Dynamatic: Aerospace Orders To Double In 30 Months | NDTV Profit
Transcript
00:00Thanks for tuning into this very special broadcast. I am at the shop floor of a company that is making the whole or the part of the structure that you would have seen, a Bell helicopter.
00:16I've never seen a facility like this. And the man who's painstakingly built this, or if I'm not wrong, 39 years, Udayant Balotra, with me here at the shop floor of Dynamatic.
00:28Great having you. It's been an absolute delight watching what is a very state-of-the-art facility. Just before we get to the nooks and corners, what is this? Can you just tell us?
00:39This is the fuselage of the Bell 407, which is the world's largest selling helicopter. We make 1600 parts that go into this and then we do the assembly of these major structures that form the fuselage of this remarkable helicopter.
00:57Wow. Okay. Now, viewers, I want to tell you, as much as it seems to me that I'm in a complete aerospace facility, Dynamatic is a lot more than that. So, Udayant, just tell us a bit about Dynamatic, because as I learn, you're doing three things in your business, right?
01:12There is hydraulics for tractors and others, there is metallurgy division and there is aerospace. So tell us a bit about Dynamatic.
01:20So our hydraulic division is the world's largest manufacturer of hydraulic gear pumps, which creates the pressure that you need in a hydraulic system. Our largest market is agricultural tractors, but also construction equipment like bulldozers, drill rigs, cranes, excavators, and even battle tanks.
01:44And while we are a very large manufacturer of hydraulic gear pumps, we are now, in the next five and 10 years, increasing our wallet share by making valves and systems for the same customers. So we intend to move using the market share that we have, which is very large, and increasing our share of the market to grow the business, the share of the wallet.
02:11The second business that you talked about is metallurgy. We had three foundries, two in India, one in Germany. We divested of the foundries in India, we retained the German foundry, which largely caters to the best German automotive industries. But we are now segwaying that into aerospace and defense. And that's why we retained that particular facility.
02:36Okay, so you move out of the auto piece per se?
02:40So the Indian foundries were completely automotive, which we divested. We've retained the German foundry, which is a very fine foundry with a great history. And in the next few years, we are segwaying its capacity and its capability to making aerospace and defense products right in the heartland of Europe, where there are shortages right now.
03:07So you do auto, aerospace and defense, all three out of that foundry?
03:10Out of that, yeah.
03:11Okay. And the third, the sexy looking one.
03:14Well, this was actually my childhood passion. I was a hobbyist. And in a little garage behind the hydraulic pump factory in the early 90s, we started making aero structures as a developmental partner, first for DRDO, then HAL. We learned a lot from them. In fact, I'd like to say that I'm a child of HAL, but in the private sector.
03:40And we then developed a global footprint making products for Airbus, Bell, Boeing, Dassault, some of the best companies in the world.
03:51Wow. Okay. So I want to do a broad brush first before I talk about the specifics, Udayan. So just give us a sense of based on either revenue or order book or both, where do each of these three divisions stand in your overall setup? And your past shows that you build the business, not with a one year, two year target in mind, but a longer term horizon in mind.
04:17Yeah.
04:18So as you, I'm presuming that's what your view is right now as well. So what is the current and what is your view say, say three years out, five years out or till the end of the decade for each of these three?
04:29Okay. So it's really interesting. There are three ways to look at time. One is of course, time in relation to yourself. I was much younger earlier. So I had longer time frames to look at. I'm older now. So I'm obviously closer to the latter part of my career than I was 30 years ago.
04:49The second part of it is also harvest. You build a business for 20, 30 years and suddenly opportunities for harvest, for much bigger things come because these businesses take a lot of time to build.
05:02Okay.
05:03So what we've done is we built a really fine world-class aerospace business where we are a global tier one with engineering capability to the best companies in the world. We are the first winner of Airbus' Global Sustainability Award. We are last year's Boeing Supply of the Year Award. These are global awards. And we've been Bell Helicopters' Best Global Supplier.
05:29So what you've done is you've created excellence where your customers appreciate the quality of work and rigor of what you do. And therefore, once you have that, you're able to broaden your market. And that's where we are now. So when I say harvest, it doesn't mean harvesting as in taking more value, but you suddenly have more opportunities than you had earlier.
05:54It takes a long time for a tree to grow, a good tree, and then suddenly you have the harvest. And then you're able to multiply it in a much faster way. And that's where we are now in aerospace.
06:04Okay.
06:05In the metallurgy business, it's really about taking a business that was much larger. We took our automotive business that we built, we divested out of it. We were making engine products. And we obviously saw the electrification of the industry. So we sold the Indian auto parts, engine parts business to people who wanted it.
06:27We kept the German piece because of the skill sets and took what was a 100 million euro business, shrunk it to half to 50 million. We've got latent capacity, which we're right now using to build a ground up aerospace and defense business.
06:44That's where we are. Now, if you take the metallurgy business, probably in the next two, three years, you'll have a very nice aerospace, defense, metallurgy business coming out of that. If you take our hydraulics business, as we go from market share to wallet share, you can look at a roughly 500 crore business that should be able to double in the next five years and then double again five years later.
07:12So you're in a nice position where you have a good reputation, you have a good market share, and you just need to increase your share of the wallet.
07:20The real interesting thing is here in aerospace, because aerospace itself is in a moment of turbulence across the world. Supply chains are really hit. And it's almost like a flight to quality, where the major OEMs are seeking to give their best suppliers more and more work share. And we are one of their best suppliers. So we're in a good place.
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