A decade ago, with a corporate office in the middle-class Bharat Nagar locality, Solar Industries Limited (SIL) was — like its low-profile chairman Satyanarayan Nuwal — not much known. It supplied commercial explosives for mining projects, and to leading players globally.

Since 2010, the company has emerged as a key player in the defence segment. From making explosives for mines and quarries, it has now got technology from Defence Research and Development Organization (DRDO) for over a dozen items, ranging from grenades to propellants for Brahmos missile. In most of the cases, it’s the sole technology partner from the private sector.

With its sudden rise, controversies too have arisen, with Solar Group dubbed as a ‘favourite’ of the BJP government, and in 2015 its detonators being found with Islamic State (IS) operatives. Solar Industries chairman Satyanarayan Nuwal speaks to TOI. Excerpts from the interview…

Q. It is said that it was because of your links with the RSS and BJP that you could bag all the transfer of technologies (ToTs) from DRDO. This could be an out-of-the-way favour to your company?
A. I know politicians in their individual capacity, but that does not mean I have any political affiliation. If they say I was favoured by the BJP, then let me clarify that I got the licence in 2011, when the UPA government was in power.

Q. The issue of Solar Industry detonators being found with ISIS has cropped up again. The decision of granting contracts and ToTs was questioned on that basis.
A. It’s an old matter and we have already clarified. SIL was not alone, material from 60 different companies was found with the militia. We have units making commercial explosives in Turkey, Malaysia, South Africa, Ghana and Nigeria. Theft of explosives from the users’ end cannot be ruled out. There have been many such incidents in the entire sector. Even Conflict Armament Research (CAR), which had reported the matter, has given us a clean chit. (CAR in its letter issued in 2019 has said it does not say that SIL had carried out any illegal trade.)

Q. Do you think the system needs to be strengthened to prevent diversion.
A. We have already begun bar coding each of our cartridges meant for commercial use, both in India and abroad. This will ensure precise tracing. The practice in the industry is to just bar code the container. Despite the higher cost, each piece is being bar coded.

Q. How did you diversify into defence from being a manufacturer of commercial explosives.
A. It started in 2010-11 with a single contract to make pyros (propellant and ignition systems) for the ordnance factory. It was cleared by both ministry of defence and Ordnance Factory Board (OFB). The order was meant to fill the gap in existing supply, but it never took off. After a pause of around five years, there was a contract to make similar systems for Aakash missiles and then finally the latest multimode hand grenade. The grenades are the first ever order for a full-fledged ammunition system. The defence business is carried out under Economic Explosives Limited (EEL), a 100% subsidiary of SIL. We are the first private company to make an entire ammunition system.

Q. What is the order position for EEL at present?
A. The major order is of the multimodal hand grenades. It is under process at various stages for rest of the ammunition systems. After this, we expect to bag a contract to make Pinaka rockets. The company is making propulsion systems and similar components for Brahmos, Akash and even for satellites of ISRO.

Q. EEL is the sole ToT holder for a slew of ammunition types, from Pinaka rockets, anti-personal mines, anti-tank mines to aerial bombs. Questions are being raised how can a single company get all the TOTs.
A. Whenever DRDO or any of its labs want to share the technology, expression of interests (EOI) are invited. The private players respond to the EOIs and those having the required infrastructure at their units get the technology. Our company had applied only for the projects for which it has the manufacturing capacity. Some other companies too have got TOT for similar items but finally only EEL has developed the product. The company has technical collaboration with certain foreign players too.

Q. You have even got the TOT for the Brahmos missiles. How did it happen?
A. The propulsion system for the missiles were imported from Russia. The Russians said it was not easy to indigenize the component. However, we could make it in alliance with the DRDO and the first order was received. We expect to get fresh orders too soon.

Q. What is the investment in the defence projects and the turnover of EEL.
A. We have pumped in Rs600 crore in the defence business. However, the revenue is not more than 5% of Solar Group’s overall turnover of Rs2,400 crore.

Q. There is always a concern orders from the armed forces cannot be viable for a private player.
A.That’s true to a certain extent, which is the reason EEL has been sustaining losses so far. However, somebody had to take the first step, so we did. There is a huge gap in the current supply and the dependence on imports has to be reduced too. We hope to make gains once the order for Pinaka rockets is received. The Rs1,000 crore order can lead to profits. A major jump is expected as orders for other items under ToT materialize. It will also provide support to an entire system of ancillary industries. The export market will also be tapped eventually.

Q. How are you funding your defence venture, any plans to invest further or come up with an IPO.
A. So far the investment is being made out of internal accruals. We plan to invest another Rs1,300 crore but no IPO is planned. The fresh investments will also happen over a period of time from internal accruals only.

Q. What are your views on corporatisation of the OFB?
Corporatisation will certainly lead to competition over both quality and cost. As far as OFB is concerned, our company is too small a entity to pose any threat to such a mammoth organization. We will only be just another source of supply for the defence forces.