Hindustan Aeronautics Ltd. awaits IAF’s dues and LCA order
1st LCA MK1 to come in December. Then 1 LCA per month.
Pretty much the timeline I gave.
LCA Tejas Mk1 & Mk1A - News and discussions
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1st LCA MK1 to come in December. Then 1 LCA per month.
Pretty much the timeline I gave.
83 LCAs Order: HAL may finally agree to lower price - Times of India
Devil is in the details, details are missing..
Anyway good to see some movement.
Good man hours management also spoken about.
Devil is in the details, details are missing..
Anyway good to see some movement.
Good man hours management also spoken about.
83 LCAs Order: HAL may finally agree to lower price
By Chethan Kumar, TNN
Updated : 25th August 2019, 3:23 IST
BENGALURU: Staring at a depleting order book, defence PSU Hindustan Aeronautics Limited (HAL) — negotiating price for the 83 Light Combat Aircraft (LCA) Tejas aircraft order — is likely to agree to a price that is significantly lower than its quotation.
According to sources privy to the negotiations, HAL quoted Rs 450 crore per aircraft as the basic price. “MoD and IAF (customers) are firm that this price is not competitive and are negotiating for a price that is less than Rs 300 crore per aircraft. Negotiations are nearly complete and final price is likely to be in the range of Rs 250 crore and Rs 275 crore,” a source said.
If the price is Rs 275 crore, then the value of 83 LCAs would be about Rs 22,825 crore compared to Rs 37,350 crore if it was Rs 450 crore. This value would be excluding maintenance and other aspects of the overall deal. It’s noteworthy that former defence minister Nirmala Sitharaman had pegged the total value of LCA order at Rs 50,000 crore in January.
“HAL really has no choice. If we need to sustain our production lines and the employees, we need fresh orders, and this is one of the bigger orders which will go on for at least five years,” a source said.
At present HAL has orders worth only Rs 45,000 crore, with a major concern brewing in its plant in Nasik, which has orders to sustain only until March 2020. According to MoD, HAL has orders for 48 fixed wing aircraft—only 12 of these for Nasik plant—67 helicopters, 80 engines and 26 sets of rocket structures placed by Isro (See graphic).
One source claimed: “The Gripen, which has features similar to LCA, was costing less than Rs 300 crore per plane and that HAL must become competitive and be able to offer similar price.” Gripen is manufactured by Swedish firm SAAB.
Another source said that this would benefit HAL in the long run to increase efficiency to reduce costs. Eventually, the aim is to export LCAs and HAL has already expressed an interest in supplying them to Malaysia. If it wants to export, it needs to price aircraft in the same range as others.
“Why would anybody pay Rs 450 crore for Tejas if they can buy Gripens for cheaper,” the source argued, adding: “Also, HAL quoted 2.5 lakh man hours to build one aircraft and the customers want it to be 1.5 lakh hours,” a source said.
83 LCAs Order: HAL may finally agree to lower price | India News - Times of India
By Chethan Kumar, TNN
Updated : 25th August 2019, 3:23 IST
BENGALURU: Staring at a depleting order book, defence PSU Hindustan Aeronautics Limited (HAL) — negotiating price for the 83 Light Combat Aircraft (LCA) Tejas aircraft order — is likely to agree to a price that is significantly lower than its quotation.
According to sources privy to the negotiations, HAL quoted Rs 450 crore per aircraft as the basic price. “MoD and IAF (customers) are firm that this price is not competitive and are negotiating for a price that is less than Rs 300 crore per aircraft. Negotiations are nearly complete and final price is likely to be in the range of Rs 250 crore and Rs 275 crore,” a source said.
If the price is Rs 275 crore, then the value of 83 LCAs would be about Rs 22,825 crore compared to Rs 37,350 crore if it was Rs 450 crore. This value would be excluding maintenance and other aspects of the overall deal. It’s noteworthy that former defence minister Nirmala Sitharaman had pegged the total value of LCA order at Rs 50,000 crore in January.
“HAL really has no choice. If we need to sustain our production lines and the employees, we need fresh orders, and this is one of the bigger orders which will go on for at least five years,” a source said.
At present HAL has orders worth only Rs 45,000 crore, with a major concern brewing in its plant in Nasik, which has orders to sustain only until March 2020. According to MoD, HAL has orders for 48 fixed wing aircraft—only 12 of these for Nasik plant—67 helicopters, 80 engines and 26 sets of rocket structures placed by Isro (See graphic).
One source claimed: “The Gripen, which has features similar to LCA, was costing less than Rs 300 crore per plane and that HAL must become competitive and be able to offer similar price.” Gripen is manufactured by Swedish firm SAAB.
Another source said that this would benefit HAL in the long run to increase efficiency to reduce costs. Eventually, the aim is to export LCAs and HAL has already expressed an interest in supplying them to Malaysia. If it wants to export, it needs to price aircraft in the same range as others.
“Why would anybody pay Rs 450 crore for Tejas if they can buy Gripens for cheaper,” the source argued, adding: “Also, HAL quoted 2.5 lakh man hours to build one aircraft and the customers want it to be 1.5 lakh hours,” a source said.
83 LCAs Order: HAL may finally agree to lower price | India News - Times of India
Goes to show how ridiculous the initial price was. HAL literally just put whatever amount they wanted to on the bill.
@Picdelamirand-oil @Bon Plan @A Person @vstol Jockey @halloweene @Milspec
Can we expect indigenous replacement of expensive items also as a reason for price drop?
No chance of that happening. The configuration would already be frozen before negotiations. The best they can do is eliminate stuff, but that's also not possible because there's not much to eliminate.
