With the disinvestment plan in Coal India Ltd (CIL) hitting trade union hurdles, the government may shift its focus to other companies like Hindustan Aeronautics Ltd (HAL) to meet the sell-off target for the current fiscal. The department of disinvestment has already appointed book running lead managers (BRLMs) for a 10% stake sale in defence PSU HAL through an initial public offering (IPO).
The government expects to mop up nearly $2 billion from the proposed sale of its stake in the PSU. The Union Cabinet had approved the proposal for HAL stake sale last November.
Under its disinvestment programme for the current fiscal 2013-14, the government has targeted to raise R40,000 crore. It has kicked off the programme with a stake sale in MMTC Ltd recently.
The price band and the timing of the IPO will be decided by the government in consultation with BRLMS and HAL, depending on the market conditions.
"HAL will need to spend $4 billion in the next five to seven years to build additional capital and human infrastructure to support the aircraft programmes”, an official said.
HAL is a premier aeronautical complex in Asia with 19 production divisions and 10 R&D centres. Its expertise encompasses design, production, repair, overhaul
and upgrade of aircraft, helicopters, aero-engines, accessories, avionics and systems. The 19 divisions of HAL are equipped with modern infrastructure for production of fighter aircraft, trainer aircraft, transport aircraft and helicopters. It provides one-stop solutions for all the design needs of aircraft and helicopters in airframes, airframe systems, avionics, mission & combat systems, using advanced design tools.
HAL,having a turnover in excess of R14,000 crore, will be the third defence PSU, out of a total of nine, to witness a disinvestment programme. The state has already divested a part of its stakes in two defence PSUs; 25% stake in Bharat Electronics Ltd (BEL) and 34% in Bharat Earth Movers Ltd (BEML).
The stake sale of HAL is expected to be made in November-December, The government has appointed four merchant bankers -- SBI Cap, Goldman Sachs, Barclays and Axis Capital—to managing the stake sale.
"Merchant bankers are conducting due diligence on 29 production divisions, nine joint ventures and ten research & design centres," said an official, adding the defence ministry is working on restructuring the company's board.
The Cabinet had approved a sale of 1.2 crore equity shares, amounting to 10% stake, in the Navratna defence equipment maker.
The paid-up capital of HAL is Rs 120.50 crore,