Production pact in private sector for defense


BF Utilities a part of the $1.5 billion Kaylani group of India has entered a joint venture agreement with Singapore Technologies Kinetics to design, engineer and manufacture high-end systems for the defense sector.

The Kalyani group will hold a majority 74% stake in the JV, which will be based in the city of Pune in India. The agreement was signed between Kalyani group and ST Kinetics in Singapore recently.

ST Kinetics is the land systems and specialty vehicles arm of Singapore Technologies Engineering (ST Engineering), a global defense and integrated engineering group which provides solutions and services in the aerospace, electronics, land system and marine sectors. The Singapore-based company reported revenues of $2.1 billion in FY2005

Over the next three years, ST Kinetics will invest $1.56 million (about Rs 7 crore) in the JV, in line with its 26% equity, while the Kalyani Group will invest $4.44 million (Rs 19.98 crore), to cater to the running of the JV and for joint development projects. The JV is expected to commence operations in 2007 after obtaining regulatory approvals in India.

India needs a large amount of defense hardware. ST Kinetics has a lot of experience in land-based systems, while Kalyani group has a strong manufacturing base and understand the local market. The joint venture will offer the Kalyani Group an access to ST Kinetics growing portfolio of products and services for the defense market, while the Kalyani Group will leverage its full service supply capability on the basis of its technology, product design and product development expertise.

The joint venture will also boost the country’s efforts in the areas of research, development and manufacture of military land-based products and solutions, specifically in the area of large-caliber guns and small arms, for India’s defense and security requirements. This year’s defense budget is estimated at $20 billion, which includes about $2 billion worth of large-caliber guns and small arms

This investment is in line with ST Kinetic efforts to establish a foothold in key markets through partnerships with major players around the world. The Kalyani group will offer access to the Indian market through its defense links and strong industrial base.