Wednesday, 10 September 2008

Chopping prices in the chopper market: Part 3 of a three-part series on India's thrust in helicopter building


(Photos: courtesy Ajai Shukla)

Right: An elevated view of HAL's Dhruv assembly area. The new ALH squadron being raised has its hangar alongside.



Left: HAL's helicopter test pilots, Wing Commanders CD Upadhyay and Unnikrishnan, after giving me a demonstration ride on the Dhruv behind us.



by Ajai Shukla
Business Standard, 10th Sept 08
HAL, Bangalore

At the prestigious Farnborough Air Show in 2006, India’s Dhruv Advanced Light Helicopter (ALH) got a parking slot beside a US Army Apache Longbow, the world’s most feared attack helicopter. HAL’s chief helicopter test pilot, Wing Commander CD Upadhyaya, who was display-flying the Dhruv there, describes the respect between the Apache and the Dhruv pilots. On the final day, after a particularly exhilarating display by the Dhruv, the Apache pilots strolled up and, only half in jest, folded their hands and bowed before the Dhruv. “This guy can fly any manoeuvre that we can”, one said.

Upadhyay has a fund of stories about the splash the Dhruv always makes. At the Berlin Air Show, three months ago, he gave Airbus president, Thomas Enders, a ride in the Dhruv. On landing, Enders remarked that the Dhruv’s glass cockpit was as advanced as that of his flagship Airbus A-380.

This is hardly surprising, considering that the Indian military --- acknowledged as the world’s most discerning arms buyer --- has tested, okayed and bought more than 80 Dhruvs, and ordered another 159 from HAL. But the foreign accolades have not translated into the flood of international orders that HAL had hoped for, even though the Dhruv is a cost-effective buy. At about Rs 40 crores (US $9 million) per piece, it is about 15% cheaper than competitors from market-leader Eurocopter and 10% cheaper than US brands like Bell Helicopter Textron.

So far, besides two Dhruvs gifted to Nepal, Ecuador has bought 7, Turkey has bought 3; meanwhile Bolivia and Venezuela are negotiating for some 23 more. Chile seemed set to buy the Dhruv, but that fell through at the last moment, as Washington allegedly piled on the pressure on behalf of Bell helicopters.

The Dhruv’s only disadvantage is that --- being newly introduced into service --- it is a comparatively untested product. But HAL has a three-fold strategy to bring down the Dhruv’s price to what it calls “an irresistible level”.

The biggest savings are planned through import substitution; 70% of the Dhruv’s price consists of imported components. Savings are expected once the Turbomeca Shakti engine rolls out from a new plant in Bangalore by end-2009. HAL has committed Rs 1000 crores to French company, Turbomeca, to develop the Shakti engine, provide 60 engines fully built, and supply parts for 320 more to be built in Bangalore. HAL plans to rapidly develop local suppliers for Shakti engine parts, thereby bringing down the price.

Next, HAL is banking on economies of scale to bring down the unit price. Mr J Shankar, General Manager, Helicopters, points out that current orders for the Dhruv will almost certainly increase as non-military users discover its utility. He expects paramilitary and police forces to buy the Dhruv, companies that implement projects in far-flung areas, such as hydro-electric projects, and corporations that will use the Dhruv for flying senior executives.

Mr Shankar explains, “The Cheetah and the Chetak (previous generation utility helicopters) eventually sold more than 600 helicopters. The worldwide trend is that the military develops helicopters and then civilians find uses for them. For someone setting up a BPO unit, Mysore is far cheaper than Bangalore. It is four hours away by road, but only 20 minutes away by helicopter.”

And finally, HAL is cutting costs by using common parts across its entire range of helicopters. Orders are in hand for 159 Dhruvs, 76 weaponised Dhruvs, 187 Light Observation Helicopters (LOHs) and at least 65 Light Combat Helicopters (LCHs). All of these will use the same Shakti engine, the same communication and navigation equipment, and common cockpit equipment like pilots’ seats. HAL is also awaiting another order for building 350 Medium Lift Helicopters, possibly in collaboration with a foreign partner.

HAL is not revealing how much prices will fall through its three-point strategy --- import substitution, economy of scale, and commonality of parts. But experts say that if the Dhruv can be priced at around Rs 35 crores, it will become hard for any other helicopter maker to compete with HAL in the growing global market for utility helicopters.

