Ford’s exit is a recent issue. Here’s how the journey has been:
I am assuming that between 2018 to 2019, the product was being improved after which Covid came and then Ford’s exit.
However, this does make me question DCM’s approach and I have concerns over this collaboration. Ford’s good with the SUV segment but the armored vehicles are a different dimension altogether and not just an upgraded SUV.
- Ford is not new to defense sector
- What happens when SUV’s are poorly remodeled as armored vehicle
My guess with this tie-up is that Ford is providing their SUV expertise while DCM is remodeling the vehicle. This isn’t new and companies often use Ford’s trucks as a base for such projects (Reference). You can also read their last AR - they explained some details there @nav_1996
These are the open questions I still have:
- Why defence: Why would DCM choose to enter defense space? Why not expand agrochem or look for distillery space or perhaps something the management has experience in?
- What’s the end goal: Is company shooting blind? From armored trucks to drones, the company has been doing everything at once. Each of these is a very specialized segment. Why not focus on one and use the available resources on one segment → achieve something (or at least discard) → then move to other? It’s not like the company has thousands of crores to burn
- Speed of execution: Speed of execution is quite important in a technology-driven space. You cannot sell 3G systems if 5G is invented. You cannot make big in Mach 1 anti-missile systems if the world is moving towards hypersonic missiles. Have been tracking some other companies. Let’s call them company X and Y (not taking any names). Company X started making anti-drone system somewhere near Covid and have had much more success than DCM. Company Y has entered the autonomous drone space in the last 2-3 years - and has been making much faster progress.
Defence equipments are technology-driven and it may be very wrong to compare each of these companies. One feature can change the timelines and success. However, I do see that the other players were able to execute during Covid while DCM is still offering no clarity.
If my understanding is correct, the company should get small defense orders over the next few years. I continue to have concerns about the scalability of DCM in the defense sector. I am living with the hypothesis that the management will start to offer some clarities after Q4 or post-election.
Disclaimer: Invested (PF sizing here). This is not a buy/sell recommendation. I may add/sell anytime. Do not have any insider information and my views may change.