Govt to sell up to 15 per cent of stake in HAL

Move would raise up to Rs 5,020 crore for the government

HAL workers go on indefinite strike over wage revision Representational image | Reuters

In its latest stock exchange filing, Hindustan Aeronautics Limited—India’s premier state-run aerospace enterprise and the country’s largest aerospace company—announced that the government would sell up to 15 per cent of its stake in the Navratna to retail and institutional investors in an offer for sale (OFS).

In the filing, HAL said the government would sell 33,438,750 shares, a ten per cent stake, on August 26 and 27. In the event of over-subscription, an additional five per cent of shares (16,719,375) would be sold.

“The Offer shall take place on a separate window of the Stock Exchanges on August 27, 2020 (“T” day) and August 28, 2020 (“T+1” day), from 9:15 a.m. to 3:30 p.m. (Indian Standard Time) on both days, as per details given below,” HAL said in its filing.

The floor price was set at Rs 1,001 per share. The proposed sale would mop up about Rs 5,020 crore for the government, which currently holds an 89.97 per cent stake in HAL.

The move is part of the larger strategic disinvestment of public sector enterprises, in a bid to raise revenue. It comes just months after a new strategic disinvestment process was approved to expedite privatisation of select PSUs, allowing both NITI Aayog and the Department of Investment and Public Asset Management (DIPAM) to identify PSUs for disinvestment.

The government had already sold 10 per cent of its stake in HAL in the company’s IPO in 2018.

While HAL has long had a monopoly on aircraft manufacture for the Indian Armed Forces, there is a growing move towards privatisation in defence, even as the government aims to reduce import dependency with the introduction of a negative list.

As multinational aerospace companies move to set up shop in India, HAL has seen talent stray elsewhere. Even so, the company has a large order book to make and assemble aircraft for the IAF. In March, the government approved a Rs 38,000 crore contract for 83 Light Combat Aircraft (LCA Tejas MK1A) from HAL.  

As multinational aerospace companies move to set up shop in India, HAL has seen talent stray elsewhere. Even so, the company has a large order book to make and assemble aircraft for the IAF. In March, the government approved a Rs 38,000 crore contract for 83 Light Combat Aircraft (LCA Tejas MK1A) from HAL.

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