Govt approves divestment of 10% stake in HAL

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SummaryThe government has approved the disinvestment of 10 % equity stake in the state-owned Hindustan Aeronautics Limited through an initial public offer.

The government has approved the disinvestment of 10 % equity stake in the state-owned Hindustan Aeronautics Limited (HAL) through an initial public offer (IPO).

The decision was taken by the cabinet committee on economic affairs (CCEA) at its meeting held here. Currently, the government holds 100 % equity of the company, which has a paid-up capital of R120.50 crore. Briefing reporters, finance minister P Chidambaram said it would be basically an IPO and for this purpose, a restructuring of the HAL board will have to be done. He said the IPO would be issued only in the next fiscal.

"Five percent discount on the issue price will be allowed for retail investors as well as to eligible HAL employees applying under the reservation portion," the CCEA said in a statement.

HAL is a schedule-A Navratna company that comes under the central public sector enterprises and is administered by the defence ministry.

The government had set up expert groups under former cabinet secretary B K Chaturvedi and is awaiting its report for suggesting measures for strengthening the restructuring plan.

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

It is also preparing to handle future projects such as the medium multi-role combat aircraft (MMRCA) and fifth-generation fighter aircraft (FGFA), light utility helicopters and multi-role transport aircraft (MTA).

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