54 Just about yesterday, our group president
08:57 reiterated that India is not just a market for us.
09:01 It's a base.
09:02 It's become a base.
09:04 This means not only collaborating
09:06 with large houses, the big companies,
09:10 but also typically developing an end-to-end ecosystem
09:16 system of parts, metal parts, machining, electronics,
09:21 aviation, integration, testing equipment, and so on,
09:26 to make a completely integrated airplane.
09:29 And that means working with small, medium,
09:32 and large-scale enterprises, which typically
09:34 are entrepreneur-driven.
09:36 For India, we source over $550 million
09:39 worth of hardware and services.
09:43 We are committed to sustaining and growing
09:45 this in the foreseeable future.
09:48 And we also have a startup incubator
09:52 called Airbus BizLabs, where every year we
09:55 take a select number of startups,
09:58 and we provide them with a platform
10:01 to conceptualize their ideas, prototype them, and then help
10:05 them deploy them globally across our business,
10:09 including in Airbus commercial airplanes, helicopters,
10:12 as well as defense and space.
10:14 So that's a significant opportunity for startups.
10:17 And there have been startups from India
10:20 who have actually tremendously benefited
10:23 from a program like this.
10:28 Our plans also include setting up a helicopter manufacturing
10:31 facility in India, and also setting up
10:35 a manufacturing facility for military cargo aircraft
10:38 manufacturing.
10:41 Now, we cannot do this all alone.
10:43 It requires a robust and sustainable ecosystem
10:47 of supply base, not only for mechanical components,
10:51 but for end-to-end systems.
10:53 So generally, the question is, so what can entrepreneurs
10:57 do to get a piece of the pie so that there's value
11:00 creation in the long term?
11:03 What are the expectations?
11:04 How can an entrepreneur get in and start
11:09 doing business in this sector, which is now potentially going
11:14 to be growing over the next 20 years?
11:19 So for entrepreneurs and innovators,
11:23 it's kind of a paradigm shift from a traditional business
11:27 into doing business in the aerospace domain.
11:30 First and foremost, there needs to be an understanding
11:33 that aerospace is a very long cycle business.
11:37 It is a low volume, but very long cycle.
11:40 And as an example, launching just an incremental change
11:46 to an airplane takes a couple of years.
11:50 And if it's development of a brand new platform,
11:53 like an Airbus A380 or a H160, which
11:58 is our next ultra-modern airplane,
12:01 then generally, the cycles of development
12:03 last anything between five to seven to 10 years.
12:07 But then the life of an airplane is 30 years.
12:10 So once we are developed, this life cycle
12:14 goes on for two to three decades.
12:17 And that is the kind of long-run value creation
12:21 that happens in this.
12:22 So you start small, but then once you are in,
12:25 you are in for about 25 years.
12:30 So the lesson is be patient.
12:34 Invest time in understanding the business, the requirements.
12:38 And this will provide deep insights into the domain
12:43 and also have you prepare to be in this for the very long term.
12:50 An example I would like to quote just
12:52 for an understanding of the business
12:54 is an example of a maintenance, repair, and overall organizer.
12:58 There are many companies, many suppliers,
13:01 and many entrepreneurs who approach us and say,
13:03 oh, I have land in the middle of nowhere.
13:06 And we would like to take you to show this land so that you
13:10 can put up an MRO facility there.
13:14 And in India, land is a precious asset.
13:17 But the fact is an MRO is best developed
13:22 at the busiest airport in the world,
13:24 busiest airport in the country, because no airline would
13:28 like to fly their airplanes empty
13:30 to the middle of nowhere just to get maintained.
13:33 So this is the type of understanding
13:36 that it's a tremendous cost for an airline
13:38 to actually fly the airplane empty to go to a certain place
13:42 just to get maintained.
13:44 So the point is understanding of the business, its requirements.
13:50 Once you invest time in it, you'll
13:51 actually know what kind of solutions to propose.
13:55 Aerospace is driven by very high standards of quality.
