The skies over Bangalore’s Yelahanka airbase thundered with the sound of fighter planes, helicopters, turboprops and other aircraft. As the biennial air show—its 2013 edition in February is considered Asia’s biggest-ever aviation event—was in action, one aircraft had a different flight path: Business jet Embraer Phenom-100 made chartered flights to Belgaum. Perhaps it was the right time for Quest Global Inc to show potential customers that the aerospace hub it has been building is ready for take-off.
On the outskirts of Belgaum, nearly 500 km from Banglaore, is the 300-acre special economic zone (SEZ) set up by Quest. Driving through the beautiful landscape, it is difficult to believe it could soon be the most sophisticated industrial belt in the region. It is already notified as the state’s first precision engineering region. “You can walk away from this place with a finished [aerospace/automotive] product without stepping out of this facility,” says Aravind Melligeri, co-founder and chief executive of Quest Global Inc, the manufacturing arm of Quest Global Engineering.
No other facility in India, other than state-owned Hindustan Aeronautics, can claim such a design-to-build capability in aerospace. “It is built very neatly, in a graded manner,” says Ashok Baweja, former chairman of Hindustan Aeronautics.
Over the past four years, Quest has developed essential capabilities of an aerospace cluster, such as machining, surface treatment, forging and assembly. It has done some on its own; for others, it formed joint ventures with overseas partners: Magellan Aerospace of Canada, Saab of Sweden and Aubert & Duval of France. The ventures are to serve the global supply chain, although India’s share in the $100 billion commercial aerospace manufacturing is a paltry $100 million.
It was the 2005 defence offsets policy that turned things on its head. Most industrial groups, including the Tatas, Mahindras and L&T, formed partnerships and talked big investments. Looking back, it appears they moved opportunistically. “Even the human resource deployment was convenience-based,” says a public sector aerospace official who saw automotive professionals handling aerospace projects. Three SEZs, two in Hyderabad and one in Bangalore, were also announced.
This February, Karnataka announced a 10-year aerospace policy, which will target $10 billion in investment. It also announced a 1,000-acre industrial park near its SEZ. Even if one considers all this to be hot air, it remains plausible for states to roll out the red carpet for big companies.
Additionally, the conglomerates are finally getting a hang of this high compliance industry. Mahindra Aerospace’s first greenfield project is nearing completion in Kolar. With competition soaring, can Quest create an aerospace cluster in Belgaum, like Toulouse near Paris or Wichita near Kansas City?
Melligeri has bet his life he can.
The Bug of Business
As a child, Melligeri knew he had to get higher engineering degrees from the US. No sooner did he get there that he knew he had to start his own business, even abandoning his PhD programme. It took him a while to find an entrepreneurial young engineer to team up with. Ajit Prabhu, co-founder and chief executive of Quest Global Engineering, was also looking for a like-minded partner.
Prabhu landed himself at the GE R&D centre near New York soon after graduating. He had to pay off the debt he incurred on his credit card while paying for his parents’ US visit. At GE, the engineer in him felt like a “kid in a candy store”, but the businessman in him kept bugging him. Every time his manager cribbed how contract agencies couldn’t find the right skills for the company, Prabhu knew his business idea lay right there: An engineering services company.
At GE, Prabhu did structural analysis of gas turbine rotors; Melligeri modelled the impact of automotive crash at Ford in Detroit. Just over two years into their jobs, in 1997, they decided to borrow money on their credit cards and register Quest Engineering in New York. It was registered in India the following year. In the first year, Quest made $300,000. All the projects that Prabhu had worked on at GE eventually came to Quest, even though his manager thought starting a company “was the stupidest idea”.
By 2001-02, the company was grossing $20 million. Prabhu, who sold incense sticks as a schoolboy to get a sense of business, found more projects coming his way than he could handle. And then Enron—the energy trading giant—collapsed. Several GE power generation contracts got cancelled. Quest, which got 80 percent of its revenue from GE, saw revenue dip to $14 million, and GE’s share in it fell from $18 million to $6 million.
Another reason for the sluggish start is that most government defence acquisitions have been delayed; so, contracts aren’t really awarded. Also, says Nidhi Goyal, director at Deloitte Touche Tohmatsu India, business in this sector requires approvals and licences from various ministries before and after awarding the contract.
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(This story appears in the 17 May, 2013 issue of Forbes India. To visit our Archives, click here.)
My heart swells with pride, and my eyes well up with tears as I read this story. I have been a personal witness to the staggering growth of this company because many of my own friends
on Jun 20, 2013Quest SEZ is a rare case of entrepreneurial vision. The infrastructure, facilities for Aero structures are impressive and best is yet to come. A shining example of shape of things to come for -Indian Defence Industrial base.
on May 19, 2013My sincere and heartfelt wishes to dear Ajit.........he is family and we are so proud of him........may God always Bless and Guide him
on May 17, 2013What a company! Without any hype, they\'ve quietly built a solid organization. And at a time when many entrepreneurs are happy to take the short cut, to build a precision manufacturing company is absolutely commendable. We need several more such visionaries in this country.
on May 16, 2013Mr Arvind Melligeri and Mr Prabhu have a vision for India and I am thankful to him to bring Belguam on aerospace manufactureing map, even though our govt are only involved in making money in th name of announcing projects, QUEST has delivered and and silently setup a hughe infrastructure with commitment to deliver form parts to sub assy, I wish soon all the success to QUEST and wish it will turn itself to make the whole aircraft sub systems and may be soon an MRO at Belguam Airport
on May 16, 2013I applaud the entrepreneurial spirit these gentlemen have and wish them success at Quest Global. I had just read an article in another publication regarding the US\'s shortage of qualified engineers and computer professionals to fill the many vacant positions at US firms and even at US defense research facilities such as DARPA. This is a reason for the reconsideration of the H1-B visa laws as the US tries to fill these positions with highly skilled and talented professionals from countries such as India. As a former airline employee and aerospace worker who lost my careers in these fields and long to return, I have a high passion for commercial aircraft and the airline industry. I have seen a continued globalization of this industry with American dominance disappearing. The US, years ago, was the unquestioned leader in aerospace technology but time has changed this as increasing numbers of foreign companies introducing advanced systems are challenging the shrinking US lead. We see a small reason why this is occurring. Driven and intelligent foreign nationals such as the above mentioned, come to the US to take advantage of some of the world\'s finest higher education facilities. Some foreign nationals will remain here in the US to fill positions that the US cannot fill with American citizens who have no interest or lack the expertise and skills required of them. Foreign nationals will return to their native countries to start or join emerging high technology companies that compete with the nation that educated them. This is, in no way, critical of these highly intelligent people but a testament as to why the US has continued to lose ground in every high technology segment it led the world in. I have always been a patriotic American who wishes to see the continued US lead in the last industrial segment the US leads in but the reality is that highly motivated, nationalistic and intelligent foreign nationals and their companies will continue to further challenge and eventually erode the American dominance in this critical industry. I can only hope that I may return to this area of technology I have a high passion for even if it means that I work for a high technology aerospace company based in India, China, Indonesia, Turkey or even Middle Eastern countries who are developing indenguous aerospace programs.
on May 16, 2013