Mahindra Aerospace, the aviation division of the Rs 56,000 crore Mahindra & Mahindra Group, is spreading its wings in India and globally.
The company is negotiating a deal to sell more than two dozen GA8s, its eight-seat piston engine-powered planes to a China-based millionaire looking to start a low-cost airline.
Mahindra Aerospace began manufacturing and marketing the GA8 aircraft in 2009 when it acquired Gipps Aero, an Australian plane maker. So far, more than 200 GA8s have been sold in Africa, the US and Australia. With each of the GA8 carrying a price tag of A$750,000 (about Rs 3.5 crore), the entire deal with the Chinese entrepreneur is likely to be in the region of A$19 million (about Rs 88 crore). The company has received orders for 20-25 GA8s from China and hopes to deliver at least two planes before the year-end.
In addition, the company is also keen on collaborating with the Indian government on its ambitious plan to develop an 80-90 seater regional transport aircraft, involving other private parties in addition to M&M. The government is holding talks with some potential suitors.
Mahindra Systech president Hemant Luthra, who oversees the group's aviation division, said: “I think the government will now ask for proposals. The have invited Anand (Mahindra) and me to meet the director general of CSIR. I am sure they have asked other people for participation to throw ideas on whether a regional transport aircraft is possible.”
“The government has commissioned a survey and found the 80-90 seater turbo prop, like an ATR, is the ideal plane. It is going to require a serious amount of development cost. We can take our 18-seater plane to 30 seats but for a country with a huge population, the 80-90 seater plane seems to be the sweet spot,” he said.
The cost of developing, prototyping, testing, certifying and producing ancillaries of such a turbo prop plane can be around $1.5-2 billion, according to Mahindra Aerospace.
According to sources, the regional transport programme is in a preliminary stage and the Planning Commission is examining its feasibility.
While Mahindra Aerospace is expanding its sales internationally, the company hasn't been able to sell even a single aircraft in the Indian market. The existing Indian civil aviation rules do not allow single-engine planes with more than five seats to be used for commercial air transport purposes.
"Australia, Europe, the US and China don't have a problem with this plane,'' Luthra said, stressing the government must review the policy.
Mahindra and National Aeronautics Laboratory are jointly developing NM5, a piston-engine plane, under development in Australia. "If all goes well, we could have its test flight in six weeks,'' Luthra said.
The 10-seater turbo prop version of GA8, in the design stage, will be ready by the next year-end. Luthra said he would be disappointed if the total volumes did not touch 75-100 planes a year in the next five years.
The company will commission its aircraft component manufacturing facility in Bangalore by June 2012 and is also looking for technology partners in the US and Europe. It is investing Rs 300 crore in this facility and hopes to secure orders from Boeing, Eurocopter and other manufacturers. "We will have a full-fledged shop and will do painting, pickling and processing of sheet material,'' he said, adding the facility would earn Rs 300 crore in three-four years.