This is just HAL giving themselves a huge profit margin. It's impossible for an aircraft that was previously built at 162Cr to suddenly climb up to 450Cr with just a few avionics changes. Even 275Cr is an inflated amount.
and nobody will be asking questions to HAL on how sudden drop of 175 crore, how are they going to manage it now and what were they thinking while quoting 48 crore ????????
They have quoted high price because they knew that IAF will bargain and then they will reduce it.
Indian Dukandaar daam jyada bolta hai kyonki Indian grahak molbav karta hi hai.
What was HAL thinking here? It's a public company eventually everyone would have find out actual numbers. @Milspec
$40-45 million per plane is a very reasonable price with AESA, SPJ, AAR and NGBVRs.
IAF should order few more sqds and increase the per year production to ~24.
Development cost spread across small qty raises the unit cost, where have we learnt that, I wonder?
The entire cost to develop LCA Mk1 itself was 8000Cr. So you're saying converting Mk1 to Mk1A is 15000 Cr?
The cost to develop Mk1A is peanuts, to the point of negligible.
The reason why the unit price's high is because most of it is just profit margin. HAL outsourced 70% of the work, and then added a 30% profit over the price of the outsourced work. So the price for 70% of the aircraft is already inflated by 40-50%, likely much, much more. And you can expect HAL to have added a similar profit of 30% to their own share of 30% work. And I think I'm merely scratching the surface, since this doesn't cover the supply of raw materials and imported electronics.
The fact that LCA can be made with just 1.5L manhours instead of 2.5L manhours shows how much golmaal was involved. Even the labour was magically 30% more than needed. Also, that 1.5L manhours is also likely exaggerated. So what's this got to do with development cost?
The entire cost to develop LCA Mk1 itself was 8000Cr. So you're saying converting Mk1 to Mk1A is 15000 Cr?
The cost to develop Mk1A is peanuts, to the point of negligible.
The reason why the unit price's high is because most of it is just profit margin. HAL outsourced 70% of the work, and then added a 30% profit over the price of the outsourced work. So the price for 70% of the aircraft is already inflated by 40-50%, likely much, much more. And you can expect HAL to have added a similar profit of 30% to their own share of 30% work. And I think I'm merely scratching the surface, since this doesn't cover the supply of raw materials and imported electronics.
The fact that LCA can be made with just 1.5L manhours instead of 2.5L manhours shows how much golmaal was involved. Even the labour was magically 30% more than needed. Also, that 1.5L manhours is also likely exaggerated. So what's this got to do with development cost?
Design development cost different than the Product development cost, Cost to develop of 8000cr was what ADA cut the receipt for, not HAL.
Jigs, fixtures, tooling, machines, chem treatment, final assembly, fixed overheads:
All distributed over 83 units would lead to higher unit price, no?
Also what about IAF specified upgrades, that might ring a bell.
Everything's been paid for by MoD. The total cost to HAL is less than 1500Cr, the other half borne by forces, for a 16/year line. That's just 12 Cr per jet.
And the actual conversion to Mk1A is ridiculously cheap. It's way, way, way, way smaller than the 8000Cr spent developing the Mk1.
None of those will increase the cost by 15,000Cr. It's just more advanced versions of what's already on the Mk1, like radar, EW suite, so the cost differential is minuscule. For example, the Israelis sold the EL/M 2052 to HAL at the same rate as the EL/M 2032 for the Jaguar upgrade, so no negotiations were necessary. And the total cost of the upgrade, which is much more significant than LCA Mk1A, is about $10-12M, or about 80+ Cr, and includes full replacement of avionics and also full replacement of the internal estate.
Anyway, the cost to develop MWF is about 1/3rd that magical 15,000Cr figure. If ADA can develop a significantly more advanced aircraft at such a cheap rate, that only goes to show how bad HAL is at R&D.
Unfortunately, that is not how it works. MoD allocates money to the product being made by, it doesn't pay for anything. HAL buys and implements everything from its own operating budget and then invoices the MoD in lieu of IAF. Like if it has to set up a new hangar for LCH, IAF is not going to pay for the new hangar or machine tools, HAL is going invest it's CAPEX for the Hangar, while some of that is going to be distributed as overheads in the pricing for that product or in some cases the entire product lineup, that depends on the situations.
Most of cost for development for MWF have already been established in LCA program, they do not need to buy new autoclaves, or establish wind tunnels or for that matter even develop new engines. Most of the work was already done. Similar to ALH vs LCH, given most of the infrastrucure is already available with HAL for ALH, LCH is significantly easier.
even a MKI to Pakfa transition is going to be easy for HAL, but given the horrible manufacturing package delivered by ADA, LCA is going be challenging, once the LCA line Series Production is established, mk1a, mk2, mwf are going to significantly cheaper.
Yes, and that was just 1500Cr for HAL. As I said, 12Cr per jet, and reduces even further with more orders.
You have confused production and R&D. They are not the same.
Thats not what you said buddy, You said manufacturing overheads for HAL are paid for by MoD, that is simply lying.
Production line: Jigs, fixtures, what have you, it's half. HAL paid for half the line and IAF/IN paid for the other half.
As for other aspects, it's all part of the contract price. So quite literally, HAL pays for something itself and is in turn paid for by the MoD anyway, along with profit.
In the end, HAL pays nothing. The contract price includes all associated costs of the aircraft, including manufacturing overheads + profits. So at the end of the day, HAL has paid all its employees, sold aircraft and churned out a profit after everything. That's how businesses are run.