Power of I 2019

Ceramic Warrior

This little-known firm, which started by making egg trays, has bagged the biggest bulletproof jacket order from the ministry of defence. What made it successful?

Vishal Koul

How often do people get to make products that are worshipped, literally? Ashish Kansal is therefore rightfully excited narrating the story of a happy customer. “At the Defence Expo 2018, I was approached by a commando who had been shot with two bullets in 2011, one on the chest and another on the hand. While the hand was ruptured, there was not a scratch on the chest, which had been protected by our bulletproof vest. He has kept a photo of this vest in his pooja room at home,” says the 39-year-old executive director of the Delhi-based SMPP. 

The small firm found itself under the spotlight in 2018 when it bagged an order of 186,000 lightweight bulletproof jackets (BPJs) from the Ministry of Defence. The total order amounts to Rs.6.39 billion. This defence products’ manufacturing firm was founded by Ashish’s father SC Kansal in 1985, and has a production facility in Palwal (Haryana) near Delhi, staffing over 400. The firm also manufactures other defence products such as combustible casing ammunition and green packaging, which is cellulose-based packaging that does not use plastic or polythene.

But what differentiates SMPP in the defence space is its capability to manufacture a type of ceramic called boron carbide. It is the third-strongest and one of the lightest materials known to mankind, and the primary material used in modern BPJs.

The history of BPJs has been largely about finding the most effective and lightweight material. Since the 1500s, armies have experimented with reinforced metal, interwoven silk and layered hard cotton. In 1971, they settled on Kevlar, discovered by DuPont’s Stephanie Kwolek and made of synthetic fibre and layered enough to have 5x the tensile strength of steel. In the early 2000s, ceramics such as boron carbide came to be preferred for being stronger and lighter. Globally, only five companies including SMPP have the capability to manufacture this.

Interestingly, SMPP didn’t start off as a defence manufacturing firm. The senior Kansal had no intention of building a defence-supplies business when he set up the first unit in Sangrur, Punjab, which manufactured cellulose-based packaging material for eggs and fruits. The idea for this business took shape while he was still at IIT Bombay, doing his PhD in chemicals, way back in 1973. His topic of research was “Making pulp out of hardwood”. While his batchmates wanted to become scientists and teachers, Kansal was always keen on business. “It was unusual for that time,” he says. 

He worked in chemicals-related businesses, in private and public sector firms such as Sehgal Papers and Punjab Poultry Corporation, to get familiar with the sector before heading out on his own. “I gained ample experience of putting up a factory and running it, after working in various positions from an engineer to manager,” he says. Kansal decided to set up a unit to manufacture moulded trays for fruits and eggs, made from pulp. 

Till then, they were packaged in husk, which, he says, resulted in bruising 30% of the goods transported from Shimla to Delhi. He used the seed capital and subsidies he got from the Punjab government, and designed his own machinery. When the business grew and he needed more capital, he became a machine supplier too. 

In 1990, he got a call from Defence Research and Development Organisation (DRDO) that changed the course of his career. A few of the officials had read a paper he had published at IIT Bombay, about cellulose derivatives such as cellulose acetate and cellulose nitrate. If the nitrogen content in the latter goes up to 13.4%, it becomes explosive grade. So, inadvertently, he had stepped into the field of explosives.

Material advantage

Would he work on combustible cartridge cases, an application of explosive grade nitrate, for the Indian Army? It would have deterred any ordinary person, but not Kansal. He did many rounds of trials-and-errors in his Sangrur factory and developed the dyes and machine prototype for manufacturing the cases in 1990. He was given his first order immediately. The combustible case has several advantages over the conventional brass case — for one, it weighs a tenth of the conventional case and barely leaves any residue after burning out in a fraction of second. It increases performance in high-pressure gun systems, shortens the weapon’s cycle and reduces crew fatigue.

The product was certainly useful from a defence perspective, but as an entrepreneur, Kansal had to take a huge risk. “The order was of Rs.10 million but the investment in setting up a plant was much bigger at Rs.25 million,” recalls Kansal. He needed a bigger facility and a safer one, since Punjab was turbulent in the 80s and 90s, and shifted to Palwal in Haryana. 

