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Despite being among the small number of space powers in the world, India has very few entrepreneurs who have built companies recently in this domain.

When it comes to building a good international business, this number reduces to nearly one, if you exclude those who have minor contracts. The lone exception, however, was created just six months ago, when a Hyderabad-based space entrepreneur decided it was time to go international. What Subba Rao Pavuluri then did was inconceivable even a year ago: he took the first steps towards becoming an international satellite operator, by signing a $300-million deal (about Rs 1,800 crore) with Russian company Reshetnev Information Satellite Systems.

Pavuluri is a hardened space entrepreneur. He was a former employee of the Indian Space Research Organisation (ISRO), the government's primary space agency, and had set up two companies in 1993. One was to sell value-added remote sensing data, and the other, Anant Technologies, to develop avionics for ISRO launch vehicles.

In 2011, he set up one more firm, AOneSat Communications, as a joint venture with the Swiss group INDEN. Anant Technologies participated closely in the moon and mars missions of ISRO by building satellite components. It is now a large company with 1,200 employees, 400 engineers and sophisticated facilities for space engineering. But the 62-year-old Pavuluri had an overarching ambition.

"We want to become one of the largest satellite operators in the world," he says. Becoming a satellite operator from India is not easy. ISRO, the dominant player in India, does not give this job as a package to others, and so Pavuluri followed the next best option: build, own and operate satellites himself. AOneSat will do the system design and engineering for its first satellite, which will be built in Russia and launched by a Russian rocket over the Americas in 2016.

He has tied up the financing for this venture through exim (export-import) banks of various countries. AOneSat is already working on another satellite to be launched over the Americas, and a third one over the middle-east and India. The international satellite services market is expanding rapidly, and there is good busi-ness to be done. "India's strength is the ability to churn out technology at a competitive price," says Aman Pannu, global consultant, aerospace, defence and security practice, Frost & Sullivan, a consultancy.

ISRO As One-Stop Shop

While Pavuluri builds his international business, his former employer isn't keeping quiet. ISRO's commercial arm, Antrix Corporation, has been increasing its business steadily in recent times. Last year, it grew by 10% to `1,295 crore. It is expecting to close at roughly `1,500 crore this year, a growth of 15%.

Antrix is now looking for a jump in business that will take it to the big league quickly, to 3,000-4,000 crore, in the next few years. According to its officials, this isn't difficult to accomplish, as Antrix has one capability that no competitor has.

"Antrix, operating through ISRO, is the only company in the world that can become a one-stop shop in this industry," says V S Hegde, its managing director.

The company has had one such jump in its history, about 10 years ago. Antrix—a company 100% owned by the government of India—was set up in the early-1990s to transfer ISRO's technology to industry as well as channel private participation into the agency's space programme. Later, it started selling remote sensing data— used for applications like natural resource mapping and planning—from ISRO's satellites through its resellers around the world.

In 2001-02, Antrix had revenues of only Rs 42 crore. It went up to Rs 100 crore the next year, and over Rs 300 crore in 2003-04. This jump in business happened when ISRO started leasing its satellite transponders— a device that gathers and transmits signals back to earth—to private companies.

Its future rise in revenues, likely over the next few years, will come when it increases its satellite launch services. It might take a big jump when it decides to build satellites for overseas companies or countries, probably in the near future.

For building these satellites, Antrix can either use ISRO's spare capacity—what is left after meeting national needs—or set up facilities of its own.

Business Of Satellites

ISRO has so far launched 35 foreign satellites, all through its workhorse rocket Polar Satellite Launch Vehicle (PSLV). With 25 consecutive successful launches, this vehicle has built a reputation around the world for its reliability. PSLV has been continuously upgraded in its two-decade history, and now comes in three variants.

Although its name suggests launch capability for polar orbits (orbiting pole to pole), it is now an extremely versatile launcher that can do much more. A recent upgrade in its avionics makes it good for any kind of orbit: polar, equatorial (over the equator), or low inclination (close to the equator). It is good for moon shots or mars missions, provided the payload (weight of the satellite) is small enough.

Then, there is ISRO's latest rocket, the Geostationary Launch Vehicle (GSLV), which had one flawless launch two months ago. It needs two more launches to soothe the minds of potential customers, but enquiries about GSLV have already started coming ISRO's way.

Apart from the cryogenic engine, the GSLV is built mostly using tested components from the PSLV, and so there is no reason to suspect that it will be anything less successful. ISRO is also currently developing its next version of this rocket, the GSLV Mark III. These rockets together will give the organisation a good range of capabilities that should be enough to launch satellites weighing up to four tonnes (4,000 kg).

