In 2004, Godrej Aerospace (GA) became an independent business, cutting off its umbilical cord from PED, which had existed since the birth of GA in 1985. In 2004, GA had a large development order from DRDO for a sub-system of BrahMos missile. This order gave the business a boost to have its independent P&L account. In that timeframe, ISRO, our major customer, gave us a bulk order of 34 nos Vikas engines, which was a breakthrough from the past. In 2004, even though we had a large value of orders on hand, we could not produce and generate revenue for having a positive bottom line. Production was also curtailed because of continual modifications in the design of the engine. As this state of affairs continued, serious doubts began to arise about the viability of the newly carved out business. There was no clarity as to how the business would shape up going forward. In 2006, a favorable development took place; namely, the Ministry of Defense (MoD) announced a new Defense Procurement Policy (DPP), wherein the government made it mandatory for the global original equipment manufacturers (OEMs) to source 30% of the value of the orders received by them in the form of components and sub-systems from Indian Public and Private sector organizations under the OFFSET policy enunciated in the DPP. This change in the policy was a shot in the arm for us and it prompted us to look for opportunities where we could become a part of supply chains of the global players such as Boeing, Airbus, GE, Saffran, Israeli players and so on. On the face of it, this opportunity of entering the supply chains of global players appeared attractive, but in practice, it was extremely challenging and difficult. To gauge the difficulty, we should ask why a global player would add another supplier who was not tested by them, nor did they have any track record. In fact, under normal circumstances, these players would go to great lengths to prove that Indian players did not have the capabilities to meet their stringent requirements, making it extremely difficult for the Indian players to gain an entry.
This was a welcome change and we started learning about the buying patterns, minimum qualification requirements, raw material availabilities, testing standards and so on for the Global Aerospace and Defense players. Overall, we found that their procurement process was a highly regulated regime where onboarding a new supplier would take a considerable amount of effort and time, not only for us but them as well. The first two years went in obtaining essential, basic approvals such as AS9100, NADCAP, ISO 27001 and others. Also, we had to take additional customer/project specific approvals as well. With these efforts, we could secure small trial orders from GE and Moog. Learning the newer ways of doing business with these global players, we executed these initial orders to their satisfaction. Though these orders were small, their successful execution gave us the confidence that we could handle larger orders. As more orders came our way, we gathered requisite experience and adopted the newer ways of doing business with the global players. If we take an overall view, we can see certain common requirements amongst all the players. However, these common elements were additionally layered with specific requirements of each of the players. All these efforts yielded offset orders from Rafael Defense Systems, Israel and Safran Engines, France. As offset orders do not have continuity and are related to the procurement by our Government, we were not sure whether the same would provide us adequate revenues to improve our top and bottom lines over the years. GE and Moog orders were low in volumes and simple in requirements. Though these forays did not give us significant revenues, they enabled us to learn the ropes of catering to the requirements of the global players. We learnt a lot in the bargain, but our need to have large repetitive revenue remained unfulfilled. We had no option but to look for additional buyers to boost our business and make profits.
At that stage, in 2013, we decided to look for sub-systems or systems, but all such assemblies would require approvals from the ultimate OEMs like Boeing and Airbus for aircrafts and for engines, approvals from GE, Rolls Royce, Safran, Pratt & Whitney and others. Obtaining these approvals was much more difficult as it called for the deployment of manufacturing processes, quality systems and documentation of higher levels. To supply components to Boeing, the suppliers needed to have valid aerospace quality management system (QMS) -AS9100 D certification obtained from the nominated certification bodies as specified. The certification is then verified for its validity before Boeing conducts an in-depth assessment for compliance to their requirements (D1-4426). For processing Boeing design products, this requirement is a must. Once the supplier demonstrates compliance to NADCAP and Boeing specifications for various processes, the Boeing team visits the supplier and produces samples to be tested at Boeing’s internal lab. If these samples get approved, then the supplier is added to their approved list. Once the supplier is added to the approved supplier list of Boeing, purchase orders are placed on the supplier. Boeing representatives conduct a Quality Requirements Review (QRR) for the supplier to bridge any gap in the understanding of the quality requirements. Once this step is cleared, the process is taken forward. In addition to the above, the supplier needs to maintain updated checklists to prepare for digital product definitions (DPDs) and the approvals. Any reports of non-compliance have to be shared with Boeing for assessing the impact of non-compliance. On the basis of these checks, Production Readiness Assessment (PRA) is carried out by a cross-functional team of Boeing for various areas of QMS. Accordingly Red, Yellow or Green ratings are given which are re-assessed every year.
In case the supplier fails to meet Boeing’s expectations, then a perfect product plan (PPP) is triggered and daily, weekly and monthly reviews are carried out until the desired results are achieved. We took up this challenge and set up a task force to study all the specifications of these OEM and planned for upgraded methoding, manufacturing, quality control, project management, purchase and stores, quality assurance non-destructive testing processes, IT. It took us a few months to put in place upgraded processes which were first audited internally and then by independent international experts. In 2016, Boeing accepted our request and gave us a trial order based on which we offered for a complete business audit by them.
Once this important milestone was reached, enquiries started flowing in from not only Boeing, but other leading OEMs as well. We strived our best to meet all of the requirements from the first order onwards itself, to create a strong foundation.
Further, for more than fifteen processes, we are among the top three suppliers for Boeing and others with a wide range of qualifications for each of the processes.
With most of the aircrafts remaining grounded, the chances of passenger and cargo traffic levels bouncing back to the pre-covid levels appear very slim. This negative outlook for demand has a huge impact on the aircraft manufacturers who did not foresee any recovery in the demand of the new aircrafts. This negative outlook coupled with the need for developing climate friendly aircrafts has pushed these companies to the drawing boards for coming up with newer versions of aircrafts. This development has a cascading effect across the supply chain with every supplier requiring to redesign their offerings to the new set of requirements. Considering these uncertainties, our analysis shows it will take another two-three years before the demand arrives and we see a healthy flow of orders from the global OEMs. In the meanwhile, the best thing to do is to track developments, hone our skills and build capabilities with an eye on the future.