The proposed disinvestment of shares in defence public enterprise Hindustan Aeronautics Ltd. (HAL) could be picking up speed with the Secretary, Department of Disinvestment, Ravi Mathur, presiding over a high-level review meeting with the company’s senior management here on Friday.
The process for the initial public offer (IPO) may roll out in January 2014, so that HAL might get listed on the stock exchanges by March 31, 2014 as planned, it is reliably learnt.
The meeting thrashed out certain concerns about allowing the military aircraft manufacturer to be publicly traded on the bourses ahead of finalising the public offer documents, The Hindu learnt.
In view of the sensitive and security-related nature of HAL’s business, the meeting is learnt to have favoured excluding foreign financial institutions from buying HAL’s shares and limiting this to small and big Indian investors. Apparently, there are also other issues, such as possibly seeking exemption from stock market regulator SEBI (Securities and Exchange Board of India) so that military-sensitive information need not be disclosed in the offer document or later.
Publicly traded companies are required to be transparent about their business. Two other defence PSUs - Bharat Electronics Ltd and BEML Ltd - also based in Bangalore, are trading on the bourses for several years. BEML came out with a follow-on or second offer in 2007.
Besides HAL’s executives, the meeting was attended by a few senior officials of the Ministry of Defence which governs the company, military officers, merchant bankers and the legal team who will handle the IPO.
The Bangalore-based company licence-manufactures fighters, trainer and small transport planes, helicopters, avionics and other hardware for the Armed Forces, mainly the Air Force, through its 19 divisions. It also undertakes repair, overhaul and other services for them.
For the year which ended on March 31, 2013, HAL made a turnover of over Rs. 14,300 crore and profit of over Rs. 3,400 crore. Its modernisation plan for the period of 2010-20 anticipates an expenditure of Rs. 20,000 crore, part of which is to be offset by the amount coming in from the divestment.
The latest development comes almost a year after Cabinet Committee on Economic Affairs cleared the disinvestment. As on March 31 this year, the paid-up equity of the company that is fully owned by the government was Rs. 120.50 crore.
Keywords: HAL divestment