Firm to offload 10% shareholding; to make capital expenditure of R17,500 crore over next five-six years
Public sector defence behemoth Hindustan Aeronautics (HAL) is planning to divest 10% of its shareholding and go public with an initial public offering (IPO) next financial year. The company plans to offer 36.1 million equity shares to the public at a face value of R10 per share. However, the final value of the shares will be ascertained after the valuation of the company, which is currently going on, a top company official said.
“We have government approval for divesting 10% shareholding. We have already firmed up our plans to go public. The draft red herring prospectus is ready and book running lead managers have been appointed. The valuation of the company is currently taking place and the issue price will be fixed thereafter,” HAL chairman T Suvarna Raju told reporters at Aero India 2017 in Bengaluru on Wednesday.
As part of its disinvestment process for 2015-16, the government has bought back 25% shares in HAL valued at R5,265 crore including tax. The government sold 120.5 million equity shares in the company.
In January last year, the government had asked cash-rich public sector companies to consider the buyback option or pay higher dividends to meet the shortfall in its revenues. HAL, which has a huge amount of cash reserves, has paid R750-crore dividend to the government for FY16.
The process to divest stake in the company through a public issue was first mooted in financial year 2011-12 and its implementation began in the subsequent year. However, due to unfavourable market conditions, the government had to postpone the process. According to the HAL chairman, the process has now gathered steam and is likely to be completed during the next financial year.
Raju said the company will make a capital expenditure of R17,500 crore over the next five-six years. For the first time, he said, the company will also raise resources through bank debt to meet its investment programmes. “We will tap bank funds in the next few months to meet our funding requirements,” Raju said.
HAL has achieved a turnover of Rs 10,086 crore as of January 2017 against a target of Rs 17,100 crore for the year 2016-17, with a profit of Rs 1,621 crore. For the year ended March 2016, the company had recorded a turnover of Rs 16,736 crore, a growth of 7.4% over the previous year. Its profit before tax stood at Rs 3,288 crore.
BEL, HAL to set up Rs 50-crore defence innovation fund
Public sector defence major Bharat Electronics (BEL) and HAL are jointly setting up a R50-crore defence innovation fund. The objective of the fund is to promote start-ups in the defence sector and enable them to design and develop products for the armed forces. Both the companies will set up a joint venture company to take this initiative forward. “To begin with, both BEL and HAL will contribute R2.5 crore each and create a R5-crore fund and going forward, it will be enhanced to R50 crore. It will be operational by the end of the current financial year,” Ajit Kalghatgi, director, R&D, BEL, said at the Aero India exhibition in Bengaluru on Wednesday.
The ministry of defence will advise the proposed joint-venture organisation between the two public sector defence giants. “It is a forum for fostering innovation among the start-ups and MSMEs in the defence sector. The selected start-ups will be awarded grants so as to enable them to come out with innovative products,” he said.
There will be a knowledge partner that will handhold both the JV partners in identifying innovative start-ups keeping in mind the requirements of the Indian armed forces, Kalghatgi said.