In March 2016, then HAL CMD T Suvarna Raju had said in a statement: “HAL has made a massive contribution of Rs 4,284 crore to the Government as buyback of 25% of the share capital and free reserves from HAL.”
This amount did not include the interest component, which was another few hundred crores. Further, in December 2017, HAL paid another Rs 921 crore (minus taxes) for the second buyback.
However HAL has been quite shoddy in fulfilling the very commitments for which it has been raised. However now after many years it is being held accountable at every step and this us causing massive problems for its administration which had got used to a CHALTA HAI attitude.
Defence PSU HAL, is now grappling with delayed fund release from its budgetary allocation and depleting order book that has has resulted in its cash-in-hand dip to as little as Rs 1,000 crore, has its hopes set on the massive outstanding dues from the Ministry of Defence to stay afloat without having to borrow money.
HAL is a company mainly for the armed forces for its business—its export business and work it does for other departments of the government are negligible—HAL’s payments are made by the Ministry of Defence in general and Department if Defence Production in particular.
The Ministry owes the firm at least Rs 10,000 crore as of September 30, sources said. At the end of March 31, 2018, as per HAL’s annual report, the outstanding dues from the Ministry of Defence stood at Rs 7,900 crore, and the number remained around the same for the quarter ending June 30.
“As of the quarter ending September 30, the dues have touched Rs 10,000 crore, HAL will make it public by October 30,” a source in the know said. The source added that as of Tuesday the dues have increased further.
The cash balance HAL has, is not even sufficient to pay salaries to its 29,035 employees for three months, which comes up to Rs 358 crore every month. HAL will be forced to borrow money from outside if it does not receive money from one of its sources soon.
HAL is hoping that the government releases money as part of the budgetary allocations for 2018-19—only 40% has reached the firm so far—or that the dues owed to the firm is paid by the Ministry if Defence. “Our Board has been trying to impress upon the officials at the ministry of defence about the same, but to no avail so far,” another source said, adding that defence minister Nirmala Sitharaman has not visited even once in her tenure.
The ministry of defence (MoD) did not respond to query raised by many on why there was a delay in making payments that are due to HAL. “This has had a massive impact on the firm, which will be forced to borrow money to even pay salaries if the money does not flow in soon,” another source said.
Another major decision that reduced HAL’s cash balance, as insiders claim, is share buybacks. The first buyback happened in 2015-16, while the second one happened in 2017-18.