30 comments:

fighterclass said...

nice series of articles ajai.
I would have liked some info on the current state of Naval Dhruv, the 159 order includes it.
*)will the navy finally replace the chetaks with the dhruv ? what do your sources say ?
*)which foreign collabarator is HAL looking at for the medium helicopter, Mil ? any idea of the basic requirements for that machine, weight, payload capacity, etc ?
kudos again.

Anonymous said...

70% of the Dhruv’s price consists of imported components

Hmmm so they going to indigenise them by local assembly ???

Ankur said...

Top Stuff!

One question: Is the economies of scale tactic safe? I.e. Has HAL got confirmed orders from the govt or are they likely to be subject to change?

Anonymous said...

ajai, how about price comparison with Russian helicopter manufacturers like Mil Moscow and Kamov? Can the Dhruv take them on?

@Ankur: GREAT to see u back bro.. How are u doing?

Anonymous said...

Ajai, did you, all in only take 8 photos? Come on man we are expecting more..

Anonymous said...

Hi Ajai,
As you might be knowing that Navy decided against taking ALH because of excessive vibration which would play havoc with any sensors used by navy . I did hear that HAL was in the process of reducing the excessive vibration.
Any update on that??

Anonymous said...

anon 20:34 The following is from shiv aroor's livefist blog.

HAL's Answer to Shiv Aroor's query:

Q. Give us specific details about the vibration issues of the ALH Navy variant, which have apparently been sorted out.

HAL's answer: Vibration reduction on ALH was initially proposed to be achieved by passive ARIS (Anti-Resonance Isolation System). The ARIS units interposed between the rotor and the fuselage isolate vibrations arising from the rotor. ARIS is a passive system which can be tuned for a desired speed band. HAL has carried out extensive tests and analysis to carry out fine tuning of ARIS to achieve optimum reduction in vibrations.

Stiffening of fuselage has been carried out to reduce vibrations and to remove visual cues in the cockpit. Retro-modification for stiffening of fuselage has been completed on all the helicopters delivered. New production has been taken up with the stiffened fuselage in the series production. Acceptable level of vibration has been achieved for Ops roles with fine-tuned ARIS and fuselage stiffening.

Further reduction in vibration is planned through Frahm dampers (mechanical spring-mass system tuned to a dominant excitation frequency) are mounted at specific areas where vibration reduction is required. These are effective over a wider speed range. Frahm dampers will be introduced based on the specific requirement of the customers.

Active Vibration Control System is also being introduced in the transmission deck area to achieve further reduction in vibration.

@ copyright shiv Aroor

S.som said...

any news or photos about aircraft carrier,.. p-15A.. oa atv???

Mayuresh Gaikwad said...

http://dailypioneer.com/indexn12.asp?main_variable=FLASH&file_name=cap3%2Etxt&counter_img=3

US to sell 24 Harpoon anti-ship missiles and associated equipment to India for USD 170 million.
The Harpoon block-2 missile range is said to be 315 km (wikipedia), it is a subsonic missile with a 500 lb (220 kg warhead).

Help me understand if there is any secific reason for us to purchase a subsonic missile @ USD 7 per missile, with 315 km range when we have the Brahmos (supersonic, 290km range, 200 kg payload) and unit cost of USD 3 million? Wiki also mentions that the unit cost of a Harpoon is USD 720,000. Even assuming a USD 1 million cost, it leaves us with approx USD 146 million in associated equipment! Am I getting the math wrong?

Shiv Aroor said...

fighterclass: The order for 159 ALHs is 104 for the Army and 55 for the IAF. The current order book does not include any more Dhruvs for the Navy.

Anonymous said...

Mr mayuresh,

harpoons are intended for Jaguars maritime strike squadron on which brahmos cant fit in.

They are Sea-Eagle replacement.

fighterclass said...

Shiv Aroor said...

fighterclass: The order for 159 ALHs is 104 for the Army and 55 for the IAF. The current order book does not include any more Dhruvs for the Navy.

10 September 2008 23:57
_____________________________________

so what does IN intend to replace it's MATCH/SAR chetaks with ?
I don't remember seeing any RFPs for helicopters that are light enough to be carried in the smaller ships of IN -- the ones that now carry the chetaks.

Mayuresh Gaikwad said...

@ Annonymous,

Thanks! It makes much more sense now.

