The Hindu Business Line : HAL sees no need for a public offer

Bangalore, Feb. 25 The country’s premier aircraft maker does not seem to be in a mind to join the capital market-wagon, and certainly not in the foreseeable future.

While its defence public sector peers Bharat Electronics Ltd and BEML have been on the bourse for some years and an apex committee on navaratna companies recently favoured the listing of Hindustan Aeronautics Ltd, a public issue from the company is not in consideration nor warranted, either for the sake of funds or governance, according to Mr M. Fakruddin, Director (Corporate Planning & Marketing) of the Rs 7,800-crore HAL.

“Ultimately, however, it is the Government and the Ministries concerned [Defence, Finance or Disinvestment] who would have to take a decision on this. We are not aware of any moves formally. At the end of the day, we would like to keep up our supplies to the defence services and continue paying dividends,” he said in reply to a query from Business Line.

In fact, this year, the PSU would be paying a dividend that is three times (300 per cent) the money the Government has invested in it in all these years.

With around 85 per cent of its revenue coming from aircraft sales and services to its main clients – the three Armed Forces - HAL has seen 46 per cent revenue growth last year and is targeting a turnover of at least $4 billion (around Rs 1,600 crore) by 2012 and $6 billion (Rs 2,400 crore) by 2017 — dovetailed to the 12th Plan period.

Profit was not the primary motive, though the company registered a PAT of Rs 1,700 crore last year. On the flipside, there was the risk of diluting defence requirements, if the company offloaded its stock.

If it is for money, the company has enough reserves for its projects and can raise loans, if necessary. If it is for governance or transparency, “This too, is not an issue as there are six independent directors and two government nominees to ensure that the policies are implemented and the accounting practices are in place,” Mr Fakruddin said.

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