By Team ADU
New Delhi.16 January, 2016. In a recent announcement by the Ministry of Defence the Ordnance Factories Board will be nominated without competing as a third development agency and two development agencies would be chosen out of the nine private sector companies namely Tata Motors, Tata Power SED, Mahindra, Pipavav Defence, Punj Lloyd, Titagarh Wagons, Rolta India , Bharat Forge and L&T. This means a walk through for OFB and not great news for the other contenders.
Also a section of the press reported that in another development a fax has been sent to all 10 contenders for the project by the ministry stated that companies are required to have capital assets in India, and their turnover in India will be accounted for determination of threshold limit of turnover. Tata Motors had a consolidated annual turnover of Rs 263,695 crore and a net profit of Rs 13,986 crore which included their UK based subsidiary Jaguar Land Rover’s (JLR) profits. Tata Motors generated an annual turnover of Rs 38,176 crore from its domestic operations and posted a net loss of Rs 4,739 crore. This makes L&T and Mahindra zoom ahead as there turnovers and profits projected are all domestic.
Spokesperson’s statement of Tata Motors stated , “ With reference to some media reports regarding Tata Motors’ bid for the Defence Ministry’s FICV project, Tata Motors would like to emphatically point out that it continues to be a strong bidder for this program. Tata Motors and the Tata group have the required credentials and a track record to collaborate, co-create and support the country’s defence agencies as a partner with long-term commitment to see products through multiple generations of evolution.”
The statement said that a response to Tata Motors from the Defence Ministry’s IMPT (Integrated Project Management Team) shared yesterday, clarifies that bidding companies must have capital assets in India, and the turnover in India will be taken into account for the threshold limit. We note we meet all the requisite criteria for bidding for the FICV project. With our robust technical strength, the size of our Indian assets, a strong balance sheet and the backing of the Tata group, with other group companies joining hands in the consortium, we remain confident of being a strong bidder for this project.”
Tata feels that it is imperative to note that the evaluation of the bid is to be based on technical and financial parameters. The financial parameters only account for about 26% weightage. The remaining assessment criteria parameters are all technical like Technical Capability Assessment (32%), Critical Technology Assessment (34%) and Technical Specification Assessment (8%).
Tata Motors is confident of fulfilling all commercial / financial criteria, even with the above-mentioned clarification from IMPT stating that a company’s turnover from its domestic operations (excluding global operations) will be considered for the threshold limit. Notwithstanding this, Tata Motors will discuss with the Government and the Defence Ministry about including consolidated revenues, as its wholly-owned subsidiaries form an integral part of the parent company, including in stock exchange listings, and its consolidated revenues offer strong financial support to the project.
Future Infantry Combat Vehicle (FICV) is one of the key projects that is bringing the Tata group companies together to work collaboratively and provide convergent defence solutions as required for the project. Tata Motors is the lead company on behalf of the Tata group for the FICV programme as the System of System Integrator (SOSI).
FICV is a high tech complex vehicle program under the “Make” category ,to replace the ageing BMP II vehicles of Russian origin in use by the Army. The model of the program is based on the selection of 2 Development Agencies (DA) from the 10 vendor consortiums that will competing and have been issued the EoI. The vehicles must be amphibious, be able to carry a crew of 3 with 8 fully equipped soldiers in an NBC environment , must have anti tank guided missiles that can fire beyond visual range , carry a gun on its turret and must air portable by C-17/ IL-76 aircrafts. The max weight must be no more than 20 tons. The approximate value for the 2600 vehicles program is INR 50,000 Crores at the present rates.