FDI in defence will bring together best technologies and talents in the Indian defence industry

MKU Limited, an Indian defence manufacturing company, scored a coup of sorts by recording a record export target this year despite the constraints brought about by the pandemic. MKU specialise in the manufacturing of protection and surveillance range of equipment, including ballistic helmets, armour inserts, bulletproof vests, and electro-optical devices like night vision binoculars and monoculars. In this exclusive interview Managing Director Neeraj Gupta details out the company’s successes and plans for the future.

IGB: MKU is expected to touch INR 250 cr of exports this year despite the pandemic. How did you manage to achieve this?

NEERAJ GUPTA: Our actual exports in the last financial year were above the INR 250Cr. mark. This was made possible, despite the pandemic, because of several reasons. We never lost sight of our ultimate objective. We brought about a change in the way we worked, keeping in mind the restrictions imposed due to the pandemic. Our biggest challenge was the travel and transport restrictions, but we trained our team to ensure that the communication channels were kept activated despite the restrictions. We strengthened our online communications and virtual medium. We are also thankful to our suppliers who supported us by delivering the raw materials, despite the travel and transport restrictions. Above all, the team continued to perform inspite of the limitations.

It was a result of a collective effort of team members, including our channel partners, coupled with the vision and advance planning of the management.

MKU is the first company outside Brazil to provide ballistic vests to the elite Military Police of Sao Paulo. Please share some details about this.

The requirements of the ‘elite’ Military Police of Sao Paulo, were specific and stringent. They wanted the best products available from tried and tested manufacturers. Besides being light weight and flexible, they also wanted the solution to conform to National Institute of Justice, USA (NIJ) standards.

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They issued a global competitive tender since they were unable to source the materials and products locally. MKU won this contract because our products conformed to NIJ standards and met the technical specifications.

Brazil was the first country in the LAC region where we made a breakthrough way back in 2006. Since then, we have been working in the region and have expanded our reach to other countries like Mexico, Chile, Ecuador, Argentina, Peru, Columbia and Guatemala.

There were several challenges faced by us with respect to language, distance, time barrier, local laws and, above all, a distorted perception of India as a manufacturer of defence goods.

We countered this by introducing advanced solutions, promoting our brand equity through regular participations and display along with upgrading our R&D capabilities to make world class products to meet the user requirements. We invested in acquiring the necessary international quality certifications for our products. At the backend, we built a large infrastructure and world class manufacturing facilities.

This helped build customer confidence and enabled us to establish ourselves as a leading player in the region.

India has recently increased its FDI limit within the defence sector, allowing greater investment by foreign companies. Do you think this puts indigenous companies on the backfoot?

I do not think so. In fact, this should create greater opportunities for Indian companies as these FOEMs would like to work with local companies except for some in the high-tech sectors. I also believe this will help bring together best technologies and talents which will foster the Indian defence industry.

What are some of the top tech trends within the defence industry that you find interesting from an investment point of view?

There are several emerging sectors and technologies that could be of interest to the defence industry like Artificial Intelligence and Robotics, Unmanned Mobility, Secured Communication, Surveillance and Green Technologies to name a few. These domains hold great prospects for the defence industry. In fact, some industries have already invested in and are working in some of these sectors.

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India has been trying to move towards lesser imports and more self-reliance within the defence sector, producing more defence equipment indigenously. What are some of the challenges that you think need addressing in order for this to be successful?

There are several hiccups faced, but a major challenge is with regards to the testing infrastructure available in the country. This needs improvement.

Another area is the availability of raw materials within the country. We are still dependent on imports for several crucial raw materials. The demand flow in the country is not regular, resulting in cyclical procurement and supply cycles. The procurement process needs to be made transparent and quicker.

What are MKU’s plans for the future?

We have identified several growth areas and are systematically progressing towards them. We have invested heavily into electro optics and feel this will be our next growth driver.

We are also looking at investing in the manufacture of strategic materials which are critical for the defence industry.

Soldier connectivity both on and off the battlefield and secured communication are also areas in which R & D efforts could be focused.

We have been scouting for companies in the selected areas and are also considering acquisitions as part of our inorganic growth strategy. We already have a tie up with some leading FOEMs and are looking to expand this cooperation further.