13:59 And all businesses are driven by quality, all sectors,
14:03 but quality and regulation.
14:05 And the regulation is the key here, because as an example,
14:10 there needs to be documentation maintained on every part
14:13 that the airplane has, and not only just for the part,
14:16 but for the origin of the part and the origin
14:19 of the raw material all the way to the mill
14:21 where it originates from.
14:24 And this needs to be maintained for a period of 30 years
14:26 as per regulation.
14:28 Now that requires a lot of understanding, cost,
14:32 as well as potentially technology
14:35 to preserve this kind of documentation for 30 years.
14:38 And technology has made this very easy.
14:43 But then to deploy such technology to the scale,
14:48 it comes at a cost.
14:49 And there needs to be an investment
14:52 to deploy such technologies.
14:54 So the message is there needs to be
14:56 a deep understanding of the regulatory environment as well.
15:00 And this is the same for technology investors also.
15:04 As much as technology has created or sped up
15:07 the creation of products and services such as drones
15:11 and surveillance, the regulation still
15:14 has not caught up to the level where the technology has
15:18 reached and gone.
15:19 At times, innovators will need to also work with policymakers
15:24 to help them educate and understand
15:26 about the way technology has evolved
15:30 and the products and creations that
15:32 has happened as a result of this to propose regulation
15:35 around it.
15:36 And at Airbus, we do make efforts
15:38 to ensure that this regulation is caught up with technology.
15:44 Short-term gains in aerospace almost do not exist.
15:50 As an entrepreneur who is now a tiered supplier to Airbus,
15:55 he basically has quoted all the time,
15:58 saying that if you are expecting returns in about three
16:01 to five years, forget about it being in aerospace.
16:04 So while that might be true in manufacturing,
16:08 technology certainly has better timelines for value creation.
16:12 But these are still not very short-term.
16:15 There needs to be a strategy in it for the longer term.
16:18 And the strategy in it to typically walk--
16:22 first crawl, then walk, and then run
16:24 with the partner or the OEM, which is typically
16:28 your aerospace customers.
16:30 So there's very low value creation in the short term.
16:33 But then due to entry barriers, the value creation
16:35 in the longer run is very, very high.
16:39 Having said that, any entrepreneur who
16:41 has a vision and passion to be in this sector
16:45 can embark upon the journey to fulfill their ambitions.
16:49 And a few things might help.
16:52 Be in it for the long run.
16:54 Please be willing to invest.
16:56 Now, it becomes a chicken and egg situation
16:58 where one would question, how do I
17:00 invest before getting business?
17:02 But then there needs to be a certain level
17:04 of infrastructure put in place and process maturity
17:09 that companies see before even awarding contracts
17:13 in this segment.
17:14 And be willing to start small.
17:17 And I mean very, very small.
17:19 That will give you not only confidence,
17:23 but have you learned the learning curve
17:24 and give confidence to the OEMs that you are not
17:27 in it for the short term.
17:29 Because the OEMs do look for commitments
17:31 that go into decades.
17:34 Invest in obtaining certifications,
17:37 such as AS9100, EN, or Part 145.
17:42 These do bring in a lot of credibility
17:45 to the organization and to the business
17:47 and brings confidence to your customer
17:49 that you can deliver to the process and the standards
17:53 and makes you stand out from the rest.
17:56 And finally, be willing to be a tier two or even a tier three.
18:01 In this sector, a tier two or even a tier three
18:05 needs to be certified by the OEM.
18:07 So you always keep working with the original equipment
18:09 manufacturer, like Airbus, to actually deliver value.
18:14 And once they see it, you automatically
18:16 start to graduate up the supply chain from a tier three
18:19 to a tier one.
18:20 This again allows your business to build credibility.
18:24 So in conclusion, what I say is that the opportunity
18:28 for entrepreneurs and innovators to enter in this business
18:33 is now.
18:35 The time cannot be right.
18:37 A right amount of preparation and mindset alignment
18:40 will go a long way for your business
18:42 to be greatly successful in the aerospace and defense sector.
18:46 Thank you so much.