Samsung-L&T win Rs 12,500 crore artillery contract

Major production contracts likely for L&T facilities in Powai and Pune

By Ajai Shukla

Business Standard, 7^th Oct 15

Indian engineering major, Larsen & Toubro (L&T), in partnership with Korea’s Samsung Techwin (STW), has bagged a Rs 4,875 crore ($750 million) order for supplying the Indian Army with 100 self-propelled (SP), tracked howitzers.

Business Standard has learnt the defence ministry has written to L&T and STW informing them that their gun --- called the K-9 Vajra --- has cleared army trials conducted in 2013 and 2014. Simultaneously, the ministry has written to the other vendor in contention, Russia’s arms export agency, Rosoboronexport (RoE), rejecting the gun it offered, the 2S19 MSTA howitzer.

The K-9 Vajra consist of a 155 millimetre, 52-calibre howitzer, mounted on a tracked vehicle. It is highly mobile and can keep up with tank columns in the open desert. The Indian army wants this gun for its mechanized strike corps, which launches rapid thrusts deep into enemy territory.

The strike corps’ T-90S tanks currently outpace their artillery guns, which are towed by wheeled vehicles. This constrains the tank spearheads to fight without artillery support at key moments in the advance. With the K-9 Vajra mounted on a tracked vehicle that keeps up with tanks, the armour spearheads would be assured of heavy fire support.

The contract falls under the “Buy Global” category of procurement, which provides for over-the-counter sales of ready-built defence equipment. Despite that, STW has partnered L&T to ensure that a full 50 per cent of the weapon system is built in India.

L&T plans to build 13 major sub-systems of the K-9 Vajra at its facilities in Pune, Talegaon and Powai. This includes the fire control system, ammunition handling system, muzzle velocity radar, and the nuclear, biological and chemical (NBC) system.

With the acquisition subject to 30 per cent offset liability, the high percentage of domestic manufacture meets that requirement easily.

The exact cost of the deal is still unknown, since the commercial bid submitted by STW and L&T has not yet been opened. However, STW-L&T are the only ones remaining of the four companies that originally bid: Bharat Earth Movers Ltd (BEML), Tata Power, RoE and STW-L&T. The first two didn’t make it to the trial stage, while RoE failed to meet the army’s requirements during trials.

The army requires at least three K-9 Vajra regiments for each of its three armoured divisions, and another regiment for each of the independent armoured brigades in the three strike corps. The eventual requirement, therefore, is of 12 regiments of tracked SP guns, i.e. 252 K-9 Vajra systems.

That suggests supplementary purchases of the K-9 Vajra would take the order up from the initial Rs 5,000 crore for 100 guns, to at least Rs 12,500 crore. The vendors would continue reaping benefits from maintenance, repair, overhaul and upgrade of the gun through its 30-40 year service lifetime.

L&T has pursued its relationship with STW strategically, ever since the two sides struck up a partnership in 2007. Noting that the Samsung gun’s turret fired only a single type of high-explosive ammunition, against India’s requirement of multiple warheads, L&T re-engineered and indigenized the gun control system to conform to the Indian Army’s requirements.

Besides the K-9 Vajra, the army is looking to buy several more gun types to equip its 264 artillery regiments that have not bought new equipment since 1986, when Bofors controversially supplied India 410 FH-77 howitzers.

In the pipeline now are 114 howitzers from the Ordnance Factory Board (OFB), with the order possibly rising to 414 guns if they perform well. The Defence R&D Organisation (DRDO) is partnering Indian private companies in the Advanced Towed Artillery Gun (ATAG) project to develop a new 155-millimetre, 52-calibre gun. A contract could be concluded soon with BAE Systems for 145 ultralight howitzers for mountain formations. In November, the ministry sanctioned the purchase of 814 mounted gun systems (MGS) for an estimated Rs 15,750 crore. Meanwhile separate tenders are out for 180 wheeled (self-propelled) howitzers, and 1580 towed guns.

The defence ministry and L&T declined to comment on this subject.