252: Secrets Behind Building Planes in India - What You Didn't Know | Venkatesh Mudragalla(Jeh Aerospace)

Speaker A: This is as critical and as complex as it gets, right? I mean you are at the end of the day making something which is actually carrying humans in the air. I mean it is as complex and as safety critical as anything that we do, uh, in the world.

Speaker B: What do you think happened at Boeing then in that case? Right. Seems, uh, again like a horror show. Should we be worried?

Speaker A: See, the mantra is very simple. Uh, how do we deliver conforming parts consistently on time as long as we're able to do that. We have a winner here.

Speaker B: Venkatesh Mudragala is the co founder of

Speaker A: J Aerospace, a company pushing the boundaries of indigenous aerospace innovation with a deep focus on advanced manufacturing and precision engineering. He is driving technological breakthroughs that put India on the global aerospace map.

Speaker B: M. Hello everyone. Welcome to the Startup Operator podcast. I am Roshan Kariopa, uh, and my guest today is Venkatesh Mudragala, who's the co founder of J Aerospace. Uh, Venki started this venture with Vishal, uh, uh, another friend and colleague of his, uh, in Tata. Venky and Vishal spent about a decade or so leading the Indian aerospace industry. Um, they're very, very accomplished professionals. Venki got promoted about seven times in ten years. Um, Vishal was one of the youngest CXOs, uh, in the Tata group as well. Um, and they quit, um, uh, all of this to start up in 2022. Uh, so there's a lot that one can talk about in the aerospace industry itself. It's so damn complicated. Uh, explore all of it, right? I mean the supply chain constraints, what uh, goes into the product and engineering aspects. How does someone really make money in this industry? What is the value chain like? Um, and you know, what it will take from a policy, from an ecosystem perspective, uh, to sort of have our own Airbus or Boeing maybe 10 or 15 years down the line. Uh, this was a fascinating, um, uh, overview of an industry that is super important for us. I mean if we were to think of a Vixit Bharat as such. So yeah, I had fun talking about it. Um, in fact, I mean this is perhaps the most number of questions I've asked on a podcast and I hope you guys enjoy this. If you do, don't forget to share and subscribe. All right, with that out of the way, let's dive in to this episode with Venkatesh Mudragala, co founder of J Aerospace. Hey Venky, welcome to the Startup Operator podcast. Thank you so much for making the time.

Speaker A: Hi Roshan, good to be here. Thank you.

Speaker B: Yeah, I Know, we've gone back and forth with your team a few different times. Uh, but it's great, great to have you here finally. And like I was telling you before we started recording, we're trying to focus on deep tech and manufacturing, uh, move away from some of the SaaS consumer, uh, fintech folks. Um. Right. Not, not trying to throw any shade or anything. We absolutely love those startups and founders as well. But I think we've done too much of that and we now want to focus on cutting metal. Right. So, which is why we've had uh, you know, Ethereal before. We've had uh, triple S, we've had Signler and so on. So Jay is added to that list as well. So. Yeah, yeah. Thank you so much for being here.

Speaker A: Um, yeah.

Speaker B: Awesome. So, uh, you know the aerospace industry. Right. I mean it's, it's perhaps the most complicated space, uh, I can think of. Right. Um, and I think if you see what's happened over the last five or ten years, uh, just from a layperson perspective, I think there's so many shocks that uh, this industry has gotten. Right. I mean whether it is the 737 crash that happened.

Speaker A: Yeah.

Speaker B: Right. And then of course, Covid. Yeah. And then everything that uh, you're seeing with what's happening in the U.S. right. With air traffic controllers and you know, how that intersects with DEI and then labor shortage and everything, uh, it's a space and evolution at this point of time and it feels like an inflection point. I mean, do you feel the same?

Speaker A: No, no. I think absolutely you hit the uh, nail right on the head. In fact, if I were to give you a little bit of context from our side, uh, aerospace industry has come from two back to back backspawn events. Right. First one, we had a crash, ah, of 737 Max aircraft at that point of time. That aircraft used to be the largest selling aircraft in the world.

Speaker B: Yeah.

Speaker A: And uh, when all of us thought nothing worse could happen, that's when the COVID hit. If, uh, you see, along with the hospitality industry, this industry has been a, uh, very severely affected industry. So industry has never been able to come back, uh, from these two shocks that uh, is so supply chain is also under severe turbulence.

Speaker B: Right.

Speaker A: One more thing that happened was of course there's a serious demand down that we have seen ramp down post pandemic because the travel has stopped. However, when pandemic went away, travel has come back with vengeance. Uh, there's a V shaped recovery in the demand. But as you would Imagine it's relatively easier to ramp down but far more difficult to ramp up. So uh, industry continues to be in a supply ah, chain turbulence. And not that it's something new in this particular industry. Roshan, this industry was always supply chain constraint. Because today if you look at the likes of the OEMs, like the Boeings of the Airbus of the world, more than 70% of the value add that happens in an aircraft is actually done by m, the tiers of these OEMs and not by themselves. They do very limited amount of value add internally. So which makes them very, very dependent upon supply chain. And events like these happen, hitting some of the best platforms in the world. Uh, then the entire supply chain vendor turbulence which has started seriously affecting the OEMs and then uh, of course the deliveries to the end customers as well as.

