Tuesday, 2 April 2019

HAL reports record Rs 19,400 crore turnover, but IAF still to pay its bills

The Sukhoi-30MKI assembly line in Nashik built 11 fighters this year

By Ajai Shukla
Business Standard, 2nd April 19

Hindustan Aeronautics Limited (HAL), which has faced concerted criticism over the past year from both the defence ministry and the Indian Air Force (IAF), has announced a record turnover of over Rs 19,400 crores (provisional and unaudited) for the financial year that ended on March 31.

This amounts to a six per cent revenue growth over the previous year’s turnover of Rs 18,284 crores.  That comfortably beat the revenue growth of 3.8 per cent during 2017-18. 

However, the IAF still owes HAL about Rs 20,000 crore in unpaid dues for aircraft delivered and overhauled and for milestone payments due, Business Standard learns.

In January, HAL had to take a bank loan of Rs 781 crore to pay salaries to its 29,000 employees. At that time, HAL chairman R Madhavan told Business Standard: “The IAF owes HAL money for aircraft, helicopters and services that we have already delivered. Current dues are Rs 15,700 crore and will rise to Rs 20,000 crore by March 31.” Madhavan’s projection has turned out to be accurate.

A statement from HAL on Monday says: “In FY 2018-19, HAL has produced 41 new aircraft/helicopters and 98 new engines and has carried out overhaul of 213 aircraft/helicopters and 540 engines.”

HAL sources say they built 11 Sukhoi-30MKI and seven Tejas fighters in the year just gone by, as well as five Dornier-228 aircraft, three Cheetal light helicopters and 15 Dhruv advanced light helicopters, totaling 41 aircraft. 

In addition, it has overhauled 15 Sukhoi-30MKI (up from 11 the previous year) and several Mirage 2000 and Jaguar fighters, Kiran trainers and a large number of helicopters.

Amongst the research & development (R&D) projects under way in HAL are the Tejas Mark 1A fighter. HAL is also claiming a breakthrough with the HTT-40 basic trainer aircraft, which it expects to certify this year.

“HAL’s R&D projects are on track and are tailor made for the requirement of the armed forces,” the company stated on Monday.

HAL said it “expects continued ‘Excellent’ MoU rating for the FY 2018-19 from Government of India for meeting all the relevant parameters related to its performance.” 

Senior HAL executives say that, more than an “Excellent” rating, the company requires cash to meet its monthly running expenditure of Rs 1,300-1,400 crore.

Traditionally cash-rich HAL has, over the last five years, transferred Rs 11,024 crore to the government. 

This included Rs 6,393 crore to the government in an “equity buy back scheme. HAL made this payment in two tranches – Rs 5,265 crore in 2015-16 and another Rs 1,128 crore in 2017-18.

During this period, HAL also paid the government dividend and taxes worth Rs 4,631 crore: Rs 1,041 crore for 2013-14; Rs 576 crore for 2014-15; Rs 755 crore for 2015-16; Rs 963 crore for 2016-17 and Rs 1,295 crore for 2017-18.

Masked by the healthy turnover, HAL executives are worried about the impending closure of one of its most lucrative lines – the production of Sukhoi-30MKIs at Nashik. Two years down the line, HAL would have delivered all of the 222 Sukhoi-30MKI fighters that are on order, with no production to replace the Rs 4,000-5,000 crore HAL makes annually from building about a dozen fighters.

5 comments:

  1. Instead of paying the HAL its dues, the government has chosen Anil Ambani who has no experience in either the manufacture or maintenance of fighter sircraft over HAL.

    ReplyDelete
  2. Perhaps the IAF does not take ownership and responsibility for the success or failure of HAL.
    The IAF has given up on HAL - and here with his usual patriotic fervour Broadsword enlightens us all.
    Constrast this with Pakistan
    Air Marshal Ahmer Shahzad Legahri heads the Pakistan Aeronautical Complex and reports to the Joint Chiefs of Staff Committee under General Hayat. The whole military industrial complex is controlled by defence offices. The success of the Pakistan Aeronautical complex is something that the PAF takes ownership off, foreign visitors are taken to the factories by By PAF offices and shown around with a degree of pride which comes with the achievement.
    It seems there is a disconnect between HAL and the Indian Air Force, a culture of interdependence and ‘ownership’ must be built, this may be done by giving the IAF a controlling role in HAL the chairman and majority board memember must come from the IAF.
    The IAS bureaucrats deserve the boot, the interference from these cretins over the years, the self serving arrangement of power, so that every decision coalesces to them, has caused this disconnect to the extent the IAF holds HAL in contempt, delays paying its bills and rather spend its budget on foreign aircraft.

    ReplyDelete
  3. HAL has no reason to worry since they are set to get orders for the LCA Mark 1A to replace their Sukhoi production line. As a short-term solution, the IAF should also order another squadron of the LCA Mark 1 in FOC squadron to make up for their depleting squadrons which will also help HAL to keep their production working until they start building the Mark 1A. Also crash replacements before the Sukhoi line closes.

    If they can finish development of HTT-40, LCH and LUH quickly they can get additional revenue streams as well. I don't think HAL has anything to worry about.

    ReplyDelete
  4. There is an other side to the coin. Airforce pays advance for many ongoing projects as upfront payment or advances. Many of these projects are delayed beyond expectations. DARIN III, Mirage upgrade, etc. These cash is stuck with HAL without any tangible assest due to perennial delays in production at HAL.

    Effecively, IAF money is also stuck at HAL as advances for products not delivered.

    Please try to bring out these issues as second part of you story. Let us be neutral in our these kind of topics

    ReplyDelete
  5. There is an other side to the coin. Airforce pays advance for many ongoing projects as upfront payment or advances. Many of these projects are delayed beyond expectations. DARIN III, Mirage upgrade, etc. These cash is stuck with HAL without any tangible assest due to perennial delays in production at HAL.

    Effecively, IAF money is also stuck at HAL as advances for products not delivered.

    Please try to bring out these issues as second part of you story. Let us be neutral in our these kind of topics

    ReplyDelete