The planned disinvestment of Hindustan Aeronautics (HAL) is likely to be pushed to the next fiscal year, government sources told FE, citing issues regarding the company?s inability to complete vital documentation as well as the composition of its board of directors.
The Centre had planned to sell 10% stake in the Bangalore-based defence and aerospace major by March through an initial public offering worth R2,500-3,000 crore. This was to be a part of the government?s FY14 disinvestment target of R40,000 crore.
?HAL has not yet completed its draft red herring prospectus. Now they are running out of time as the market regulator takes at least a month after the prospectus is submitted to give the go-ahead for the IPO,? a senior official said.
The official also added that HAL?s current board of directors? composition did not meet Sebi?s listing requirements. ?These issues have been brought to their notice for quite some time now, but they have not worked on it,? the person said.
According to the clause No. 49 of the listing agreement, in cases where the chairman of the company?s board is a non-executive director, at least one-third of the board should comprise independent directors and in case he or she is an executive director, at least half of the board should comprise independent directors.
HAL?s chairman RK Tyagi is an executive director on HAL?s board. Apart from Tyagi, HAL has six full-time directors. It also has six part-time directors, out of which two are defence ministry officials.
Hence, only four out of the thirteen directors on HAL?s board are independent.
Calls made to HAL regarding both the issues went unanswered.
Finance ministry officials, including economic affairs secretary Arvind Mayaram and disinvestment secretary Ravi Mathur, had so far sounded confident about HAL?s stake sale being completed before March. In November 2013, Mathur had met HAL and defence ministry officials to speed up the disinvestment process.