Q&A: P Ravinder Reddy, Chairman, MTAR Technologies Pvt Ltd

'Defence procurement policies are not conducive to growth of SMEs'

Having been a supplier to the Indian defence and aerospace sectors for the past four decades, MTAR Technologies Private Limited, which fabricates precision components and complex engine systems, is one of the very few Indian companies that can claim to have the capability to build an entire nuclear reactor on its own. P Ravinder Reddy, chairman of the Hyderabad-based company, which is now focusing more on global opportunities, speaks to B Dasarath Reddy. Edited excerpts:

What is your vision for the future of the company?
With expertise and experience acquired in all the cutting edge product technology areas in the defence, aerospace and energy sectors, we now wish to emerge as one of the biggest engineering companies in the country in the next four-to-five years. Plans are afoot in this direction in anticipation of orders from both domestic and global companies to drive growth to reach that level.

What products and systems has your company manufactured or built partly or fully?
We have handled the design and development of missile systems for the DRDO organisations. We have built core structures for Indian satellites. We have assembled aerospace engines such as liquid propellant Vikas and Cryogenic engines for the PSLV, GSLV and Chandrayan satellite launch vehicles. We have also contributed to the development of Prithvi and Akash missiles, besides making aircraft components used by Boeing and Airbus. Above all, the company has fabricated almost all the components that are required to build a nuclear reactor. In fact, we are now in a position to build a pressurised heavy water reactor (PHWR).

The capability to build a nuclear reactor is no small achievement for a medium-size company. What next?
We want to build a similar capability in aircraft engine manufacturing as well. We are willing to invest Rs 400 crore to make light combat aircraft engines, which cost around Rs 20 crore each, if we see a business opportunity to the tune of Rs 5,000 crore coming our way over a period of time. We have been producing aircraft components, hitherto imported from countries like Israel, for Hindustan Aeronautics Limited.

How are government policies helping industry?
Though the defence ministry's offset policy is expected to provide substantial business opportunities for us, the procurement policy of defence organisations is not at all conducive to the growth of the SME sector. Defence organisations change vendors by simply following the L1 (lowest bidder) criterion every year. High-precision engineering jobs are a low-volume business. The company that loses the contract also loses the opportunity to grow and the years of toil in achieving technical expertise go waste. The new vendor who gets the contract also faces the same situation. This is not the case with global companies, which enter into three-to-five-year contracts with their vendors.

Are you looking at global opportunities?
We have already been supplying components to energy and oil companies in Europe and elsewhere. The scope of working with MNCs is growing on account of the offset policy. I think the company's export business will reach Rs 100 crore soon. I hope to see exports contributing 70 per cent of our business in the near term. Then, we would expect to achieve a turnover of Rs 500 crore in the next two-to-three years.