HAL's rare cash crunch: IAF sits on dues of Rs 14,500 crore
HAL has never been so precarious financially. Last week it was revealed that its cash in hand was in negative.
The main reason behind HAL's financial plight is a huge amount due from the Indian Air Force (IAF) which is Rs 14,500 crore. As of December 31, total dues of HAL are Rs 15,700 crore. The IAF has paid only Rs 2,000 crore since September 2017.
Madhavan said dues would touch Rs 20,000 crore by March 31. The Ministry of Defence (MoD) had approved a budget of Rs 13,700 crore for 2017-18, and revised budget for 2018-19 was Rs 33,715 crore, including the pending amount from 2017-18. “Of this, an allotment of Rs 20,287 crore came and balance in receivables was Rs 16,420 crore. As of today, pending dues are Rs 15,700 crore. And none of this is money we want as advance, it is for products and services we’ve delivered already,” Madhavan said.
“We’ve always been cash rich, this is the first time ever, or at least in the past two to three decades that we’ve borrowed money,” Madhavan said.
What makes HAL's situation ironic is the fact that HAL has performed very well in the past and paid close to Rs 9,000 crore to the Centre in dividends between 2003-04 and 2017-18, with more than 50% paid in the past five years, according to a TOI report. Of the Rs 8,996 crore paid as dividend, Rs 4,366 was collected by the Centre in 10 years between 2003-04 and 2012-13. In the next five years, Rs 4,630 was distributed as dividend.
For the first time in HAL’s over 75-year history, the company returned Rs 6,393 crore in two buybacks, both of which were done in the past three years. The first buyback of Rs 5,265 was in 2015-16 and the second was in 2017-18, when HAL paid Rs 1,128 crore.
“This was the first time the government did a buyback, and this most certainly affected HAL’s finances,” Suryadevara Chandrashekhar, general secretary, HAL Employees Association, and chief convenor of the All India HAL Trade Union Co-ordination Committee said.
In the five years between 2013-14 and 2017-18, HAL paid the Centre Rs 11,013 crore, which is more than double of what the defence PSU paid in the 10 years before 2013-14
The PSU also got an “Excellent” rating for three consecutive years between 2015-16 and 2017-18 from the ministry of heavy industries and public enterprises.