However, one question still remains. 24 missiles would cost at USD 24 million (wiki states a unit cost of USD 720K). Maybe increasing the cost to USD 2MM, but still it leaves us with USD 122MM. Is this the cost of associated equipment?

Anonymous said...

what associated equipment ? you don't need any associated equipment.
India is sybsidising pakistan's next batch of f-16.

Shiv Aroor said...

fighterclass: The Navy is part of the light helicopter deal that the armed forces are buying from abroad. these will be used to replace the chetaks.

ajai: how many of the HAL-built LOHs will the Navy get?

fighterclass said...

oho, I thought the LOH was limited to IAF/IA.

Ajai said...

Don't know the exact breakdown... I'm not certain if they've even sub-allotted the HAL production yet.

I'm sure someone on the blog would know?

Shiv Aroor said...

fighterclass: i'm quite sure a few of the choppers in the LOH procurement are for the Navy, if I remember correctly. Will check and LYK. But about the Dhruv's, that's confirmed. 159 on order, 104 for the Army and 55 for the IAF. that's an official figure from HAL itself in response to a questionaire i sent them some time ago. out of these 159, 66 will be the Weapon Systems Integration variant. Not sure of the breakdown of this 66 between the IA/IAF. Will revert on the LOH for Navy. Don't think the HAL LOH has been sub-allotted between services, but the ones being bought from abroad certainly have.

fighterclass said...

thanks for the nuggets, shiv.

Broadsword said...

Hi Shiv,

I was told 76 WSI Dhruvs. The breakdown I got was 60 for the army and 16 for the IAF.

thx

max said...

Ajai, i asked u this earlier: after going all the way to Bangalore, did you only take 8 pictures? 2 of which were CG images?

Max said...

Shiv, good to see you here. Since you're so sure, may I ask whether you know the following?
1. No. of Dhruvs in service with the armed forces
2. Are the 159 in addition to what's in service?
3. Cumulative number of Dhruvs built (including for commercial, exports)?
4. Cumulative number of Dhruvs on order?

Sorry if it's too much but just answer what you can. Thanks.

max said...

Shiv: b'Coz the quantities stated in Wikipedia look pretty dubious.

Anonymous said...

Thanks! It makes much more sense now.

However, one question still remains. 24 missiles would cost at USD 24 million (wiki states a unit cost of USD 720K). Maybe increasing the cost to USD 2MM, but still it leaves us with USD 122MM. Is this the cost of associated equipment?

well...this is a more advanced version, it can also fly below water ;)...but more seriously, every new missile that is inducted comes with a few 'training' rounds, they generally have a 1:5 ratio(one fore every five live missiles). Also there is some additional software and sensor fusion that we pay for...

Shiv Aroor said...

Max said...
Shiv, good to see you here. Since you're so sure, may I ask whether you know the following?
1. No. of Dhruvs in service with the armed forces
2. Are the 159 in addition to what's in service?
3. Cumulative number of Dhruvs built (including for commercial, exports)?
4. Cumulative number of Dhruvs on order?

Sorry if it's too much but just answer what you can. Thanks.

11 September 2008 23:28
________________________________

max,

1. As of end March 2007, HAL has produced around 70 ALH for the Indian defence services.

2. Yes, the 159 is the current orderbook that remains to be delivered. What has been ordered.

3. Ajai could answer this better -- not too sure.

3. Cumulative Dhruvs on order would therefore be the 159 + those ordered by Ecuador, Peru and Turkey + any civilian purchases. Should therefore hover around 200 choppers.

max said...

thanks shiv.. i hope ajai fills in the gaps

max said...

btw shiv i saw ur post on the naval variant

void walker said...

ajai, thanks for posting that pic of my office..you made my day..it would be nice of you, if u publish a few pics of the MRO facility, which is beside the Army Aviation Hangar ...and also a pic of the Dhruv at the rainwater leak test jig.

void walker said...

ajai, it would also be fine if u publish a few pics of the new hangar & assembly line that is being constructed behind the ALH final assembly....I have a few pics of the new facility taken about 6 mnths ago...pls gimme ur id if u need them.

Anonymous said...

Hi Ajai

As per CAG report Dhruv can fly more than 15,000 feet.
http://www.merinews.com/article/dhruv-fiasco---cag-report-tabled/15775680.shtml

Can you post your thoughts please

Thanks
Ananth