Speaker B: Right, yeah. I mean I often think of this Milton Friedman clip, right where he's explaining capitalism. Uh, and he just, you know, shows a pencil and he says, you know, this one pencil, right, has graphite coming from somewhere else, has lead coming from somewhere else, wood from somewhere else, paint from somewhere else, and so on and so forth. Right, right. Um, and just to illustrate the efficiency of capital markets and whatnot. Right. Um, I mean I can't even begin to think how complex the, the aerospace industry is.

Speaker A: Right.

Speaker B: With as many dependencies and complex supply chain. Right. I mean, um, you know, I shouldn't say this but it's a surprise that there's only one crash every few years or so. Right? God, you know, God forbid, uh, it become like a recurring uh, thing. Right. But when such a thing happens, you know, I mean, what goes through your mind? Because you guys are in the industry, right? So what, what do you guys think about?

Speaker A: No, I think, uh, Roshan, as you said, this is as critical and as complex as it gets. Right. And you are at the end of the day making some things which is actually carrying humans in the air. And it is as complex and as safety critical as anything that we do, uh, in the world. And like you rightly said, of course there are thousands of parts that come from different, different places. They all come together to make something like an aircraft. Like just to illustrate, uh, with some numbers, if you were to look at a single aircraft, like an A320, uh, it has close to 300,000 unique parts. If you were to talk about something as big as an A380, uh, it can have parts up to a million, uh, SKUs. So that's, that's a lot of part numbers made in different, different factories across uh, the world. And they're all coming together and made into this aircraft that flies all of them. It's complex thing. Right. Again, what drives uh, this particular industries, its consciousness towards the safety and the

Speaker B: quality of the product.

Speaker A: That's paramount for everybody that who is in this particular industry. And that's what actually determines the success of everybody who is part of this particular industry.

Speaker B: Right.

Speaker A: So I think nothing more uh, uh, important than that. So the processes are extremely stringent, both at manufacturing level, at an OEM integration level and of course at the certification level by the authorities, whether it's FSA or dgca. The uh, process and the controls are extremely stringent. Right, of course. To ensure the safety of you and I when we travel uh, on the aircraft.

Speaker B: Right. What do you think happened at Boeing then in that case? Right. I mean like with the door flying off and I mean didn't really fly off but I mean it opened midair and stuff. Right. I mean, seems uh, again like a horror show. Um, right. Especially for an industry which emphasizes safety as you mentioned so much. Right. So should um, we be worried?

Speaker A: No, I think, see Boeing is one of the best engineering companies that ever existed.

Speaker B: Right.

Speaker A: Uh, I think the uh, capability and the technology that Boeing has is at par with anything else that we do in the world. Right. Top notch. I think Boeing is taking enough actions to uh, make all of us feel comfortable with the actions that they're taking. The uh, issue that we have seen of course, uh, is something that should have never happened, but it's an issue that costs somewhere in the supply chain. And of course today Boeing's uh, uh, initiative to acquire that particular entity and bring it back to the fold so that they ensure that the process are more stringent and quality is kept at the way. How it needs to be kept is one of the uh, critical aspects that Boeing is doing to ensure the safety

Speaker B: for all of us. Right. So you mentioned the demand supply gap. Right. I mean especially post Covid, we've seen like rising travel and which means that people want more aircrafts and um, suppliers, whether it's Boeing or Airbus or whoever else is kind of struggling to keep up uh, with that demand. Um, Right. So how is the industry looking to bridge this? I mean what, what seems to be the solution?

Speaker A: No, I think Roshan, if you see, uh, like I told before, this industry has always been a supply constrained industry. However, because of the problems that we spoke of a little while ago, uh, this problem has been accentuated now uh, and has completely pushed the supply chain into turbulence. And like we spoke before, the OEMs are also heavily dependent on the supply chain. So what's the need of the supply chain resiliency today? While this industry has many suppliers, but still the supply chain is very fragmented. How do we continue to make it distributed but more focused and also use some of the capabilities and capacities that are there in emerging economies like the countries like India will help to bridge this gap better. If you also look at any uh, speech or any uh, announcements made by the OEMs because of delays in they attribute the problem to the supply chain. Right. Some of the aero engine manufacturers also struggling for capacities and capabilities uh, that are there. Another thing that's happening is uh, unlike any other industry erosion, this particular industry, even today most of the manufacturing happens action actually in western economies which is us, US and Western Europe, which is very different if you look at any industries like uh, electronics, industrial goods, white goods, etc. So there is also today uh, increasing gravitas to move some of this work to the emerging economies to make it more balanced or else some of the problems that you're experiencing in these countries have become the problems of aerospace industry like severe labor attrition, uh, talent shortage, uh, aging population, high inflation, liquidity crisis. So some of these problems of the existing markets is also uh, causing trouble in this particular uh, industry. So uh, some of the initiatives like moving some of this work to countries like India is also helping bridge this gap. But again we are a long way uh, from where we need to be uh, to completely solve this problem.