Initially, Kansal started with manufacturing ammunition for T-72, T-90, and Arjun Tanks in 1991. The products were met with resistance in the Army since the soldiers were used to brass cases. But thanks to APJ Abdul Kalam, the-then DRDO secretary, Kansal’s product was mainstreamed. Between 1991 and 1995, it was a period of trial and error, and the order flow was slow after it was introduced in 1996. But in 1998, SMPP was given a national award for developing this ammunition in India and then the situation improved. In 1999, when Pakistani soldiers were detected on the Indian side of LoC, the Kargil War began and SMPP emerged as the sole supplier of combustible cases to the forces. 

Things were working out well for the company when a surprise dip came in 2004. The Indian government in 2005 opened up the defence sector to foreign direct investment (FDI), where foreign companies could invest with an Indian offset partner. While other domestic private players began growing, SMPP’s orders became less frequent. “For whatever reasons, India suddenly began to buy combustible ammunition from Israel. By 2007-08, the ammunition order pipeline dried up completely,” says Ashish who joined the business in 2003. 

He had completed his textile engineering from IIT Delhi and Masters in Fiber Engineering in the USA, and had also taken lessons in ceramics. “Once at IIT Delhi, we lost a very small piece of Kevlar fabric, and 20 of us kept looking for it for half an hour. It was so valuable,” he says. That incident left a deep impression on him and, when it came to expanding his father’s business, he knew the future was brighter in the bulletproofing space. 

By 2004, Kevlar wasn’t as hard to get. What was more in demand in the bulletproofing space was ceramics. “We could either buy the technology or develop it. Buying would give us the know-how but not the ‘know-why’, so we took the relatively tougher path of developing capability in this space,” says Ashish.

For four years, he did extensive research and invested Rs.100 million, from the company’s kitty and personal funds. Normally, companies do the R&D in labs and then figure how to scale it up. However, SMPP did the research with production scale machinery. To test the results, the team headed to advanced labs in the US, UK and France.

By 2008, they had fine-tuned their technology and SMPP now had its own boron carbide ceramic product. While Kevlar-based vests could stop 9mm bullets, boron carbide vests could deflect the more lethal kind such as those fired from an AK-47. It had become ‘the’ choice outside India; even the US Army had been using it. But the domestic market was not ready for it. 

The Kansals had not planned to make the vest, even when they mastered the material-manufacturing tech. But it was a not-so-charitable remark made by an “end user” that fired up Ashish. “I remember this one meeting, where that person said that the only reason we were selling this material was because we couldn’t make a bulletproof jacket like existing players. We took that as a challenge,” he says. “We understood that we cannot maximise the true potential of this market unless we made the finished product.” And that is how the vest came out of the factory in 2009.

A year ago, the deadly 26/11 attack had taken place in Mumbai, and the state police was looking to add muscle to its inventory. SMPP’s new vest was on time and the company was asked to deliver 100 jackets. “Even a 50-jacket order was considered big at that time because there was no market,” says Ashish. One piece could cost anywhere between Rs.10,000 and Rs.200,000, depending on the weight the wearer would carry. Simultaneously, SMPP got a 1,500-jacket order from Assam Rifles and since then, orders started flowing in steadily.  

In 2013, the company faced another setback. The Defence Ministry floated a tender for bulletproof jackets and, while the other companies lost in the first 20 bullets, SMPP’s jacket missed the finishing line at a grasping distance. The jacket gave way before the last two bullets were fired of the total 395. “It was sheer hard luck because two of our three sizes passed,” says Ashish, the loss still resonating in his voice. The Request for Proposals (RFP) call was scrapped by the government since no company could meet the requirement. The Kansals revisited the product, fine-tuned it, and when the RFP was floated again in 2016, they got their big BPJ catch in 2018. SMPP has three years to fulfill the order. 

The lifesaver

The technology development they invested in had paid off. In this tender, while SMPP offered to supply at a price of Rs.6.39 billion, their nearest competitor was asking for a much higher Rs.10 billion. This, Kansal says, was because they do not have to buy the material from outside. The technology also places an entry barrier for newbies, who would need to invest in a rigorous and long-cycle process to catch up. “It requires a deep understanding of ceramics,” says Ashish. 

By making boron carbide themselves, SMPP can also experiment with new products. Last year, the company developed a helmet that has no joints, for the forces. They developed circular ceramics especially for this product. They got an order of 50,000 for the new no-joint helmets and have already supplied close to 100,000 general helmets to various forces such as CRPF, NSG and BSF. They expect to make Rs.500 million from helmets this year. 

