BAE Sytems teams up with Mahindras for M777 gun

Exactly three years after BAE Systems pulled out of a joint venture with the Mahindra Group, both companies have teamed up again to make the M777 Ultra Light Howitzers for the Defence forces.

At present, India and the United States are in discussions for a Foreign Military Sale of 145 M777 Howitzers, estimated at around $700 million, for the Indian Army. India is said to be reviewing the letter of acceptance submitted by the United States.

BAE Systems said it has selected Mahindra as its business partner to provide “part of the supply chain that assembles the gun. Mahindra will assemble, integrate and test the proposed in-country support weapon systems at their facility.”

Speaking to BusinessLine, a BAE official said, “This is not a joint venture. There is no equity holding. We have tied up with Mahindra to deliver a particular part of the production line.”

BAE Systems said it would finalise details of the proposed assembly, Integration and Test (AIT) facility for the M-777 with Mahindra, as well as negotiate the terms of its contractual arrangement.

Earlier, BAE Systems and the Mahindra Group had formed a joint venture company, called Defense Land Systems India, that focused on the Future Infantry Combat Vehicle (FICV) order. Both the companies were to invest Rs. 99 crore over a three-year period in the joint venture. However, on January 23, 2013, the firms decided to conduct a strategic review, and the UK-based company parted ways with its Indian partner in Feburary 2013.

To facilitate the 5-year long-delayed gun order, sources said BAE Systems had offered through its US arm, to build more components in India for the 39-calibre M777, and had also offered to transfer the AIT capabilities to India. BAE Systems confirmed that in 2015, it had developed and submitted a US Government-supported proposal offering a higher degree of indigenisation on the M777 weapon system, and to establish AIT capabilities in India in partnership with a domestic Indian company.

Operational advantage

SP Shukla, Group President, Mahindra Defence and Aerospace, Mahindra Group, noted that the M777 would give the defence forces “a much needed operational advantage and an access to state-of-art technology. The Mahindra M777 facility will also ensure that life-cycle support is available locally, thereby enhancing operational availability of the guns.” Mahindra has not identifed the location of the facility.

Joe Senftle, Vice President and General Manager, Weapon Systems, BAE Systems Inc, noted in a statement, “The facility is a fundamental part of the M777 production line. A domestic assembly, integration and test facility will enable the Indian Army to access maintenance, spares and support for the M777 locally. We will continue to support the two Governments to progress to contract agreement, so that we may begin the process of Make in India for M777.”

In talks with several others

BAE was reportedly in talks with several Indian companies, including Ordnance Factory Board, Tata Power, L&T, Punj Lloyd, Kalyani Group, Mahindra Group and others. Commenting on selecting the Indian partner, the BAE official said “a group of companies were evaluated for their suitability to do the job, and of those, M&M was considered the most suitable.”

Refusing to identify the other Indian partners, the company said the selection followed a detailed assessment of Mahindra’s ability to fulfill the requirements and, in the future, grow its capability as a strategic partner for BAE Systems in India.