Speaker B: Most um, of the demand is also coming from the uh, likes of India. Right. I mean I think we, perhaps we buy the most aircrafts in a year or somewhere close to that. I feel like Indigo and Tata, I uh, mean Indigo and Air India and so on. Right. So um, it does make sense for the ecosystem to kind of exist closer to India in that case.

Speaker A: No, absolutely. In fact let me give you a statistic which is very, very surprising. Today India is third largest in terms of market, both in commercial and defense aircraft. However, in terms of industry we are almost at 19th or 20th. There's a huge gap between the market and the supply that you see here. Right. So however, what's happening is there's now natural gravitas, the market is moving towards India, so is the industry today. If you see some of the major OEMs like the Boeings and the Airbus of uh, the world have significantly increased their spend in the country, uh, uh, and that we have seen in the last five years uh, significantly rising. And even if you look at some of the announcements that were made in Aero India a couple of days ago, that's showing the progress that's happening towards moving manufacturing into India.

Speaker B: Right. M so I think this is useful context and background for us to delve deeper into J Aerospace. Um, could you share the origin story? I mean I understand you and Vishal, the co founders, were in Tata earlier. Uh, right. And sort of helped unlock this uh, India potential for the likes of Boeing, Lockheed and so on and uh, saw opportunity to sort of do something uh, yourself.

Speaker A: Right?

Speaker B: I mean, yes, uh, yeah, if you could just talk about how everything came together.

Speaker A: Sure. No, I think uh, uh, Vishal and I have been both fortunate, lucky to be part of India's aerospace growth story in the last decade and a half. Uh, like you said, we have been part of the Tata Group's uh, aerospace and defense arm, um, uh, where we had opportunity to work with all the global OEMs and leadership roles. We have done some good work at um, global scale. Uh, like I mentioned before, uh, Roshan, uh, we have unlocked this potential of India to a lot of large OEMs. However, like I mentioned before, we have even Today more than 70% of the value add in an aircraft done by the tier ones and tier two S. M Our objective is how do we unlock this India potential to some of these tier ones and tier 2s who have not come to India, who have not experienced India, who have not got the benefits of working with uh, the

Speaker B: Boeings and the Lockheeds are making use of the India potential but everyone else right, in that uh, value chain is not. And so you want to focus on those guys, um, and sort of unlock this.

Speaker A: Okay. See the problems that they're facing are very, very similar to the likes of the Boeing's, Airbus and the Lockheed's of the world. Right. However, they're small in size, uh, they don't have wherewithal to come and set up large offices here in India and largest supply chain teams. That's where we want to become that bridge. Who can help them unlock India potential, uh, for meeting the demands of the global aerospace supply chain.

Speaker B: Right, interesting. Um, when you think about aerospace, right? I mean manufacturing in general is quite capital intensive. I mean it's not like you know, writing software or you know, uh, something like that. Um, aerospace is even more capital intensive. Right? I mean you're talking about very high precision and you're also talking about um, materials which are of a certain standard or you know, these semi processed, um, you know Equipments and parts that you may need which are perhaps again have to be imported and so on. Right. Yeah. Um, how do you overcome some of this? How do you, how do you start up in aerospace?

Speaker A: Yeah, no I think see starting up anything is very difficult. However in an uh, industry like uh, aerospace which have very high capital demand, uh, it makes it even more difficult. And uh, when Vishal and I uh, thought about starting something in this particular industry, those were the questions that we were also rappled with. Uh, here ocean. What we have done is we have taken a two pronged approach. Uh to begin with at zero space. What we started doing was first initially we were integrating the capacities that were available in the supply chain in the country. Uh, we uh, had a huge ecosystem that we ourselves have been personally involved in developing in the last 10 years or so. Uh, so we have used some of the unused capacities there and offered those capacities coupled with the capabilities that we bring in uh as a part of our team and started offering that to the customers. Uh in the US and Western Europe we have been able to find some early success. We started using supply chain to deliver some components uh from here to the, to us. Uh, uh subsequently uh, then uh, we have been funded by General Catalyst, one of the largest uh, VCs in the world from Bay Area. And then we have set up a world class capability now in Hyderabad where we are manufacturing componen of our facility as well. So we've taken a two pronged approach. Initially we were integrating the supply chain in the country and uh, being capital efficient by doing so. And then subsequently then we've raised our series seed round of funding and then set up our own internal capability.

