Air force pays HAL long-outstanding dues, company posts record Rs 22,700 crore turnover - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Wednesday 31 March 2021

Air force pays HAL long-outstanding dues, company posts record Rs 22,700 crore turnover

With several large orders received, including for 83 Tejas Mk-1A fighters, HAL's order book is at Rs 80,000 crore



By Ajai Shukla

Business Standard, 1st April 2021


Hindustan Aeronautics Ltd (HAL) has registered its all-time high revenue of over Rs 22,700 crores for Financial Year (FY) 2020-21, even as operations were hit by production shut-downs and supply chain disruptions caused by the Covide-19 pandemic.


“The company has posted [this revenue growth] thanks to the improved productivity after suspending operations for one month in the beginning of the year,” said an HAL statement on Wednesday.


“The record revenue was achieved with the production of 41 new helicopters/aircraft, 102 new engines, overhaul of 198 aircraft/helicopters and of 506 engines,” stated R Madhavan, HAL’s chief.


With several large orders having been placed on HAL during the current FY, the company’s order book is healthier than any of the preceding years.


“The year 2020-21 was significant in terms of securing the largest ever defence contract of 83 LCA Mark-IA by an Indian company. This helped the company surpass the order book position in excess of Rs. 80,000 crores,” said Madhavan.


Until last year, the Indian Air Force’s (IAF’s) failure to pay HAL for aircraft already delivered to it had forced the company to turn to bank borrowings to pay employees’ salaries. With the IAF now making good its outstanding payments, and paying an advance for the Tejas Mark 1A order, HAL’s cash flows are healthy again.


“The company has ended the year with a positive cash balance of around Rs 6,700 crores, as against borrowings of Rs. 5,775 crores as on March 31, 2020. 


“The cash flow position has improved significantly with improved budget allocation from defence customers and it stands in excess of Rs 34,000 crores including advance payment of around Rs. 5,400 crores for 83 [Tejas] Light Combat Aircraft.  This helped HAL to liquidate all its borrowings availed from the banks,” said HAL.


HAL says it has taken various cost cutting and austerity measures during the year, including indigenisation of various components, increasing outsourcing efforts and rationalisation of manpower.


The company says these are expected to facilitate a double digit growth in the Profit After Tax (PAT).  


Anticipating a healthy growth in profits, HAL had paid an interim dividend of Rs 30 per share during the current financial year, representing 300 per cent of the face value of Rs. 10 per share.

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