To our colleague Parikshit who is in conversation with Baba Kalyani, the CMD at Bharat Forge. Parikshit.
Well, there has been a lot of action at the Ministry of Defense over the last one week and Bharat Forge has won a major order for close quarter carbines. This is the second major order they won from the Ministry of Defense. The earlier one was in March and that was for advanced towed artillery guns. The chairman and managing director of Bharat Forge, Mr. Baba Kalyani, is joining us. Mr. Kalyani, thank you very much for being with us. Wishing you a very happy new year. First of all, could you give us a sense how Bharat Forge will benefit from this order and this is a 2770 crore order for 4.25 lakh close quarter carbines. How much of this order is going to Bharat Forge?
Well, thank you very much. First of all, happy new year to you and everybody on the channel. I'd like to first take this opportunity to officially thank ARDE and DRDO for the tremendous partnership that they had with Bharat Forge in development of this product. It was very similar even for the ATAGS. So the similarity between these two products is that both are indigenously designed, developed and manufactured products. First time Indian designed products and developed products are competing with foreign products and winning. I think that's a very significant milestone that we've been able to achieve. To answer your question, we have 60% of this contract because the L1 gets 60%, we were L1. So 60% of that quantity will come to us. We are quite ready and we are very hopeful that once we productionize this, which will happen in the next four to five months, we will also create capability to start looking at international markets for this product. So I think this story will continue, like it is happening with our other defense products where we've been able to export artillery guns and we will hopefully be able to export small arms in a big way moving forward.
Right. Could you give us a sense of how you are preparing to deliver on this order? The kind of investments that have gone in and the kind of collaboration, if you can give us some more color on the partnership with DRDO on this.
Well, DRDO's arm that is involved in designing and developing small arms is in Pune, it's called ARDE, Armament Research and Development Establishment. So our people have had a very close relationship with them as we were developing this product, which was designed by ARDE. All the firing internal firing trials, making sure that components are exactly made the way the designers have thought about and they're interchangeable. The most important thing here is components are all interchangeable and that creates a huge capability and huge advantage for the user, the Indian army, that they don't have to worry about if something happens to one gun, can they replace the part with another part. So all that is kind of taken care of. We don't have any external collaborations here, it's all internal. This gun right from the raw material to the finished product is all made in our plant. We have set up a special plant for this in Jodi. It's a plant that has got a capacity to produce about 50,000 to 60,000 barrels per year, but easily it's a modular plant. It can easily be doubled or tripled based on the requirements that are there.
Right. Would you be expecting more such orders from the government in 2026? Are there certain kinds of weapon systems you're hoping to participate in?
Yeah, we are participating in a couple of more programs again with ARDE and DRDO which they are designing and hopefully some of those programs might come up in 2026 or maybe 2027. I don't know, it depends on the process of field trials and everything else that needs to be done for them. But yeah, we are quite sure that there will be other programs. But we are also beginning to see in the last couple of weeks a lot of interest from companies abroad in terms of wanting us to produce weapons for them here. So that's another thing we are beginning to see and those quantities may be even bigger than the quantities that we are looking at for the Indian.
All right. Could you give us a sense of what are some of the weapon systems for which you're getting a lot of orders and inquiries for and are there certain export orders which are likely to firm up and get announced in the next few weeks and months?
Now we don't have any export orders yet, but we are certainly talking to, I would say, two or three large companies who want to move their production out of Europe into India. As you know, Europe now has to produce a lot more than what they have been producing. The whole 5% of GDP for defense expenditure is a big drive for European companies and they simply don't have capacity. Europe has another big problem: they don't have manpower either. In terms of export orders, yeah, we are looking at export orders for artillery guns which are in process and hopefully they will get materialized in 2026.
Okay. Just to also ask you about the recent meeting of the Defense Acquisition Council. They had spoken about approving a proposal for SPICE 1000 long range guidance kits. Now you have a JV with an Israeli company on making SPICE bombs and SPICE missiles. Is this a program that is likely to benefit Bharat Forge and will you be participating in this as well?
Yeah, 100%, no doubt about it. I think we have our best products and we will definitely benefit from this announcement that was made in the DAC.
Right. If I were to also ask you sir about the kind of investments you would be making in future technologies in 2026, because Operation Sindoor has shown us the need for readiness in combat drones, early warning systems and advanced warfare for the future. What would be your capex push or the focus of your investments in 2026 and going forward?
So what I'm trying to ask you sir is what will be the focus of your capex in terms of future technologies? Currently after Operation Sindoor we're seeing a lot of focus on future technologies in the defense sector. So what would be of particular interest to you?
We are working very seriously on drones, on UAVs, and on anti-drone systems for the Indian army, air defense systems. So these are all the future technologies that we are working with. These technologies are largely electronic in nature, unlike artillery gun and small arms which are weapons. Drones are also weapons because they do carry explosives, but we are hopeful of getting a reasonable amount of contracts in this area in 2026 and we are spending a lot of capex in this area also.
Could you broadly give us some numbers sir, some color on what you're investing in drones and some of the future weapon systems that you mentioned?
In drones and the anti-drone systems, those are two things, and then you have UAVs, three things. So in drones, we are setting up a plant in Bangalore to make drones. We are setting up a facility to make UAVs also in Bangalore. And on the anti-drone system, we haven't yet decided where we will produce it, but it's pretty sophisticated and it probably will be made here in Pune because it requires multiple technologies, a lot of it electronics, radar based technologies, requires of course guns, lasers and all kinds of things. So it'll probably be made here. We also have a lot of orders now with the Indian Navy on developing unmanned systems for the Navy. Also a lot of interest from the Navy to develop naval guns. So both the 30mm gun for the Navy, which will be ready in another 6 months time, and the 76mm gun, which is the main gun for every ship. These two guns are required on every ship by the way, and this will also be done, I would say, in the next couple of months, by the end of 2026 this product should be ready. We are also getting into the propulsion system for naval ships. Nobody makes the propulsion system today in India. We will be the first company that will provide an indigenously designed propulsion system which includes the propeller shaft, which is a forging, so it's very natural for us to be in that business, a gearbox, a pitch control propeller, pitch control electronic system and all that. Apart from that, we've tied up with large companies like L3Harris and others who make DE machinery. So we are going to get into a lot of DE machinery companies like FMD. So we have many tie-ups that we have done with US companies, almost half a dozen companies, which are all companies in the high-tech business. I think the India-US defense dialogue is proceeding pretty well, so we are getting our variances quite fast from the US government for all this.
Mr. Kalyani, you mentioned that some of the export orders that you're talking about are much bigger than the orders that you're currently getting from the Indian government. Could you give us a sense or some color on the size of those orders?
Very difficult to say with the numbers, but all I can say is the demand in Europe, if they talk about going to 5% GDP, the demand is extremely high. So let's wait and see. It's a bit early to give you numbers, but I'm sure India is in a sweet spot for Indian companies, companies that can design, develop and manufacture these products with their own technology, create the capability. It's an extremely sweet spot because we are extremely competitive compared to anybody in the world.