Speaker B: Right. Um, you know we discussed that the, the ecosystem, the supply chain itself is like very very complex. Right. I mean tons of moving parts and so on. So um, how do you sort of optimize this and bring this together? You know, because I, I did say that you know there might be import dependencies and so on.

Speaker A: Yeah.

Speaker B: And uh, today the world we live in is in, you know, in kind of turmoil.

Speaker A: Right.

Speaker B: I mean wars happening and so on.

Speaker A: Yeah.

Speaker B: Uh, so how do you bring all of that together?

Speaker A: No, I think these challenges are not uh, unheard of in this aerospace industry. Even today we heavily dependent upon, depend on western countries for our raw material needs. Uh, currently all of the aluminum, nickel and cobalt steels in Cornell etc that's used in the aerospace manufacturing, uh, we don't have approved mills in the country. Uh, so we continue to import these from the uh, Western Countries, uh, of course, there's a strong push internally, uh, by the OEMs and several manufacturers for OEMs to come and approve some of the mills that we have in the country, which should ease out some of these supply chain challenges and make it, uh, uh, better for the local manufacturers.

Speaker B: Right, right. Okay.

Speaker A: Um,

Speaker B: what is the starting point for someone to like, become a manufacturing services provider for aerospace? Right. Um, because when I think about services, I mean, you have to build, build with the customer at the heart of, you know, everything. Right. You're solving for that person. Right. Um, whereas in product or something, I mean, you take a hypothesis that uh, you then validate and then productize.

Speaker A: Right.

Speaker B: But, um, services as well is a little more tricky because you have to figure out where, where you want to play. Right. I mean, what you want to do specifically. Um, and if you have one of these, you know, larger, you know, 200, $300 million sort of companies like that want to subcontract to you. Yeah. Um, and they're paying you a million dollars, you will, you'll want to do anything and everything for them. Right. So.

Speaker A: Right.

Speaker B: How do you pick where to play in this sort of a domain?

Speaker A: No, I think, uh, like any other startup, even the startups in aerospace and defense industry, or the players who want to enter the aerospace and defense industry, focus is extremely important. Like we spoke before, there are hundreds of thousands of parts in an aircraft. Right? Of course these are parts, but there are several underlying capabilities, uh, that you need to manufacture some of these components, like uh, machining. Uh, there's fabrication process, there's structural assembly, there's composites manufacturing. So what you need to do is what's your focus area? And you also have to derive the focus area based on what you're good at and what you can be good at, where you can build a good capability and a good team around it. That's what you should choose as a focus area and then start offering solutions around it. That focus is very, very important if you start growing horizontally, as you know, it's very, very important to be extremely efficient and quality conscious in this particular. So focus is extremely important.

Speaker B: Right.

Speaker A: So choose the right vertical that we need to be like, right platform, maybe choose, uh, you want to begin with commerc defense and choose the right path there and then the underlying capability. And then within, let's say, if you pick up machining as a capabilities, what's the range of size of parts that you want to do? Is it something which is less than 1 meter or you want to get to log bed machining. So that focus is very, very important once you. And second thing also is choice of materials. You want to work on softer materials or harder materials. Those are the things that we need to think of. It all boils down to where you can offer best efficiency, best structure, uh, in terms of cost, best capability that you can build based on the resources that you have and the team that you'll be able to put together.

Speaker B: Right. And um, can you talk about some of the technical nuances like for a lay person audience. Right. I mean, um, talk about some of the complexities involved and how you're overcoming them.

Speaker A: So if you look at the entire manufacturing process, uh, let's put it this way, uh, Roshan, there is, to begin with there is subtractive process. Right. Uh, for example, if you were to make any particular part of any shape, uh, in subtractive process, what you do is you take a block of metal or piece of metal and start removing material to keep it that particular shape. Of course there's also additive process where you actually start depositing material to create that. So there are M2 major, uh, uh, machine, uh, process which is both additive and as subtractive. Subtractive is the most used in the common process that's used in the industry. Additive is something which is very recently picking up. Uh, apart from this you have uh, technologies like fabrication process where there is no removal of material, but you actually bend, turn so that you give that particular piece of metal a shape that is required. Basically you're forming the material. That's another process. Similarly you have composites technology where you try to join two different types of materials, let's say like a aluminum and a honeycomb structure or two different types of metal. Basically what you're trying to do is you're trying to improve the weight to strength ratio. You're trying to increase the strength but also not increase the weight drastically. So those are different, different kinds of technologies that you can use in manufacturing process.

Speaker B: Right. And what do you do specifically within that?

Speaker A: We are very, very focused on uh, precision machining and structural assembly. Um, in the machining side, we are focused on subtractive process.

Speaker B: Right now talent is a key component to your delivery as such.

Speaker A: Right.

