Dynamic Technologies (India)

Limited:
Strategic Integration Into The Aviation and Aerospace
Global Supply Chain

Achmad Alfianto - Almira Dinar Rudiani -

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Global Aviation & Aerospace Industry
Prospects & Challenges could impact DTIL Business
Flattening / Declining
OEMS must seek other
prospects in the traditional
markets to grow
high income economies
Future Prospects
1. Increasing Opportunities in the defense and
civil sectors, including India
2. Offset policy for defense procurement: 30%
value from India-based suppliers
3. 30-35 % demand of new airplanes in 2010-
2029 expected from Asia Pacific
Major players must reinvent
themselves and restructure their
supply chain
Challenges
1. Cost pressure due to traditional manufacture
hubs in high income economies
2. Fluctuating currency: European OEMS
impacted (Most aviation conducted in US
Dollars)
3. Customers in low income: Price pressure
 Survey of OEMS’s in Global Aviation & Aerospace Industry
Growth in the industry skewed from North America / Europe to Asia Pacific in 2029

Regional Market Growth Acquisition of new planes

Global Growth Europe
2009 2029 Asia Pacific

2% 28 % 19%
2010 2029

9%
30% 35% 5%

North America
2010 2029
North America Asia Pacific Inc China
2009 2029
20% 20%
2009 2029
41 % 40% 16 % 22% Europe
1% 7%
2010 2029
20% 20%
esult of Survey : Actions to manage costs based on Large OEM respondents
1 2 3 4 5 6
Cutting Back and / Exiting unprofitable Exiting unprofitable Acquiring suppliers Sharing functions/
Reducing Labor
or delaying planned or non-core product or non-core Business to stabilize input facilites with other
force costs
investment lines unit costs companies
 Indian Aviation Industry Opportunitites

Big advantage for players in Indian aviation industry based on comparison of countries:

Government supports
Support provided by government to develop suppliers in the country contributed to the attractiveness
of India as a location for sourching
Cost effective labor
Excellent supply of cost effective labor also an advantage
Education System
Ranked better than other countries except UK
Quality
At par with UK
Cost Advantage
Comparable to China, Russia and Indonesia
English Profeciency
As good as UK and better than others

Meanwhile, Indian players at par with other countries in this criteria:

Infrastructure Cultural Compatibility Time / distance advantage

Indian Aviation Industry Opportunitites
Based on Design, component manufacturing, aircraft assembly & MRO Services:
Design
• Design of Complex aero –
structure, aero components
• Design of optimization,
mission critical software and
embedded system for
avionics and aircraft product
lifecycle management
• Testing infrastructure and
services
• CAD design and
documentation
• Procurement Assistance
Major obstacle for
Indian supplier
Potentially save
costs on labor up to
50%
Component Manufacturing Aircraft Assembly
Tier 1 Supplier Tier 3 Suppliers • Final Assembly
• Power System & • Castings and forgings • Fuselage & Body
Propulsion devices • Structural sheet metal • Empennage or Tail
Assembly
• Avionics components
• Landing Gear • Wiring harness and
Assembly other cabling
• Wing Assemblies MRO Services
Tier 2 Suppliers • Engine Component MRO
• Hydraulics systems • Airframe Component
• Flight Controls MRO
• Electrical power • MRO for Tier 1
system components
• MRO for Tier 2 and 3
Easier to Integrate seamlessly with global supply chain Components
• Line Maintenance &
modification
 Dynamic Technologies (India) Limited (DTIL) Journey

Founded by
Ashwini joined Aviation division
Keran
the company launched
Jethmalani
1973 1980s 1995 2006 2008 2009 2010

1 1 Project
Manufactured Produced highly 1. Formal contract Nearly 150 units
Received started
hydraulic engineered Participated in was signed were supplied on
pump products in several projects certification to schedule with
automotive and of DRDO. supply to 2. First set of flap zero rejections.
aviation sectors Juggernaut track beam
assemblies
2 2
were completed
Provided critical Received a RFQ from and handed
components for Flight Aerosystems to over to Flight
HAL’s Sukhoi collaborate in supplying
MKI fighter flap track beam 3. Commercial
bomber assembly system to production was
Juggernaut approved
Dynamic Technologies Limited - Existing Business Model
JUGGERNAUT FLIGHT
AVIATION AEROSYSTEM

Supply the machined Assemble the components of

components To DTIL the Flap track beam in the
Bangalore plant

Ineffective

4 3

Supply the flap track Handed back to Flight

Final assembly beam to Juggernaut Aerosystems
Dynamic Technologies Limited - Proposed Business Model

SUPPLIERS OF JUGGERNAUT
MACHINED COMPONENTS AVIATION

1
Assemble the components of the
Supply the machined Flap track beam
components To DTIL 2
G. Natharajan
Model
(COO DTIL) 3
Supply the flap track beam to Final assembly
Juggernaut

Nirmal Rego Performing all activities in DTIL

Model including Machined components Final assembly
(Deputy COO DTIL) production and Assemble the
components into flap track
beam
Question 1:
The advantages and disadvantages of the approach suggested by Natarajan, COO of DTIL

