Defence sector will be the largest business area for Reliance Group in the next few years, its chairman Anil Ambani has said, seeing opportunities worth Rs 1 lakh crore per annum in acquisitions for the armed forces.
Ambani said the Group's focus will be to become a leading manufacturer and supplier of advanced weapon platforms and military hardware to meet the requirements of the Navy, Indian Air Force and the Army and also mark the company's presence across the world.
Briefing over 80 analysts last evening about future plans of his group in the defence sector, the industrialist said there is a huge opportunity for private sector in the defence business as currently India imports 70 percent of its requirement (in value terms) and accounted for 14 percent of the global defence imports in 2016.
According to the analysts present at the meet, Ambani also said there is over Rs 70,000 crore worth of offset obligation which is yet to be executed, which is a big playing field for Indian private sector.
He further said that Reliance Group's entry into defence sector is driven by the government's Make in India and Skill India policies, which provide a large opportunity for the group.
"There are opportunities worth Rs 15 lakh core over the next 15 years in the defence sector across Air Force, Navy, Army and integrated security. That means there is a business opportunity of Rs 1 lakh crore per annum in the Indian defence sector," according to a presentation made at the meet.
It was the first time ever that Ambani or his group hosted an analyst meet for defence business.
"In the years to come, defence will emerge the largest business of Reliance Group and Reliance Infrastructure.
Contrary to the general perception, defence is not a capital intensive business. It has medium to light capital intensity," Ambani told the analysts.
There are more than 2,000 people in Reliance Defence at present including a 200-strong management team.
The Reliance Group's defence play started with the acquisition of Gujarat-based Pipavav Shipyard about two years ago. This remains the largest acquisition in the defence sector in India so far.
Pipavav Shipyard has now been renamed as Reliance Defence and Engineering Ltd (RDEL). It owns the largest dry dock in the country.
According to the analysts, the group has pegged the current order book of RDEL at Rs 5,700 crore which would be completed by January 2021. This include five naval offshore patrol vessels, one cadet training ship, normal refits of naval ships Jamuna, Savitri and Deepak; offshore supply vessels, two oil rigs, one Panamax Bulk Carriers and 14 Fast Patrol Vessels (FPVs).
Besides, RDEL has submitted bids for two prestigious programmes of Indian Navy, whose combined value is Rs 30,000 crore and bids are expected to open in next few weeks, the analysts said, while quoting from the presentation at the meet.
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