Speaker B: Um, and you know, people think that with 10 lakh or 12 lakh engineers graduating every year, India is like has a surplus of engineers. Uh, but then I mean when you think about the skill gap, it is huge. Right? Um, and especially for deep tech and manufacturing, um, we don't find uh, cnc machinists for example, uh, very commonly available. Right. I mean it's ah, a fight for folks to find those kind of people as well. Um, so how do you find talent for this and how do you train these folks to upskill?

Speaker A: Yeah, no, I think uh, uh, it's a very, very valid point. Uh, talent is the name of the game here. Access to. While we have, like you said, uh, we have about 1.5 million engineers graduating in the country every year. Right. We also add about 50 million people to workforce.

Speaker B: Right.

Speaker A: While we have a lot of this talent that's available in the country, however, the talent is still very raw, not very industry ready. So there's a lot of training and unlearning and relearning that we need to do for them to uh, start uh, contributing in a uh, value adding manner. Uh, in the industry. There are two, three ways how we can do it. And I'll also uh, give you a couple of examples of what we are doing at JroSpace. One thing of course is uh, how do we partner with academia so that uh, students at the institutes are also taught subjects which are relevant to the way how industry is progressing today and very, very focused from a sector perspective as well. If, let's say there's somebody uh, who is working on building a great manufacturing shop, how do you customize a certain curriculum to uh, offer best machine is that one can be trained in the college. That's something that we uh, can do with academy on this part. We are also working with a few institutes in the country wherein we are going in a little early in terms of hiring process, giving them access to the curriculum that we want them to be trained and then helping them through our expertise, etc. And then we are trying to see. Second thing is how do we keep focusing on developing skill at the country level itself. Uh, so uh, currently at zero space, we are building our center of skill where we do in house training of all of our operators and all the people who join JRO space. So those are some of the initiatives

Speaker B: that we are doing. Um, you know, I mean I think about 10, 10 years back or something. Right. I mean this, this term called Industry 4.0 started being bandied about. Yeah. And everyone felt that you'll have these fully automated, uh, um, you know, manufacturing setups and so on and where you will not require any humans involved. Um, but certainly, I mean they may, there may be fewer required or. I don't know about that as well. Right. But uh, uh, you know, what is the, what is the current State of uh industry 4.0 uh as you see it.

Speaker A: Right. So now I think uh, if you look at the uh Western world a lot of pushes going towards moving towards automation because they are having severe labor shortage. Whereas uh in India uh because we have access to uh, uh a lot of uh workforce we tend to put in people to solve our problems. We believe at geospace actually either of the extremes is not good. Let me explain to you a little bit uh more uh if I were to talk about automation today uh generally some of these tech first comes into the automotive industry and then gets adopted in the aerospace industry A lot of the time uh even some of the world class automotive manufacturers have not been able to fully automate their lines. Here we are talking about an industry where there's high volume and very similar product that's made in thousands of quantities. Whereas in aerospace industry Roshan altogether Boeing and Airbus put together they do about 2,000 planes in a year. It's very high mix and very low volume industry which is not very conducive for doing a lot of automation. There are pockets where you can do excellence in automation but it still needs to be very very efficient in terms of using the workforce. M so what we are doing at JRSP is how do we combine this talent and technology and bring best of both the worlds to deliver uh excellence and efficiency to our customers. I'll also share a couple of examples uh there uh uh uh like you mentioned all the CNC machines that we have in our Factory are Industry 4.0 enabled which means what we are doing is every movement that's happening in our machine uh and every movement that's happening in our facility is actually digitally recorded. M We extract the data, build a digital layer and then use for driving intelligent analytics out of it and to keep improve our uh process using that.

Speaker B: Right, interesting. Uh, one thing we are also very famous for in India is that our mentality of jugaad right I mean like to work with constraints and produce innovation out of that. I mean if you look at let's say isro uh, which I would say, I mean it's high tech innovation and not JUGAAD per se. Uh yes we had a lower budget budget than most other space organizations and institutes but really I mean it's phenomenal engineering at the core of it.

Speaker A: Right.

Speaker B: Um, right. So how, how do you apply that mindset at J Aerospace Right which is that to be able to work in a let's say relatively smaller setup with more constraints and so on.

Speaker A: Right. No I think uh, Being in a country like India, like you mentioned Jugaad is something that's we offer life. Right. But however uh, coming to industry like uh, aerospace it's extremely important that we are very very oriented right. And not take any shortcuts in any of the uh, process which is what we live by it uh at our organization. Uh coming to that uh, I think uh, what ISRO has done is uh a beautiful playbook for us to implement right where we don't compromise on quality but also continue to work on efficient ways of how do we uh, produce components cheaper. See again we have access to a large ecosystem of suppliers as well. How do you keep using their resources also in a more efficient manner to bring down the cost of the product? Naturally today we also have the advantage of labor arbitrage in the country. As long as that's there we keep uh, using getting the arbitrage of uh, labor that we have in the country. And in the process what we need to do is we have to keep moving up the value chain so that we start doing more complex work for which we'll be able to justify our cost structure.

