HAL hopeful most of Rs 73,000 crore listed orders will come to it

BENGALURU: Even as the political debate on the orders signed with defence PSU Hindustan Aeronautics Ltd (HAL) and those in the pipeline with the government continues, how much of the Rs 73,000 crore listed by defence minister Nirmala Sitharaman in Parliament on Monday will go to HAL remains unclear.
Sitharaman said in Parliament on Monday an order for 200 Kamov Ka 226T worth a tentative Rs 20,000 crore is among projects in the pipeline for HAL — that is, at the request-for-proposal (RFP) stage.

As Sitharaman herself noted, Hindustan Aeronautics Ltd as a company will not get the entire order for the 200 helicopters. Even as price negotiations are ongoing, this order is going to an independent joint venture (JV) in which HAL has a 50.5% stake. This company was set up in May 2017.

The MoD, in its written statement to the Lok Sabha on March 28, 2018, had confirmed the formation of the JV — Indo Russian Helicopter Private Ltd (IRHL).

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‘Orders for Kamov will go to JV’

In his reply, junior defence minister Subhash Bhamre said: “IRHL has been incorporated as joint venture-cum-subsidiary in May 2017 between HAL, Russian Helicopters and Rosoboronexport, with the objective to manufacture Ka-226T helicopters in India.”

The JV will have an authorised capital of Rs 30 crore with a paid-up capital of Rs 10 crore. “The JV has 50.5% shareholding by HAL, 42.5% by Russian Helicopters and 7% by Rosoboronexport,” Bhamre said.

“The orders for the Kamov helicopters will go to IRHL and reflect in its books. If anything, as a stakeholder, HAL will only get dividends from the business the firm does just like Russian Helicopters and Rosoboronexport would,” an HAL official said.

A specific query from TOI on the matter did not elicit a response from the MoD.

Among other projects in the pipeline mentioned by Sitharaman is the order for 83 LCA Tejas, which is to be worth Rs 49,797.5 crore. Of this, Rs 432 crore goes for two simulators, while another Rs 300 crore has been earmarked for infrastructure, as per Sitharaman. This leaves Rs 49,065.5 crore for the aircraft itself, making the cost of each aircraft Rs 591crore. As the final price of LCA has not yet been arrived at, it is unlikely it will stay close to Rs 600 crore apiece calculated above. This is mainly because government itself had raised concerns over the high price of Tejas. “The price of LCA has been the pain point of the negotiations. The government has, in fact, set up a cost committee that is looking into the issue, with our finance department officials having made multiple visits to New Delhi,” HAL sources said.

The MoD did not respond to TOI’s query whether the government has committed to buying LCA at the cost indicated by the minister.