HAL invites merchant bankers for IPO process

It's transition time indeed at Hindustan Aeronautics (HAL) with a disinvestment plan rolling out even as Mr Ashok Nayak retired on Monday to be shortly succeeded by arguably a rank outsider as its Chairman.

The Department of Disinvestment has invited proposals from merchant bankers to advise it on the public issue of HAL - so far the only defence PSU that is not listed on the bourses. A recent notification said it would appoint two domestic and two international Category-1 bankers as lead managers for the issue.

On Monday, the Department of Disinvestment revised the presentations by merchant bankers date to November 14 and 15 from earlier proposal of November 10 and 11.

Interim chairman

As per a September 12 decision, HAL is to offload 10% of Government holding, which amounts to 1.205 crore shares. It will include bonus shares before disinvesting and some discount on the issue price for eligible employees and retail investors.

On October 13, the Public enterprises Selection Board picked Mr R.K.Tyagi, CMD of Pawan Hans Helicopters, as HAL's next Chairman. Until the formalities are cleared for Mr Tyagi, HAL's senior-most director, Mr P.V. Deshmukh, will officiate as its chairman from November 1.

HAL said Mr Deshmukh would also continue to be Managing Director (MiG Complex).

While top ranking IAF officers have regularly been at the helm of HAL, [and IAF, as HAL's primary customer, is considered `family'] the incoming chief, Mr Tyagi, is reckoned as the first "unconnected" or outsider Chairman. Many senior directors retire in 2012 or soon; and the selection rules say an "insider" should have two years of service left to be eligible for the top post.

HAL, with a turnover of Rs 13,000 crore in the last fiscal, is billed as Asia's largest aircraft company. It makes a range of military fighter planes and helicopters for the Armed Forces and has developed the indigenous Dhruv light helicopter for civil purposes, too.

It has orders of around Rs 75,000 crore, among them the Sukhoi and the light Tejas fighters; advanced light helicopters and Hawk advanced jet trainers besides systems ordered by commercial aircraft majors like Boeing and Airbus.

A veteran HAL official said with the public issue, "The government will be able to get back some of its old investment at present value, but it will take a while." The finances were comfortable now but the upcoming FGFA and MMRCA programmes (fifth-generation fighter programme and the medium multi-role combat aircraft) would be capital-intensive and going public would offset the expenses, the person said asking not to be named.