Speaker B: M Right. And what do you see as the biggest pain point or challenge for you at this point from M a technical perspective?

Speaker A: I think uh, two things. One of them we already spoke of which is availability of materials in the country. We don't have any aerospace grade materials extensively available in the country. It's uh, even today a large portion of it uh, is still continued to be imported uh, uh, from rest of the world. Uh the second point which is very important for a uh, startup is also access to capital. Access to affordable capital is very very important today. As you know cost of capital in India is far more expensive when compared to other western economies. And and today we are competing with more mature markets who have been in this industry for several decades whereas India is still a very very nascent player. Uh in addition to that if you have to struggle uh for uh, affordable capital in an industry which requires high capital, that becomes a uh, uh challenging situation. That's what we are uh, kind of working through uh, in a way.

Speaker B: Right. Okay. Let's uh, focus on some of the business aspects. I mean we've spoken about the tech and the product elements. Um. Right. How did you find your first few customers and what is that sweet spot that you're looking at in terms of scaling?

Speaker A: Right. So in terms of our focus area we have currently what we are doing is we are building capabilities to address the global demand making India for rest of the World. Right. Uh, uh, so when we are choosing the target segment. Right. Like I spoke before, uh, we have seen a great uh, value that we have been able to deliver to the OEMs in the past. We are very focused on the tier ones and the tier 2 so who don't have access to the uh, country and we have.

Speaker B: So when you say tier ones and tier twos, can you give a sense of like what size of revenue we're talking about or what kind of uh, um, where in the value chain they are?

Speaker A: Sure. Now these are uh, something we call as mid market companies in the US and Western Europe. Uh, they range anywhere between $100 million to a couple of billion dollars in terms of revenue. Those are the companies which are our target segments. Even the current customers that we have, uh, fit into that particular space.

Speaker B: And for perspective, how much does Boeing do? Uh, an annual revenues?

Speaker A: Oh, they run into tens of billions of dollars.

Speaker B: Right. Okay.

Speaker A: So we are focused on those big market companies who are between 100 million to a couple of billion dollars. Right. In terms of uh, scale and size.

Speaker B: And the pain point is that you want to give them the talent plus tech from India, from emerging markets, basically. Okay, okay. Um, are you able to get them to trust uh, Indian manufacturing, uh, um, instantly or I mean you think that there's a lot of m, you know, a lot of effort that we need to put to sort of brand India better?

Speaker A: No, I think, uh, if you see uh, Roshan, we have a very good name in the world for the IT services that we provided. We need not go and prove uh, anything to anybody while we are working, asking work for an it. But yeah, in the aerospace manufacturing things are very different. We're still a very nascent player. So there are a lot of concerns that people have. Some of them are perceptions, but some of them are also uh, based on bad experiences that they had in the past. Uh, again, still, uh, when we talk about aerospace manufacturing in India, there's a little bit of consciousness around, uh, will they be able to deliver good quality? Will they be able to deliver on time? Are there commitments, uh, up to mark? So those, those are some of the things that we still uh, fight with, uh, at this stage of our journey. But again, uh, that's where we want to really change the dynamics of manufacturing in India. How do we start making this more reliable for our customers? See, the mantra is very simple. How do we deliver conforming parts consistently on time? As long as we are able to do that, we have a winner here.

Speaker B: Okay. Okay. And I mean I would assume that you have some concept of a POC or something like that. Right. I mean where you pick up part of a certain contract or ah, scope and then, and then build upon that and get a wider sort of a contract from these folks.

Speaker A: Generally what happens is there is a lot of pre work that ah customer uh does before awarding uh any contract to manufacturers uh here or anywhere in the world for that matter. There are some of these basic certifications like your AS9100 certification and other basic settings that you need to clear with. Second thing is then also customers perform a extensive audit uh uh, uh on your quality management systems to understand if you're able to adopt the process that are mentioned as 9100 properly on the factory will we be able to deliver conforming parts uh as per the specifications provide them. So these audits go through. Once these audits are go through then then they sort uh of most of the time give you a sort of a sample uh requirement and try and observe your performance on it. And once you are able to demonstrate your performance then they scale uh with you.

Speaker B: Right. With all of this push for make in India. Right. From the government and the policy makers and so on. Yeah. Has it become easier for you to operate in the space now?

Speaker A: No, I think see uh, the push from uh government is definitely helpful. Uh uh, so some of the work that's being done under the make in India program for the last decade or so has been really helpful for the growth of the industry. If you see today a lot of growth in India in this sector actually happened in the last uh 10 years. There's lots of push for indigenization. Making India atmanirbhar Bharat. That's definitely helping the uh defense uh sector. Of course once there's capability that's underlying capabilities that's formed uh for the defense needs. The same capabilities can also be used to uh, uh, cater to the demands of the commercial aircraft industry.

