It will be basically an IPO, says Chidambaram

The Cabinet Committee on Economic Affairs (CCEA), on Thursday, gave its nod to a proposal for disinvestment of 10 per cent of the Centre’s equity in Hindustan Aeronautics Limited (HAL).

“The Cabinet Committee on Economic Affairs (CCEA) has approved divestment of 10 per cent equity in HAL out of its holding on 100 per cent through an Initial Public Offer (IPO) in the domestic market as per the SEBI rules and regulations,” an official statement said.

The statement said the paid-up equity of the so far unlisted company on March 31 this year was Rs.120.50 crore. Following the sell-off, the Centre’s equity stake in the PSU will come down to 90 per cent.

A five per cent discount on the issue price will be allowed for retail investors as well as to eligible employees of HAL applying under the employees’ reservation portion.

Explaining the features of the divestment, Finance Minister P. Chidambaram said it would be basically an IPO and for this purpose, the HAL board would have to be restructured.

The IPO, however, would be issued only in the next fiscal year.

At present, HAL is handling key projects for the armed forces which include the development of ‘Tejas’ light combat aircraft, ‘Dhruv’ advanced light helicopters and indigenous production of Russian-origin Su-30MKI fighter aircraft.

Alongside, it is preparing to handle indigenous production of medium multi-role combat aircraft (MMRCA) and fifth-generation fighter aircraft (FGFA), light utility helicopters and multi-role transport aircraft (MTA).

The proposal for disinvestment in HAL was placed before the CCEA in this light in view of the government's plans to modernise the company for which Rs.20,000 crore would be required over the next five years.

Meanwhile, Mr. Chidambaram pointed out that the government would decide on the 12.5 per cent stake sale in aluminium major Nalco in January after the company's third quarter (October-December) results.