One criticism the company faced was that they were sourcing the chemicals from China. “We have no choice,” says Ashish, adding, “if we buy from Europe, they will buy it from China and sell it to us.” Whatever the critics say, there is no denying the difference they have made for the Armed Forces. Retd. Col Deshbir Singh, who has commanded combat operations against insurgents, says that till about a few years ago most of the bulletproof jackets were imported. These were designed keeping in mind the threats perceived in those countries. “The shapes and sizes were also not customised to meet the requirements of Indian soldiers. Since an Indian soldier has to operate in various terrains such as desert and semi-desert regions, jungles, plains, low and high hills, and mountainous and high-altitude terrain, a single foreign company could not meet all the requirements,” he says. 

Retd. Col Safdar Zafar adds, “The company has changed the shape of protective ‘hard and soft armour’ plates to shape it close to the chest, which is a very effective change from the square design of foreign suppliers. This increases the protective area of the body.” Zafar adds that with their better technology and ergonomics, SMPP’s jackets weigh half as much as imported ones and that helps in better movement. “For example, their ‘weight balancing technology’ takes the load off the shoulders. A soldier wearing a 10 kg jacket with five protective plates feels the weight of only 6 kgs on his shoulders,” he says.

Having an Indian supplier means that user feedback can be incorporated into the design. During the terror strike at the Taj Mahal Hotel in 2008, a commando was shot in the foot when he opened a velcro-taped pocket on his jacket to take out the magazine. This has been fixed now. “We have designed flap pockets for their magazines so that there is absolute silence when they are on an operation,” says Ashish. Soldiers had also told company executives that magazines stored inside their jackets moved freely, swishing and rattling when they ran. So the new vests have elastic tapes inside pockets to hold these tightly. The minutest details and the smallest clink can mean life or death in combat. When soldiers run in the jungle, a gun hitting a heart plate in the jacket would make a lot of noise. That noise has been muffled in SMPP’s jacket too. 

The Kansals’ ability to make boron carbide has won it international clientele as well. This armour material can be used even for aircraft bodies and in 2013 a French company looking to protect its Airbus A400M (a military transport vehicle) came knocking at their door. “They selected us after two years of rigorous trials,” says Ashish. The armor panels were to be used to stop 12.7mm anti-aircraft bullets and the 7.62mm bullets, which are the two most lethal bullets. They are into their fifth year of a ten-year contract and have already kitted 55 aircraft, out of the total 100. “It has opened the European market for us. Post this, we got orders from Germany and other countries in Europe,” he says. 

Clients from New Zealand and Australia signed up too, and this time to armour helicopters. SMPP’s exports today make up 40% of its topline, by largely selling ceramics, and the company has opened an office in Israel to cater to the international markets. 

Marching ahead

SMPP has multiplied its revenue several folds in the past four years. Till FY16, the company wasn’t doing too well. Its sales hardly touched Rs.200 million in FY16, but it more than doubled to Rs.440 million in FY17. The combustible ammunition casings, for which the orders had dried up by 2007-08, came back in full force in FY17. The aggressive efforts by the new government to commission the Ordnance Factory Nalanda in 2016, which had been stalled for a decade, were a big help. “Until now we have delivered up to a million casings. The Nalanda factory has gone from zero to 200,000 rounds per year,” says the senior Kansal. 

In the following years, driven by exports and bulletproof jacket orders, it saw a topline of Rs.800 million in FY18 and Rs.1.1 billion in FY19. With their biggest bulletproof jacket order realising in FY20, they are expected to do Rs.3 billion in sales this year. Armour contributes 40% to its revenue, and ammunition and ceramics 30% each. 

The going is good but competition is catching up. Kanpur’s MKU is another player in the armour space. It was set up around the same time, in 1985, and also won a big order of 160,000 helmets from the government in 2017. But Kansals believe their material manufacturing capability gives them a healthy lead over others. SMPP also locks its horns with companies such as Tata Advanced Materials, which has the backing of the Tata Group. Kansal is not intimidated by the size of this competitor, saying that technology and the right product will determine winners in this space. 

The senior Kansal began by coming up with an indigenous solution for the transport of eggs and apples, and easily transitioned to ammunition by taking brave bets. But, he says he is not done yet. India still imports 50% of its ballistic raw material or high-performance polyethylene fabric for protective military clothes. They are largely sourced from China, Europe and the US, and no domestic player makes them because manufacturing it locally is capital intensive. But Kansal is insistent: “We want to make sure that India has 100% locally manufactured material for all ballistic applications.” It is an audacious dream, for the country and his company, but Kansal has been down this path and he plans to take another shot at it.