Speaker B: What do you think we need to do to sort of grow the ecosystem? I mean of course the few things you mentioned like capital for instance. Uh. Right. But is there anything else from a policy perspective? I mean because manufacturing um, has this perennial problem with being over regulated. Right. I mean you have tons of compliance to deal with and so on. Yeah. Um, is that one thing, I mean anything else?

Speaker A: I think there's been significant progress that's made by the government in the past few years which is definitely helping the industry. But of course there's a lot more to be done. Uh uh, making infrastructure available like industrial Parks that are built by the government and made it easily accessible to some of the SMEs and the startups in the country, uh, making the capital easily accessible. Affordable capital easily accessible. And a lot of policy decisions that the government if uh, they can help us do faster execution. I think those are few things that can really help the startups uh, get along quickly.

Speaker B: Yeah, I mean um, especially in the U.S. right. I mean you have this concept of like the um, industrial war machine per se. Right. Where literally the likes of Lockheed and so on are kind of adopted by the state there to sort of uh, get these contracts and develop capabilities and deliver and so on. Right.

Speaker A: So.

Speaker B: So um, yeah, I mean it's about time I suppose that we start adopting a few of these companies and if not companies, I mean start like favoring these uh, uh, uh, industries and ecosystems as well. Um, right. So yeah, interesting. Um, one thing I want to talk about was on the investing bit of things, right? I mean Typically when VCs do come in, I mean they kind of expect that hockey strict sort of uh, growth rate. Uh but this is kind of uh a slow burn industry in that sense. Right? I mean you may get a contract which is like a few million dollars, uh but it may take about two years to close. Right. So how do you convince VCs to sort of fund your startup in this?

Speaker A: No, I think uh, what we have observed in the past few couple of years is there's a new grown interest among the VC community as well in the uh, sectors like uh, uh, manufacturing, uh, uh, space, etc. So we've seen a lot of interest from the VC. They also understand the needs of the industry right now. You're absolutely right. This is an industry where the gestation period is very long, the sales cycles are very long but however once you are able to get into a contract your abilities to scale is also high. Uh the generally the contract sizes are larger, uh, the contract time is longer so it's more sustainable uh, business. But of course VCS also need to understand that uh, patient capital is required uh, uh, for the growth of this particular but uh returns in terms of risk of returns they are far more uh, efficient and uh, highly likely when compared to uh, other uh, industries.

Speaker B: Right. I, I suppose, I mean they need to have a wider horizon. Right. I mean you can't do the typical 8 year or 10 year. Right. Fund um, for aerospace specifically. Um. Right. Okay, cool. I think we've covered like a broad area in terms of the product, the tech and the business uh, and especially the space as such. Yeah, let's do a quick rapid fire, if you will. Right, so, um, what is one futuristic technology that you're super excited about that will really impact your industry? Right? I mean, could be 3D printing or AI or something else.

Speaker A: No, I think in the manufacturing space definitely, uh, 3D printing AI will uh, do a lot of uh, things going into the future. But one thing I'm personally excited about is the supersonic civilian aircraft. Uh, so that's something that I'm quite excited about.

Speaker B: Okay, Is that on the, I mean, is that, has it started playing? Is that on the horizon? I mean, because I've been hearing about it for quite a while.

Speaker A: It's on the horizon. There are companies who are making efforts in that direction. There's a company called Boom Aerospace in the, in the US who is making supersonic civilian aircraft. Again, still, still not fully operational.

Speaker B: But for perspective, I mean, let's say, I mean if I were to fly Bangalore to Hyderabad, how fast can I get there? I mean it's already 30 minutes.

Speaker A: It's actually quite uh, close. I mean I believe you should be able to do London to New York in maybe four hours.

Speaker B: Wow. Okay. Insane. Uh, if you had unlimited budget, right. M for aerospace as such, what is one of the first things you'll build?

Speaker A: I think there are a couple of things that I would think about. One thing is how do we um, help materials industry that would grow in the country, uh, making it more accessible and affordable for manufacturers in the country. And second thing is if you're able to build a next generation fighter aircraft completely out of India.

Speaker B: Yeah, that would be super amazing. Yeah, we're talking at a time when the aerospace aeroshow is happening in Bangalore. So yeah, let's fingers crossed for that. Um, what is one misconception that exists about your industry that you want to clear?

Speaker A: Uh, see again, a, uh, lot of times, again, uh, this comes from uh, a lot of people who are not very familiar with the industry. See, generally when you talk about aerospace, you think about uh, rockets, satellites, etc. Right. But this is a very, very deep industry. Uh, there are many other things that happen today. There's of course rockets, there's satellites, there's aircraft, there are EV tours, there are new age flying vehicles like we spoke. Uh, of, uh, and of course this is just at a super, uh, official level. Right. But there are underlying capability. There are component manufacturers, patient machining material suppliers, there are mills who are supplying materials. Again, it's a very deep rooted and very wide industry than it's presumed to be generally.

