Machine tools form the manufacturing base for industries ranging from automobiles and agricultural equipment to aerospace and defence. For Indian manufacturers, these markets offer different routes to growth: supplying the equipment used to make components, machining the components themselves or producing finished products. Each requires precision engineering, but brings its own demands in terms of quality, cost and delivery.
Hyderabad-based Lokesh Machines is expanding across these activities. Established by M Lokeswara Rao and operational since 1985, the company built its business around customised machine tools before expanding into automotive components and forgings. Defence offers another application for this accumulated expertise, with opportunities ranging from manufacturing small arms to supplying components and upgrading weapons already in service.
The approach reflects the founder’s emphasis on developing technology around customer requirements. “Indian machine tool companies have to invest more deeply in R&D, technology and product development. We cannot expect customers to buy Indian machines simply because they are Indian. We have to build technology that competes on performance, precision, reliability and value. We learnt this lesson through practical experience,” says Rao, managing director of Lokesh Machines.
After working at Hindustan Machine Tools, Rao began executing small orders for HMT and BHEL in Hyderabad. The first machine Lokesh built for Mahindra was used to drill and precision-finish holes in a tractor component. The principle of understanding a production problem and designing a machine to solve it continues to shape the company’s business.
Lokesh now operates across CNC and special-purpose machines, automotive components, forgings and defence. The company reports an annual capacity of more than 1,500 CNC machines, with repeat customers accounting for over 60 per cent of its CNC business. Its component operations produce cylinder blocks, cylinder heads and connecting rods, while a hot-forging line further expands its manufacturing capabilities.
Defence route
The defence business applies this experience to products with different customers and approval requirements. Lokesh manufactures the ASMI submachine gun under licence from the Defence Research and Development Organisation (DRDO). According to the company, it delivered 550 weapons to the Army’s Northern Command in September 2024, with induction following in November.
“The IP for ASMI is owned by DRDO and we have been given the licence to develop and manufacture the gun. Our contribution is making the product manufacturable at the optimal quality and cost,” explains M Srinivas, whole-time director. This defines Lokesh’s role in the programme: translating the design into a product that can be manufactured consistently. The work draws on its experience in machining and production engineering while giving the company a role beyond supplying manufacturing equipment.
The opportunity extends beyond ASMI. Lokesh supplies Advanced Weapons and Equipment India Limited (AWEIL), with Srinivas confirming that the relationship covers other platforms. Modification kits for medium machine guns provide another revenue stream. He says the programme is repeatable and that the company has already secured a repeat order. Together, these activities give Lokesh access to direct procurement, component supply and the upgrading of The broader customer base also matters in the wake of the disruption caused by US sanctions. Management says banking restrictions interrupted imports and exports, while some multinational customers and suppliers put business on hold. Domestic procurement by the Army and Central Armed Police Forces continued, however, giving the defence business an established revenue stream during the disruption.
Coordination across these businesses is now part of the management approach. “Instead of treating each vertical independently, we can identify opportunities across the organisation, strengthen relationships and create greater coordination between what the market is asking for and what we are capable of delivering,” says M Sri Krishna, whole-time director, who oversees marketing and production related to deliveries.
Lokesh’s defence expansion brings together capabilities developed across its established businesses. ASMI gives it a finished product, supplies to AWEIL broaden its manufacturing role, and modification kits offer the prospect of repeat orders. The opportunity lies in building a broader business on engineering expertise the company already possesses. Turning this diversification into a substantial second growth engine will depend on the scale and regularity of procurement, as well as the company’s ability to execute orders on time.