Business opportunity analysis for investment casting facility at H.A.L. Koraput division

Abstract

Hindustan Aeronautics Limited (HAL), Koraput Division is presently engaged in manufacturing and overhauling of MiG engines of different versions to cater to the need of Indian Air Force in particular. Besides, it has widened its activities by entering into export market recently. The detail-components of engine are manufactured from raw-material stage and they are assembled under close dimensional tolerance. The Division is equipped with state-of-the-art technology and skilled workforce to deliver the product under stringent quality norms. The division has got the facility of precision investment casting besides the conventional casting unit to cater to the in house requirement as well as to the needs of its sister Division. With the down ward trend of the orders received from the customer for the next few years, a surplus capacity in the area of investment castings is likely to be available and hence the present study is carried out to identify new potential markets where these capabilities can be utilised .The study deals with both primary and secondary market survey. The market growth analysis (both domestic and worldwide) is carried out on the basis of secondary information collected from different sources. Before going for primary market survey, the competitive advantages of the Division over the other foundry industries are identified so that the Division can tap the right segment of the market . The methodology adopted for identifying the new market is through individual case-based approach, where the exact data on requirement is collected through personal visit and direct interaction with several organisations selected for this purpose. Subsequently the feasibility study is carried out in order to assess the technological requirements of the customers as well as to match their need with the existing facilities and expertise, keeping in mind the limitations of the present set-up. These opportunities have also been separately profiled highlighting the viability features of each of them. Viable opportunities have been systematically categorised in terms of priorities, the criteria of which is established on the basis of the compatibility to the existing technology, their market potential etc. Subsequently a detail plan is formulated for the development and production of this new component through PERT chart .Land-based gas-turbine blade market is viewed as the target market segment for the Division where its unique advantage of blade casting of super alloy through vacuum melting and pouring technique can be rightly utilised. This amounts to annual business of approx. 4.5Cr for the Division at the present rate of demand for the particular customer, BHEL, Hyderabad.To undertake the development and production activities of the components for the target customer, a recommendation is made for a capital investment worth of approximately 1 Cr for the augmentation of the facility , the details of which are workedout to justify the economic viability of the project. Further the pay- back period of less than three years for the additional investment, as indicated by cash-flow statement, justified for exploring this market opportunity. The idea of this study is to highlight certain basic information on potential options that can serve as a starting point for exploring its capabilities. While the study has focussed on meeting the realistic requirement of selected customers due to time constraint , the same can be further extended to enter into this wide-market where the prospects for the continued growth are assured .