How Arsha Consulting helped a 40-year-old French engineering firm find a partner in India
Ametra Group, formerly Deroure, is a French firm offering design and integration of mechanical, electrical and electronic industrial equipment for the aeronautics and space, defense, energy, medical and railway sectors. Ametra has 600 employees with a turnover of 45 million euros in 2017. They approached Arsha Consulting for some expert guidance on finding a suitable partner firm in India, specifically in the aerospace and defense sector.
Ametra is a part of GIFAS, a French Aerospace Industries Association created in 1908, with over 260 member companies. As recently as April 2016, representatives of 60 GIFAS firms embarked on an organized ‘Indian mission’ so they could begin executing complex global contracts by partnering with Indian OEMs by end 2018 - early 2019. French companies are looking at India as a destination to fulfill their offset obligations, cut back on costs and remain competitive in today’s landscape. CEO of Ametra, Anne-Charlotte Fredenucci commented on this development by saying, “After the purchase of Rafale, our big customers of the sector, like Dassault, signed commitments with India to meet their clearing obligations, forcing them to buy on Indian soil.” She further reinforced the urgency of finding reliable partners in the region by saying a well thought out big strategic step like this was essential and, “If we do not take these markets, it is the Indian industrialists who will do it.”
The management at Ametra decided to go in for a Joint Venture (JV) because it appeared to be the most reliable approach to finding a local partner who would guarantee quality, adhere to delivery times and ensure results. A JV would also mean that the Indian sub-contractor will commit to investing time and money to create the necessary infrastructure as the project grows and hire highly motivated people to drive the project. The CEO of Ametra said that a JV made most business sense and posed the least risks because they could not afford to run into problems at a later stage.
Understanding Our Client’s Requirements
At the outset, Ametra laid down a few stipulations for Arsha to follow in their search for a local Indian supplier.
- Technical Competence & Certification: The Indian firm would ideally have experience working with a foreign OEM in the past, meet specific technical requirements and have existing capabilities to manufacture electronic components for use in Aerospace & Defense. While it was necessary that they be a ‘clone’ of Ametra, the firm would have to demonstrate some complementarity in skill set and understand the market very well. They would also have to hold aerospace and defense clearance and comply with internationally recognized AS9100 quality standards. Arsha would need to draw up a long list of companies based on their technical competence and by studying their portfolio of services, looking at past project reports and checking for certification.
- Willingness and ability to invest in people and infrastructure: The right local partner would also have to be open to investing money and time to build capacity by setting up manufacturing plants or other kinds of infrastructure necessary. In the future, they would also have to recruit capable workers who could upgrade their skills with training provided by Ametra. Arsha would have to rate companies on their ability to ramp up facilities in the future, and asses their longer-term commitment.
- Shared Corporate Vision: Also, the companies would have to share Ametra’s vision for the future and have a similar strategy, corporate culture and value system in place. This would mean that Arsha had to work closely with the management of prospective partners to assess if the management would be able to create a rapport with their French counterparts.
- Size of Company: Lastly, Ametra did not wish to work with companies that were either too small or too big. Our team began by drawing up a long list of ‘medium-sized’ companies and checked company financials to make sure that they would be a right fit.
Drawing up a Long List
Keeping these guidelines in mind, Arsha drew up an initial list of 60 firms for Ametra’s consideration. We tapped into our contacts within the industry, attended sector-specific networking events, consulted directories and engaged with members in international trade associations to be able to ratify information and select companies that met the broad criteria for selection.
Collaborating with Ametra to Create a Shortlist
We then worked closely with the French team within Ametra to discuss each nominee’s strengths and weaknesses and whittled down this list to a final shortlist of five companies. This collaborative, iterative process further helped us understand exactly what our client Ametra was looking for.
Next, we set up visits to each of the five shortlisted companies and physically visited their factories. We also spent time with their management to understand whether they would be interested in a JV with a French firm of Ametra’s standing and evolved a third and final shortlist of four companies for Ametra’s actual visit. Our industry contacts, a thorough understanding of technical competencies in this highly specialized sector of Aerospace & Defense and prior experience in mediating between European customers and local Indian firms was invaluable during this phase.
Guiding Ametra During Their Visit To India
Our team’s focused efforts had paved the way for a visit by the Ametra team, led by their Chairman and CEO. The team at Arsha Consulting was with Ametra every step of the way and accompanied them on their field visits to meet the four firms in India. This has been a challenging and time-consuming effort but exciting for all parties involved.
What the Future Holds
Post their return, Arsha is in the process of preparing detailed reports to share our insights and recommendations with Ametra. We are also assessing their technical and commercial capabilities more thoroughly, and Ametra is in the process of deciding between two or three firms to arrive at their final decision and choose one Indian firm to begin their journey in this part of the world.
Watch this space for more updates on this project from our end. And please do not hesitate to get in touch with our team for expert, tailor-made solutions to guide your business as you expand, or set up operations in India, via a JV or standalone business unit in one of the most powerful emerging economies in the world.
Preeti Prakash | Journalist