Pipavav Shipyard, whose deal with Mazagon Dock for co-production of warships ran into rough weather, is foraying into the aviation business.
Headed by Nikhil Gandhi, the company on Wednesday announced a tie-up with aircraft maker Airbus to develop a maintenance, repair and overhaul (MRO) unit in India, with an initial investment of $100 million (Rs 450 crore). It signed a memorandum of understanding with SKIL Infrastructure and Airbus. Skill is a co-promoter of Pipavav.
Pipavav is yet to select a location for the unit, but has shortlisted five places, including airports at Kochi, Ahmedabad, Bangalore (HAL airport).
“EADS (the holding company of Airbus) will pick up a 26 per cent equity in the project and may further increase it to 49 per cent. Pipavav will hold a 51 per cent stake in the JV company. The MRO facilities and associated infrastructure will be used for civilian and military applications,” the company said in a statement to the Bombay Stock Exchange.
Over the next five-six years, the company expects $500 million a year in revenue from the business. The finalisation of site and signing of the shareholders agreement will be done in four months.
In 2007, Indian Airlines (now Air India) signed a tripartite agreement with Airbus and Bangalore-based Jupiter Aviation to form a MRO. According to sources, the MRO is yet to start business.
Air India has its own maintenance and hangar facilities for airbus planes in Hyderabad and Delhi, while other private carriers like Kingfisher, IndiGo and GoAir, all of which use airbus A320 planes, service their planes at Air Works MRO in India or abroad. “The MRO spend of all airlines in India is around $800 million annually and is expected to grow,” said Ravi Menon, executive director of Air Works.