Defense Technology International - April 2008 - (Page 46) AJIT PRABHU FIRST PERSON STAR OF INDIA Defense procurement is big business in India. The country is buying warships, submarines, missile systems and aircraft. O sets are a major part of procurement requirements, as much as 50% of the value of some contracts. One company benefiting from India’s booming aerospace sector and its o sets is Quality Engineering & Software Technologies LLC. (Quest), which provides design, engineering and manufacturing services in India and five other countries. Formed in Bangalore in 1997 by Ajit Prabhu, CEO, and Aravind Melligeri, president, Quest, now based in East Hartford, Conn., posted sales of $34.4 million in 2007. Quest provides key benefits to companies doing business with India: It manages design projects from concept to production (Quest has AS9100 certification for aerospace design and manufacturing); reduces costs by moving work to India, its largest operations branch; and qualifies for offsets. Quest is a new breed of company in India, one that leverages its design and engineering services to source business worldwide, in the process developing an array of technology. Prabhu met recently in New York with Contributing Editor Pat Toensmeier to talk about Quest’s strategy and plans. The questions begin with India’s pending $10-billion program to procure 126 fighter jets (DTI October 2007, p. 22). Defense Technology International: What impact will India’s medium multirole combat aircraft program have on Quest? Ajit Prabhu: Whoever wins the contract will have o set obligations. The o sets can be met by technology transfer or buying parts. India is going to be demanding more technology transfer. This is a long-term strategic interest for India, which wants to build its technological competence. To fulfill this, companies can establish captive centers for manufacturing, partner with local companies in joint ventures or outsource. If they decide on a joint venture or outsourcing, Quest is in a great position to support 46 them. We provide services that extend from concept design to detail design of test systems, components and avionics. We also have [precision machining] capabilities. Quest has created a special economic zone in India. It’s 300 acres and caters to companies that work with us in joint ventures or seek to establish their own operations. How involved is Quest with military contracts? We do a lot of military work. We are on the Joint Strike Fighter program. What are you doing for the JSF? Most of the work is in engines. [Prime contractor] Pratt & Whitney is one of our largest customers. We do a lot of work relating to engine hardware development, the core part and externals. Are you looking to expand in defense aerospace? We want to keep a healthy balance between the military and commercial sectors. India’s economic growth is going to drive defense procurement and civil aviation. Several of our contracts involve substantial numbers in the commercial aviation field. We plan to support companies through defense o sets and companies that will be selling commercial planes. What proportion of your business is aerospace? Quest has about 1,400 engineers and 550 of them are working in aerospace, almost one-third of our business. The outlook for aerospace is strong over the next two years. We expect to double our head count in this area of business. We have good reason for optimism since Quest is registering about 40% growth year over year in aerospace. This year, about $17 million will come from aerospace. Overall, we are projecting gross sales in 2008 of $51 million. We expect our aerospace business to grow to $35 million in the next two years. What portion of aerospace growth this year will be from defense? I would say that about $5-6 million will be defense, or one-third, so two-thirds will be commercial. Defense is actually growing faster than commercial. I believe that the defense side of our business could also grow by 100%. Is your defense aviation work focused on India? It is not necessarily for India. There is a continuing discussion about how U.S. defense spending is going to decline and defense contractors will need to be smarter in reducing their cost structures to maintain profitability. They’re finding that this means looking at India for offsets initially, but once relationships get established, that will become the way they do business. AviationWeek.com/dti DEFENSE TECHNOLOGY INTERNATIONAL APRIL 2008 PAT TOENSMEIER/DEFENSE TECHNOLOGY INTERNATIONAL http://AviationWeek.com/dti
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