Speaker B: Right. Okay, what is the most optimistic case for us to have like a Boeing or an Airbus out of India? Like how many years you think it'll take?

Speaker A: See, it's just difficult to answer. Uh, again, in the effort that we have put in the past few decades or so, now we have a indigenously made fighter aircraft in form of LCA Tejas that we are doing in. But again we took a lot of time but building a uh, commercial uh, aircraft, uh, original transport aircraft, that's something that we are uh, working on in the country, would uh, be an amazing achievement for us. But again, I think maybe a decade or so. Uh, but again the thing is it's not about competing with the likes of Lockheed or the Empress of the World because we are coming from a completely different starting point. Right. I mean these are the companies that have been built for several uh, decades or maybe 100 years in the past. We are starting from a different uh, uh, level and different vantage point. But we are able to uh, build a regional transport aircraft for the country. Uh, for a country as big as India with so many tier 2 and tier 3 cities growing, that will be an amazing uh, achievement for us.

Speaker B: Right. And I mean on that note, is there like knowledge sharing between different uh, entities here in India? I mean, let's say, I mean, so do you guys like interact formally with the fo, assorted Ministry of Defense Defense or you know, some of the other research institutes and so on?

Speaker A: Uh, there's uh, there are very few structured formats during which there are very few structured formats which are there to help these conversations. Uh, however, there are few unstructured forums that happen where we meet the industry colleagues and talk about the, this thing. However, I'm very happy to share there's a aerospace, uh, industries association that's very formed very recently wherein they're trying to put together all the manufacturers in the country together, uh, to just to enable this knowledge sharing and providing the capabilities and capacities as a forum that we can offer from the country to the rest of the world. So that's being done. That's something which is very positive in this uh, direction.

Speaker B: Amazing. Um, you know, we've spoken about plenty of different aspects of the space in which you operate. Right. But if a young person, uh, perhaps a graduate engineer or still in college is listening to this. Right, yeah. And they want to start up in this space, what are like some two or three pieces of advice that you would say? What is a good starting point for them?

Speaker A: No, I think uh, like we Spoke J Aerospace. But no, that would be an amazing thing too. We are building, we are building an amazing organization. I think, uh, one of the first smart factories that's ever built in the country in this space.

Speaker B: Uh, but let's say if I want to found a company in this, I want to start a company. Right? I mean like what is, what is the three pieces, pieces of advice that I have to.

Speaker A: I think we briefly spoke about it, uh, choose the focus area that you want to be in also, uh, see where you can be. We have a saying internally where we say how do you do anything is how you do everything. So choose your focus area where you can be best at how you can build capabilities there and then start offering uh, again what my belief is that we should not be harping on labor arbiters that we uh, get in the country. We should start building the products which are as good as made anywhere in the world.

Speaker B: Yeah.

Speaker A: So, uh, any young entrepreneur or any young kid out of the college should focus on how do we build the best product that we can offer to the world. So find the right uh, problem statement and be very focused about it.

Speaker B: Right? How do they find that problem statement? Right. I mean if they're, you know, if they don't have the benefit of like in your case or Vishal's case of being in the industry for about 10 or 12 years.

Speaker A: Right.

Speaker B: Um, like how do they pick a problem that is worth solving today, unlike

Speaker A: before, there's a lot of content that's available. Uh Roshan, there's a lot of reading, listening than one can do some podcasts like these, talk to industry experts. There are being forums also that are created. For example, attending Aero India would be a great uh, start for one, uh, in India. Right. Uh, because everybody in the world is here. You can go see what's happening in the industry. Who are the manufacturers, what are the new technologies. Some of these forums will definitely rise, uh, the interest levels and then choosing the right academia to do certain specific courses to move in this direction will also help.

Speaker B: Well, let's say you have like seed fund money, right. And you could actually like give a, I mean fund a startup or something. Like what are some two or three ideas that you think are fundable right now?

Speaker A: I think also from a uh, aerospace, uh, industry perspective, I think there's lots of growing interest in the manufacturing. If somebody can figure out a

Speaker B: right

Speaker A: product market fit for aerospace industry in the additive space, that would be very interesting.

Speaker B: Interesting. Okay. All right. I mean uh, this was fun. I mean I think this is perhaps the most number of questions I've asked on a podcast. I mean, there's just so much of interest in this space, um, and it is so nascent. And also I feel like it's so integral for us to, you know, grow into a developed country and economy. Um, so thank you so much for being on the podcast, uh, Venki. I mean, this was a lot of fun chatting with you and of course we should do a follow up sometime.

Speaker A: No, no, definitely. Thank you, uh, Roshan, for having me here. It was super exciting to chat with you and of course the questions were very deep, very knowledgeable. Uh, I had fun having this conversation as well.

Speaker B: Awesome.

Speaker A: Thank you.

Speaker B: All right, folks, uh, thank you for joining us on this episode of the Startup Operator podcast. Um, I'll be back with another interesting founder and startup very soon.