Saturday, July 07, 2007

Quest plans 300-acre aerospace SEZ in Belgaum


TNN[ WEDNESDAY, JULY 04, 2007 01:40:53 AM]

BANGALORE: Engineering services major Quest is collaborating with
business partners to establish a 300-acre special economic zone (SEZ) in
Belgaum, Karnataka, to build an ecosystem of aerospace supply chain.

The SEZ-which has been granted in-principle clearance by the Board of
Approvals — will be housing suppliers in a single area and carry out
precision machining. "The SEZ is expected to employ 10,000 people. Talks
are on with a handful of potential domestic companies and MNCs to have
them set up units at the SEZ," says Quest Global CEO Ajit Prabhu.

Quest's present facility in Bangalore, set up in collaboration with
Canadian major Magellan, will also move into the SEZ as a 2,00,000 sq ft
plant. The facility marked Quest's move into manufacturing from being an
end-to-end engineering solutions company.

Quest, which is focused on the aviation sector, felt the "the need for a
dedicated aerospace engineering SEZ, following the huge growth in
engineering services offshoring from India as well as the offset clause
for aircraft firms supplying to Indian carriers, which needs to source a
certain part of their supplies from India," explains Mr Prabhu.

The growth of engineering services outsourcing from India is
well-documented. According to latest industry figures released by
Nasscom, global spending on engineering services was $750 billion in
2004, with aerospace accounting for 8% and could rise to $1.1 trillion
by 2020.

The total offshore engineering spend is expected to grow to $150-225
billion by 2020 and India, with its talent pool and experience in
engineering services, could pick up 25% of that. Prabhu says that he
believes that there is an opportunity of close to $1 billion a year of
exports to be achieved by 2012.

The offset clause for aircraft manufacturers is also expected to give a
big fillip to aerospace-linked manufacturing. India has said it plans to
buy 126 fighter jets, valued at close to $10 billion. On the other hand,
Airbus expects Indian firms to place orders for 1,100 passenger and
freighter aircraft valued at about $105 billion over the next 20 years.
"With the current offset clause pegged at 30% of the purchase value and
looking at the buying estimates, at least $3 billion worth of business
is expected in the next 10 years," says Mr Prabhu.

Quest, which has been growing at 40% year-on-year, is the only
engineering services company that works with the top three global
aero-engine makers – GE, Rolls Royce and Pratt & Whitney. Very recently,
the company had announced that it has received Airbus design approval
and AS9100 certification. This will enable QuEST to work on upcoming
Airbus programs like the A350 in the areas of engineering design,
documentation and manufacturing engineering.

"A significant amount of defence offset business and some of the
commercial offset is expected to be routed through HAL, which in turn
could sub-contract it to Indian private players," Mr Prabhu says.


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