- Oct 3, 2018
Recent fiscal borrowings of Hindustan Aeronautics Limited (HAL) have forced the Ministry of Defence (MoD) to work out a two-pronged plan. First, the MoD has approached the Ministry of Finance to provide funds and second, the HAL has been asked to set its house in order, work with fiscal prudence and manage its resources better.
The HAL is a profit-making company — raking in Rs 2,070 crore in the last fiscal with a turnover of Rs 18,000 crore. For it to take an overdraft of Rs 962 crore is hardly a matter to sweat about, sources have said, adding the reserves of the HAL run into crores of rupees.
The HAL has pending payments (Rs 17,000 crore) from the Indian Air Force, which is being worked out, and the Ministry of Finance has agreed to additional funds for the forces, sources said.
This morning, HAL’s top management met with Defence Minister Nirmala Sitharaman, the Chiefs of the three services and senior officials of the MoD.
The HAL, a prime public sector undertaking (PSU) owned by the MoD, had to borrow money after several decades, pending fresh orders. Sources said the MoD was aware of this overdraft, but the first priority of payment was towards foreign suppliers, as delay entailed penalties and loss of international standing.
It is learnt the MoD has not taken kindly to the tweet by the HAL. The tweet, in response to media reports, had said: “HAL has taken overdraft of Rs 962 crores. With anticipated collection upto March, the cash position is expected to improve. Orders for LCA Mk1 A (83) & LCH (15) are in advanced stages (sic).”
Listed companies don’t tweet their status, they just inform the Securities and Exchange Board of India (SEBI).
Sitharaman in her suo motu statement in the Lok Sabha on Monday had said orders worth Rs 73,000 crore were in the pipeline for HAL. She clarified that between 2014 and 2018, contracts amounting to Rs 26,570.80 crore were inked with the HAL, while remaining contracts worth Rs 73,000 crore were in the pipeline.