‘India should focus on building national aircraft’

Aravind S. Melligeri of Aequs Limited, a Belagavi-based manufacturer of engine systems, landing systems and cargo and interior systems for global aerospace OEMs like Airbus, Boeing, Safran, and Collins Aerospace, said that India requires more aerospace systems and equipment manufacturing firms as the global market for these was huge.

Mr. Melligeri, who is Executive Chairman and Chief Executive Officer of Aegus told The Hindu, “We currently touch/make 5,000 parts of aircraft while each airplane has 20,000 to 30,000 different machine parts. This indicates a huge market opportunity for us. India requires 10 more Aequs kind of companies.‘’

Mr. Melligeri said India has to ultimately focus on building a national aircraft. “We have the expertise for it,” he said on the sidelines of the company’s IPO announcement here on Tuesday.

Airbus is the majority customer for Aequs and it supplies several components to the airplane manufacturer while Boeing, which came on board through an earlier acquisition in the U.S, currently accounts for 15% of the business, but is a growing chunk along with all other customers and verticals, according to Mr. Melligeri.

He said the aerospace industry grew between 2003 and 2020 without any down cycle and industries usually witness. However, the pandemic hit it hard, and yet the market grew back in 2021.

Geo-political challenges

However, geo-political challenges, such as Russia-Ukraine war, have adversely impacted the growth of India’s aerospace manufacturing sector. “Such challenges put stress on the supply chain for instance, supply of Titanium from Russia was under constraint, also the U.S. had said they won’t buy it from Russia.”

We should have a mechanism to overcome these global supply related challenges, especially when the aerospace industry is global and everyone wants to see the aircraft fly, Mr. Melligeri commented, observing that enterprises in Europe did not face shortage of Titanium as they weren’t under any purchase restrictions from Russia.

Consumer electronics

Aequs has also invested ₹600 crore in consumer electronics business in the last 24 months in Hubballi, to manufacture portable computer parts, smart devices and multipurpose wearables, he said.

Aequs’ Initial Public Offer (IPO), scheduled to open on Wednesday, comprises a fresh issue of equity shares aggregating up to ₹670 crore and an offer for sale of up to 2,03,07,393 equity shares of face value of ₹10 each. The price band of the offer has been fixed at ₹118 to ₹124 per Equity Share.

On proceeds allocation, Mr. Melligeri said, “We will invest ₹70 crore in aerospace business, ₹430 crore will go towards repaying existing loans and the balance will be kept for general corporate purpose and also for funding expansions and setting up new JVs.’’