How Dynamatic Technologies CEO Udayant Malhoutra has transformed India’s aeronautical sector
Malhoutra has transformed Dynamatic Technologies from making hydraulic pumps into a key global suppliers of complex parts to Airbus, Boeing.
Udayant Malhoutra was all of 20 then and his family had called him to Bengaluru to take charge of the company which made hydraulic systems and was owned by his grandmother and a family friend. Over time, he did not just drive the company out of its indebtedness but also went on to being considered the most dynamic man in India’s aeronautical sector.
Over the past several years, the CEO and founder of Dynamatic Technologies has transformed the company from manufacturing hydraulic pumps into one of the main global suppliers of complex parts to Airbus, Boeing and Bell Helicopter.
“Sometimes there were no roads, but we drove on,” says Suresh Naidu, the company’s head of asset management, recalling the early days. “We travelled wherever there were tractors. We met and trained village mechanics. We were pioneers in the tractor spares trade.”
The company later diversified into the automotive business, supplying metallurgical products to automakers. It took more than a decade to venture into aircraft parts, something that Malhoutra identified with even as a child.
“I have been making planes since I was a kid,” says Malhoutra, or Toby as he is widely known as, reminiscing about his early school days.
While in school, he took a six-month sabbatical and backpacked through Europe, working for pocket money at a pizzeria in Milan. Later he graduated with a bachelor’s degree in commerce from Sydenham College, Mumbai.
When he joined the company, he was an early adopter of digital tools, investing in research and development, computers and computer-controlled machine tools as soon as the finances allowed. In a move that came as a shock to the senior management then, he bought a horizontal machining centre in the early 1990s for Rs 2.5 crore, an amount that was more than the entire gross block of the company’s facility. But the move worked and in the first five years the company’s revenue increased to Rs 6 crore from Rs 1.62 crore.
The doors to the aeronautical space opened when Dynamatic pitched in to make prototypes of fuselage and wings for Lakshya, a remotely piloted high speed target drone system, designed by the DRDO’s Aeronautical Development Establishment.
Dynamatic has come a long way since it entered the aircraft business. It was the only company to be mentioned by Prime Minister Narendra Modi at the recently held Aero India defence show in Bengaluru that saw participation of 328 companies from 33 countries.
"Toby is an ambitious man. But he is also realistic and has a clear strategy. He went one step at a time, starting as a tier II supplier for us, and then scaling up and graduating to be a Tier1 for Airbus" said Srinivasan Dwarakanath, chief of Airbus India."It's true that we talk to Dynamatic as a team. But he is the one who sells us the vision" he said.
Malhoutra, however, shows a disdain for claiming personal credit for turning around the company, cautioning against the risks of making “movie stars of entrepreneurs”or “putting them on pedestals”.
“I can’t understand the logic behind usage of the phrases ‘so-and-so led company or XYZ-controlled firm’. It’s the company that matters, not its chairman or CEO. Also, one man can never represent a full company. I am not my company,” he says.
Malhoutra and five of his colleagues set up a small garage just behind Dynamatic’s existing plant to make aircraft parts. He says he never poached talent from the existing biggies such as Hindustan Aeronautics and DRDO but instead “cherry-picked the best on retirement”.
One of the key people to join the fold was Ravish Malhotra, already famous as one the two first men from India chosen to travel to space. The other contender, Rakesh Sharma, finally took the space flight.
“The start was so modest that it’s a wonder that we are where we are. But then our work was part mission, part passion and part vision,” says Malhotra.
Malhoutra is currently the largest shareholder at Dynamatic and its share price has risen from Rs 14 in the beginning of 2002 to Rs 2935 currently.
On its aerospace business, Dynamatic currently has a total order book of over Rs 5,000 crore which will be realised over the coming years, leading to significant increase in revenue. This business its most profitable business, with operating margins of around 30%, but two-thirds of its sales still comes from its automotive business. “Dynamatic’s automotive business gave it the scale to get into aerospace. Automotive segment for us is the milk, while aerospace is cream. We can’t let go of the milk,” says Malhoutra, dismissing suggestions that he should let go of automotive segment. Dynamatic's unit JKM Automotive produces high quality ferrous and non-ferrous critical engine and transmission components on a single-source basis for companies such as Hyundai Motor India, John Deere, Cummins, Honeywell Turbo Technologies and Ford Motor co.
While Dynamatic is growing to become one of the key successful examples of Modi’s make in India campaign, Malhoutra says the campaign is mostly about developing skills.
“In engineering institutes, they don’t teach you to make parts. They give you just theory. You learn on the job,” he says, adding that at Dynamatic top executives are mandated to lend a hand to workers at the plant “just as senior officers get into the foxholes with troops”. After his son Dushyant finished school, he made him work for eight months in the plant before getting enrolled into the Savannah College of Art and Design, one of the top design schools in the world.