With two partnerships in two weeks, Adani ramps up defence push
Adani Aerospace and Defense, a wholly owned subsidiary of Adani Defense Systems and Technologies Ltd, and Leonardo signed the partnership on Tuesday. Adani Defense Systems and Technologies is a wholly owned subsidiary of Adani Enterprises.
In an interview with MintAshish Rajvanshi, Chairman and Chief Executive Officer of Adani Aerospace and Defense, said the partnerships reflect the ports-to-energy conglomerate’s effort to increase revenue from its defense initiatives over the next five financial years.
“We are scaling our current operations to the required local sourcing norms of the Indian Army and Navy. Each of these contracts requires varying degrees of component localization and we will comply with each contract as required. The overall process of localization of military helicopters will happen over time and we plan to start supplying the first India-made versions of Leonardo’s products to our defense forces before 2030,” Rajvanshi said. he said.
According to the company’s FY25 records, Adani Aerospace and Defense did not report any operating income in the previous fiscal year. Holding company Adani Defense Systems and Technologies announced its consolidated operating income as follows: ₹2,007 crore in FY25.
Key Takeaways
- Adani has secured two global aviation joint ventures in two weeks.
- The group plans to deliver the first India-Made Leonardo helicopters to the armed forces by the end of the decade.
- Despite the capital-intensive nature of the aerospace industry, Adani claims it has no immediate plans to raise new funds.
- Adani is shifting from selling hardware to selling ‘intelligence’ through Alpha Design.
- The group is in a position to benefit from the government’s ₹2.19 trillion capital expenditure budget, 75% of which is allocated to Indian companies.
While the company did not disclose capital requirements for the project, Rajvanshi said there were no immediate plans to raise funds. “We are working on the current financial terms of the Leonardo deal and financial details will be shared in approximately two weeks,” the executive said.
race for income
Additionally, Adani’s defense conglomerate’s emergency purchase (EP) contracts from the Indian government are also in the process of accelerating. “We are applying for both EP-4 and EP-6 projects and each of these is in advanced ramp-up stages as we seek to increase the contribution of our defense operations to the overall profitability,” Rajvanshi added.
With numerous projects in consolidation stages, there are no further joint ventures in sight until the next financial year, Adani Aerospace and Defense Director Jeet Adani said. “Our aim is to grow existing joint ventures, although many of these partnerships are in ongoing discussions and are subject to opportunities,” he said.
Between December 2018 and April 2020, Adani Defense Systems also acquired Alpha Design Technologies to accelerate the conglomerate’s defense play in space. Alpha Design, which specializes in space surveillance technologies, reported: ₹1,039 crore in FY25, thanks to government contracts for earth observation and surveillance satellites.
“We are not looking at leveraging surveillance satellites as a stand-alone piece, but as a complete spatial intelligence suite that provides data analytics and intelligence-based outputs to defense agencies,” Rajvanshi said. he added.
Adani’s push for defense contracts comes at a time when India’s biggest conglomerates are stepping up their defense operations. On November 20, Mint Larsen & Toubro Ltd reported that its defense division aims to generate annual revenues of $1 billion (almost ₹9,000 crore) while trying to sign contracts for lightly armored tanks, air defense systems, surveillance satellites and more.
L&T has led India’s leading conglomerates in their respective defense contract bids. Tata Advanced Systems, wholly owned by the Tata group, stated: ₹In FY25, Adani Defense Systems had a revenue of ₹5,176 crore in front of it.
Policy support
The rise in India’s private defense sector was also reflected in the FY27 budget, which allocated a record figure on Sunday. ₹7.86 trillion for defense ₹2.19 trillion for defense capital expenditures.
Speaking during the agreement signing of Adani and Leonardo, defense minister Rajesh Kumar Singh said that 75% of the capital expenditure is reserved for India’s domestic private sector only.
“The Centre’s effort demonstrates opportunities and avenues for India’s large corporates as well as micro, small and medium enterprises (MSMEs) to venture deeper into private defense contracts and create indigenous solutions. At the same time, one needs to be aware that there is no absolute substitute for imports or indigenization; both must co-exist depending on the demand and need of the industry,” Singh said.
