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In House Ingenuity

February 17, 2021 | Expert Insights

Even as the tropes of ‘Make in India’ and ‘Atmanirbhar Bharat’ dominate public discourse today, there are commonly-held beliefs that the Indian industry has not been able to rework itself to meet global competition. As can be recalled, this was one of the reasons touted for India staying out of the Regional Comprehensive Economic Partnership. Belying this, however, there are many examples of Indian ingenuity at work, which have created products and processes that compete with the rest of the world.

One such company is the Bangalore-headquartered Dynamatic Technologies Ltd., which has integrated cutting edge technology with innovative business models and artisanal skills to create a global value chain. Involved in the design and construction of highly engineered products with automotive, aeronautic, hydraulic, and security applications, the company has emerged as a global Tier I supplier to Airbus, Boeing, and Bell Helicopters. Most recently, it was in the news for assembling the main fuselage of Tejas, the indigenously built Light Combat Aircraft of India. 

RIGHT PLACE, RIGHT TIME

Aerospace is a deeply regulated business, with a profound need for quality and reliability. After all, a company cannot afford to have its products fail when they are up in the sky. In this exceedingly critical sphere, Dynamatic Technologies has been charting its own path.

To begin with, it was involved in the manufacture of hydraulic gear pumps, which were mainly used in tractors and bulldozers. A significant turning point came in the 1990s when the Soviet Union collapsed. As most of the battle tanks in India, like the T-72s, had been of Russian origin, the company was able to discern a failure in the military supply chain to secure hydraulic pumps and parts. 

At this point, Dynamatic stepped up to offer its services. Through reverse engineering, it developed the hydraulic pumps required for battle tanks in India. During this process, it came to realise that the pumps which had been used in these battle tanks were far lower in terms of specifications and capabilities, as compared to those manufactured by the company. By entering into a dialogue with the Indian military, it upgraded the performance parameters of the hydraulic products that were required and qualified itself as a military supplier.

Subsequently, the company was invited by the Defence Research and Development Organisation (DRDO) to produce certain hydraulic products for the Arjun main battle tank. This relationship grew more robust over the following years. The DRDO inducted Dynamatic Technologies as a developmental partner to build the rear fuselage of an unmanned aircraft, which was to be used for target practice. Although it was a simple product, it had to be built with all the rigour that went into making a proper aircraft. This marked a key moment in the company’s history, as it established its footprint in the aerospace industry. 

EXPANDING OPERATIONS

The aerospace division of Dynamatic commenced operations as a garage start-up in Bengaluru. Owing to its location, however, the company had access to a unique range of skills and competencies, which were crucial for a nascent aerospace enterprise. Those who had previously worked with organisations like Hindustan Aeronautics Limited (HAL) and the Indian Air Force joined the Dynamatic team, bringing with them a wealth of expertise. 

Slowly and steadily, the company developed an ecosystem of knowledge at multiple levels. It focussed its energies on training an essential workforce and developing more complex products. After the success of its pilotless aircraft Lakshya, it developed aerostructures for the Intermediate Jet Trainer HJT-36 programme, as a partner with HAL. It also got involved in the Sukhoi-30 MKI fighter aircraft programme. Nearly one-sixth of the airframe for these jets was indigenised by Dynamatic. This included major control surface assemblies, which lent directional mobility to the aircraft. Towards this end, a facility was also set up in HAL Nasik, making Dynamatic the only private company to have the same, inside a public defence establishment.

Buoyed by these achievements, the company started to explore opportunities for globalising its business. In particular, it wanted to diversify into bigger markets, which did not exist in India at the time. 

BUILDING GLOBAL VALUE

Dynamatic made pitches to firms like Boeing, Airbus, and Bell, relying on its visibility as a competent manufacturer of complex aircraft parts. Meanwhile, Airbus was also looking to diversify its procurement beyond certain countries in Europe. It had not only identified target nations like China, Russia, Poland, the Czech Republic, Indonesia, and India but also benchmarked companies within these countries.

Dynamatic, for its part, was careful to emphasise its importance as a low-cost supplier of hydraulic and automotive parts, with extremely high rigour in terms of quality qualifications and systems. It also highlighted its prior experience with Russian technology, where it had not only displayed fidelity to the manufacturing system but also redesigned jigs and fixtures to ergonomically fit the Indian workplace. Overall, it was able to demonstrate a productivity increase of nearly 40 per cent, which resonated with a global value-seeker like Airbus. A contract was signed with Spirit AeroSystems, the world’s largest aerostructure manufacturer, for the manufacture of Flap-Track Beams for the Airbus A-320 family. As the sole supplier of a very complex, Class I, flight-critical product, Dynamatic was able to execute a fully defined quality and control plan.

All these aspects worked to the company’s advantage when Boeing investigated avenues for discharging some of its offset obligations in India. Dynamatic was able to enter into a partnership with this aerospace behemoth as a Tier I supplier of Mission and Power cabinets for the P-8 maritime reconnaissance aircraft.

OPTIMISING COSTS

As the company took control of its supply chain and acquired a better sense of its delivery and cost drivers, it identified a significant gap in the domestic availability of aerospace raw material. While India had other benefits to offer, such as low labour costs and an educated pool of engineers, it was saddled with increasing capital expenditures. This status quo was not attractive for a single-source firm like Dynamatic, which handled complex machines and could not afford any delays.

As a result, the organisation acquired a facility in the UK, which allowed machining at the source. Being closely located to the relevant suppliers, it was able to derive maximum value from raw materials. At the same time, the company invested in high levels of robotic automation to ensure that the labour costs were not too high. 

By doing so, it upended traditional modalities of operating in the aerospace industry. As opposed to outsourcing the construction of smaller parts and assembling the final structure near the aircraft manufacturer, it built the smaller parts in a proximate location and flew them to India for the final assembly.

Working capital was another metric where the company was able to reduce its costs. Traditionally, companies that had machined in India imported the required raw material by sea. Dynamatic, however, derived value from these raw materials at the source, and then flew them back to India. Although air freight was more expensive than sea freight, the cost of flying these manufactured parts was far lower than the cost of shipping entire tonnes of raw material. It also reduced the WIP cycle from 90 days to a mere nine days. 

ABSORBING ARTISANAL TALENT

In scripting its growth story, Dynamatic was also able to capitalise on the artisanal talent in India. It mapped nearly 56 villages in the northern part of Bangalore Rural district, where artisanal communities lived. The youth of these communities were encouraged to enrol in the Industrial Training Institute run by the company, where they were trained as highly skilled aerospace assemblers. At a time when Germany, UK, France, and Japan were facing a dearth of young people who aspired towards such careers, Dynamatic was able to create an entire army of artisans who were qualified for aircraft manufacturing.

RISK MITIGATION

The onset of the COVID-19 pandemic posed a significant challenge for supply-chain resilience in most companies. However, Dynamatic proved to be well-placed in managing health-related risks. It created its own biosecurity protocols by working closely with the government and with scientists at the Indian Institute of Science. Its distributed supply chains were also reconfigured to adapt to the developing situation. Such lessons would be particularly useful to those in the aerospace industry who are looking to weather the effects of the pandemic and any other crisis that might arise in the future.