Bengaluru: India's defence behemoth Hindustan Aeronautics (HAL) is awaiting the government's green signal to go public soon to raise funds and improve its corporate governance, an official said on Thursday.
"Being a fully owned state-run enterprise, it is for the government to decide when to begin the disinvestment process and the quantum of dilution," HAL finance director D. Shivamurti told reporters.
Though other city-based state-run defence firms such as Bharat Electronics (BEL) and Bharat Earth Movers (BEML) had gone public long ago, the government had been wary of diluting its 100 per cent equity holding in the strategic HAL, a sole manufacturer of military aircraft and aerospace systems for the Indian armed forces.
"The process of making an Initial Public Offer (IPO) is on for various reasons, including meeting corporate governance objectives, making public stakeholders and have financial muscle to meet our future requirements for scaling our strategic operations," Shivamurti said on the sidelines of Aero India 2011 trade expo here.
Once the government approves divesting in the open market, the 70-year old company board will decide the quantum, value and the timing of the issue.
"We will be investing about Rs200 billion over the next 10 years to modernise and expand our capacity to execute orders valued at Rs1 trillion. We plan to raise funds internally (about Rs1.5 trillion) and from the market through a combination of equity and debt instruments than depend on the government for capital investments," Shivamurti said.
As a global player in the aerospace industry, the Rs11.5-trillion HAL makes various types of fixed wing aircraft under licensed production, rotary wing choppers and sub-systems primarily for the Indian Air Force (IAF), army and navy and Coast Guard.
"Though we have about Rs9 trillion in reserves and excellent credit rating to borrow in the debt market, we feel it's time to tap the public for raising additional funds to meet our present and future investment requirements," Shivamurti added.
The company has projected a turnover of Rs12.6 trillion for this fiscal (2010-11).