Making and operating satellites constitute about 60% of the global space industry industry.

The global satellite market is growing at a good pace now, and this growth is expected to continue for a long time. Frost and Sullivan estimated recently that 1,213 satellites will be launched between 2012 and 2021—a growth of 26% over the preceding nine-year period. Of this, 355 will orbit over Asia-Pacific, servicing businesses and facilities in the region; the region also shows the largest increase in satellite traffic.

Many of them will be small satellites, sometimes weighing as little as a few kilograms. In fact, ISRO has launched a satellite that weighs only 1 kg. Although the launch costs are not substantially lower for India, as compared to other countries, the development costs are quite low. No satellite builder has launch capability, and so ISRO can build a package that is nearly unbeatable in the global market. It would mean substantial revenue not just for Antrix, which pays ISRO for costs and deposits the surplus with the Space Commission, under which ISRO operates.

It is godsend for public and companies working with ISRO, who will otherwise find it difficult to crack the global space market on their own.

Private Ride On ISRO

When ISRO began its operations in the 1960s, its leaders quickly took an important decision: to involve industry right from development. Over the last four decades, this has led to the development of a flourishing industry consisting of over 400 companies.

Some of these companies have built a solid technology foundation, and are now getting more ambitious and looking to move on to larger projects in this area. Some of them—Godrej and Boyce, L&T Aerospace, Walchandagar Industries— have used this foundation and gone on to build larger businesses in defence and aeronautics. Most of these companies look at space as a small but highly specialised business that is useful as a stepping stone to larger businesses. While the space engineering skills will continue to provide expertise that is useful in defence and aviation, the space business itself could expand if ISRO decides to ramp up in a big way.

Consider L&T Aerospace, for example. L&T began its association with ISRO early, making segments for the Satellite Launch Vehicle. Currently it makes these segments to enclose the solid propellants for PSLV and GSLV. Recently, it has started doing manufacturing as well as pressure testing for these rockets. The next step for the company, which it wants to pursue intensely, is to integrate these segments.

This integration is currently done by ISRO. To do this job, L&T needs to set up extensive facilities. "These facilities are not always required," says MV Kotwal, president ( heavy engineering) of L&T, "but there are other opportunities with them."

L&T and other companies have enjoyed spin-off benefits from space for some time, and they will increase over the years. Building a satellite system provides spin-offs in military radars. Making satellite structures helped it to work with the Brahmos missile. It is now setting up wind tunnel facilities in Thumba, Kerala, but might use it for the Defence Research and Development and Organisation (DRDO) as well.

Amidst all this, L&T is hoping to become an integrator that works with other companies and puts their components together. It is precisely what ISRO also wants its partners to do, but it could take some time.

Godrej and Boyce, to take another example, makes engines for the PSLV and GSLV. One GSLV flight would involve, for the company, five Vikas engines in full and a cryogenic engine in part. According to the 12th Five Year Plan (2012 to 2017), ISRO is planning 40 launches, which translates to over 200 engines. An increase in launches would obviously mean larger business for Godrej Aerospace (part of Godrej and Boyce), but there are other plans in the air as well.

There are early talks about setting up a special economic zone (SEZ) near the Satish Dhawan Space Centre (Shar) at Sriharikota, Andhra Pradesh. There are plans to set up a separate entity to do international and domestic space business, leaving ISRO to focus on research. "We have to look at the overall market before setting up a separate entity as we need volumes," says ISRO chairman K Radhakrishnan.

An organisation or company different from ISRO—with the exclusive mandate to do business—can accomplish many things for domestic industry. At the moment, ISRO's partners work exclusively for the space organisation. There are demands for the technology from companies outside India, but ISRO owns the intellectual property and so companies cannot use them for other business.

Even if ISRO allows them to use the intellectual property, setting up infrastructure is a big issue for companies. "Setting up infrastructure for small volumes is not competitive," says SM Vaidya, executive vice-president of Godrej Precision Systems. ISRO has the infrastructure for a lot of the engineering and testing, but does not have the human resources to take on additional work.

This is where a separate entity is expected to help. Antrix itself can moot the idea, which will involve private companies for manufacturing and ISRO for technology. Radhakrishnan's own aims lie in this direction, as it would free ISRO to focus on its original goal: research. The next few years should bring in this change, which will finally remake ISRO true to its name: a space research organisation.
(By: ET Bureau)

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