G. Natharajan Profile
Advantage Disadvantage
• COO of the aviation division
• Formerly work and retired • Less effort • Do not foresee the possibilities of
from HAL • Very little additional capital long term financial growth for the
• Very Instrumental in expenditure, appealed to Ashwini company
establishing the system and • Maintain quality and schedule • Weak in competency if there is same
process for the first phase adherence business model company
of component project
• Didn’t have aspiration to
take on more value added
machining operations
• Have a strong relationship
with European partners of
Flight
Question 2:
The advantages and disadvantages of the approach suggested by Nirmal Rego, Deputy COO of DTIL
Nirmal Rego Profile
• Deputy COO
• Formerly work on the
automotive Division of DTIL
Advantage
• Shorter production lead time
• Creating/opening more work fields for
Indian
• Increasing company capabilities 
production capability
• Increasing profit  financial growth
Disadvantage
• May jeopardizing quality and
schedule adherence for improper
execution
• Need more investment on machinery,
equipment, building/plant, people or
training, etc
• Need to resource the raw material
sourcing
 Question 3:
How do you think that Ashwini Jethmalani, CEO of DTIL, should organize the business to build on the
strength of DTIL in India and the partners in Europe?

Answer:

Our proposal is to blend the activity but with difference entity (Subsidiary – Company)

DTIL India Scope of DTIL Europe Advantage Disadvantage

1. Machining of component
(Highly intensive skill item)
DTIL Europe 2. Sourcing the raw
material & Handling scrap
3. Sourcing the business
partner
Partner in
Europe 4. Research & Development
1. Reduce the capital cost.
2. Reducing risk of late
delivery.
3. Reducing the risk related
with quality assurance.
4. Retain talent in Company
1. No long term financial growth for
India.
2. There is probability of longer
production lead time
Opportunity
1. Possibilities to sold equipment to
other tier 1 supplier.
2. MRO Business as Tier 1 & Tier 2.
 Question 4:
Would any European firm agree to cooperate with an organization that potentially going to take it out of
business? Could DTIL make it attractive for the owners of the partner firm to sell their business? also, if the owners
sell the stake, would DTIL be able to retain the talent or would it be purchasing an empty shell?
ernal Environment : Aviation Industry Market Growth
* Refer OEMs Survey
Europe Asia Pacific
Market Growth
1. Yes, Refer the market Growth and Acquisition of New
Market Growth
2009 2029 9% Planes, Any European company will consider any invest
2009 2029 3%
28 % 19% 16 % 22%
regarding 30% to 35% of the demand of new airplanes
during 2010-2029 will be from Asia Pacific, while
Europe market will only meet 20% of the demand each
during same period
Acquisition of New Planes Acquisition of New Planes
2010 2029 2010 2029
5% 2. Yes, DTIL’s a big company and has many Expertise in
20% 20% 30% 35% hydraulic pump, Aerospace & High precision
components with Global Certification from Juggernaut
and Flight Aerosystems. Also Supplied European &
ernal Environment : Indian Aviation Industry
Korean automobile companies, Indian defense
 Support provided by Government manufactures Inc HAL & Aerospace sector
 Very Good Education System
 Very Good Quality 3. Yes, DTIL still be able to retain the talent with
 Time / Distance Advantage comitment that DTIL will not change the company
 Very Good English Proficiency fundamental (Vission, Mission, culture etc)
 Cost-effective labor = saving 50%
Question 5:
What would be the management structure that would allow the India operations and European operations to
work seamlessly to meet global quality standards while reducing cost and maintaining delivery schedule?

Chairman, CEO
DTIL India

Internal Audit

CCO CTO CCpO CSCO / COO CFO CHRO

Chief Commercial Chief Technology Chief Compliance Chief Supply Chain / Chief Human
Chief Financial Officer
Officer Officer Officer Operation Officer Resources Officer

VP Sales & VP Tech

VP Hydraulics
Marketing Innovation & Dev
GM Procurement
CEO
VP Research & & Logistic DTIL Europe Subsidiary
Development VP Engineering
GM Production
GM Quality
VP Customer Assurance CSCO/
Relationship
CFO CHRO CCO CTO
COO
Procurement & Logistic
Production
Quality Assurance
Question 6:
Would it be worthwhile considering the option to perform all the activities, purchase of raw material, machining
of components and assembly of components in Europe?
• Based on cost estimation table on Table 1, we try to make cost comparison between the possibility to run the
manufacturing process in Europe vs India
Europe India
Manufacturing Manufacturing

Material Cost 4.200 5.000 Note:

Shipping Cost 1.925 2.600 *) 300 units sold/year
Machining Cost 160 170
Assembly Cost 27.675 17.387 • ROI calculation shows having manufacture
Scrap Revenue -5,2 0 process in Europe is less profitable
• Aviation market that is skewing toward Asia
Total Cost/Unit 33.955 25.157
Pacific, makes India Manufacturing more
Minimum Selling Price/Unit 34.973 28.679
promising
Profit 1.019 3.522
saving 8.798
Saving/year* 2.639.340
Profit/year* 305.593 1.056.594
Capital 3.000.000 4.545.000

Return of investment (year) 9,82 4,30

QUIZ TIME
Quiz 1:

Comparing DTIL with GMF

What are the differences between DTIL & GMF business
Model ?
Quiz 2:

What do you think of the possibility to have

manufacturing process of aviation industry in
Indonesia ?

What are our strengths compare to India ?

Quiz 3:

Mention the positive characteristics of Ashwini in

developing the company’s business
Quiz 4:

Please explain the business model differences between

Natharajan’s proposal and Nirmal’s proposal!

Which one is the most suitable and please explain your

reason
Quiz 5:
What do you think of the management structure we
proposed ?
If you have different proposal, what would it be?
Please explain your reason
Any additional comment
or
“Yes / No” Question?
Terima Kasih