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HAL leans on domestic monopoly

A look at the largest defence PSU

Sourjya Bhowmick 

India has been spending approximately Rs 10,000 crore to Rs 11,000 crore every year to import arms. But, with debates on India’s defence preparedness hotting up and a greater stress on domestic manufacturing, IndiaSpend’s Sourjya Bhowmick looked at the competitive scenario for to see how the manufacturing equations could evolve in the coming years.

The first stop was Hindustan Aeronautics Limited (HAL), among India’s seven defence public sector unit (PSU) enterprises. Defence was formally opened up to India’s private sector in May 2011 with foreign direct investment allowed up to 26 per cent.

is the largest defence PSU under the Department of Defence Production, Ministry of Defence. It was started on October 1, 1964, and currently has over 19 production units and 10 design and research centres, across eight locations in India. Till now, claims to have manufactured 3,658 helicopters/aircrafts and 4,178 engines, upgraded 272 aircraft and examined and repaired 9,643 aircraft, as well as 29,775 engines.

HAL’s revenue in 2010-2011 stood at Rs 13,116 crore and 90 per cent of its sales are to the Indian defence services. Interestingly, HAL also exports to the Vietnam Air Force, the Royal Thai Air Force, the Nepal Army, the Royal Air Force, Oman and Boeing, USA, among others. Up to November 2011, HAL’s exports stood at Rs 267 crore for 2010-2011. Its profit was Rs 2,840 crore.

HAL’s finances
HAL, though a defence PSU, does not get any funding from the government or any ministry. Rather, it is fully self-reliant.

It is evident that domestic sales of HAL are steadily increasing but exports are erratic. On the other hand, sales and profits have been rising steadily. As has been manpower cost, which, like many government organisations, has more than doubled in the last five years. HAL also has a very large workforce, currently at 33,681.

HAL produces 15 types of aircraft from in house R&D and 14 types under licence from others like the Sukhoi 30 MKI. A few of the things that HAL is currently producing are: the Sukhoi 30 MKI, a multi-role fighter plane; the Hawk Advanced Jet Trainer, the Light Combat Aircraft, the Intermediate Jet Trainer, the Dornier 228 – Light Transport Aircraft, Dhruv, Chetak, Cheetah and Cheetal (all helicopters).

Here’s a five-year balance sheet study (Rs cr)
Year  Sales- 
No of 
after tax
2006-07  7,513 271 7,784 31,666 1,054 1,149 638
2007-08  8,284 341 8,625 34,323 1,803 1,632 662
2008-09  9,937 437 10,373 34,822 2,543 1,740 675
2009-10  11,252 205 11,457 33,990 1,954 1,967 832
2010-11  12,878 237 13,115 33,681 2,287 2,114 987
Source: HAL

Other projects that HAL has worked on are: the Light Combat Helicopter, which was indigenously developed made its first flight on March 29, 2010; the Light Combat Aircraft (Tejas), which obtained it’s clearance in January 2011; the Advanced Light Helicopter MK III, developed for the Army and the Air Force. It can operate at 6 km altitude and is installed with systems like electronic warfare sensors; the Intermediate Jet trainer, which successfully completed flight trials with AL-55i engine.

The licensing for the Su 30 MKI aircraft, which is manufactured under licence in four phases, is completed. Raw material procurement has commenced.

This is the only specific achievement we noticed in this year’s Annual Report. All other points mentioned are all seem to be repetitive of the previous year.

However, the HAL Annual Report on the other hand illustratively jots down its achievements during 2010-2011. It says that it has produced 78 aircraft and helicopters, with engines and accessories.

HAL’s success stories
A big achievement has been the DHRUV, a multi-role helicopter. It was incorporated in the defence services in 2002 and later exported to Nepal and Israel. However, it is not an indigenous product and produced with assistance from Messerschmitt-Bölkow-Blohm, a German aerospace company.

Sukhoi 30 MKI can be termed another success of HAL. Sukhoi, is a superior fighter aircraft and expensive. India first signed a deal with Russia in 2000 and the first lot of Sukhois was accepted into the Air Force in 2002. In 2004, the first indigenous Sukhoi was built. Currently, Indian Air Force has 137 Sukhoi 30 MKI.

HAL has also played an important role in India’s space programme. HAL has manufactured structures for Satellite Launch Vehicles like INSAT (Indian National Satellite), IRS (India Remote Satellite), PSLV (Polar Satellite Launch Vehicle) and GSLV (Geo-Synchronous Satellite Launch Vehicle).


Edited excerpts. Reprinted with permission from  

First Published: Tue, October 02 2012. 00:16 IST