25% of workers in fixed-wing factories of the aeronautics firm have no work

Hindustan Aeronautics Ltd.’s new CMD recently mentioned an order book of over Rs. 61,000 crore. The production scene, however, looks grim beyond 2020 unless the government-owned military aircraft maker lands new orders for aircraft mainly for the Indian Air Force, according to information gathered from multiple sources in the company.

Such a scenario has not been seen since 1990, said an old-timer familiar with the ground situation.

The lack of new orders means that 25% of workers across HAL's fixed-wing factories do not have work. Älso, orders should be placed soon as it takes five years from sourcing components to building a full aircraft.

For the year ended March 2018, HAL posted a turnover of Rs. 18,284 crore — which is not much higher than the previous year’s turnover of Rs. 17,604 crore.

In recent weeks, the PSU has found itself in unwanted limelight in the contract for outright purchase of 36 Rafale fighters from French manufacturer Dassault Aviation.

Missed opportunity

If the government had not revised in 2015 an earlier, bigger and decade-old aircraft purchase plan, HAL says it would have produced 108 of the 126 Rafale fighter jets under licence.

Now HAL is handling two prime fixed-wing plane orders: the Bengaluru complex is producing the first batch of 20 LCA fighters (Light Combat Aircraft) for the Air Force. The MiG Complex at Nashik is wrapping up an order for another fighter aircraft, the Sukhoi-30 MKI.

Upgrades of two older fighter fleet, 61 Jaguars and 51 Mirage-2000s, are under way in Bengaluru but are of lesser value than fullscale production. The 20 LCAs in Mark 1 are being made to the specifications of the IOC or intermediate operational certification. Nine of them have been delivered to the IAF.

Between four and six more LCAs are likely to be completed by the end of March 2019 and the rest of the order would be achieved by December 2019, a spokesman said. A higher and fully armed version, the LCA Mark 1A, is being developed for FOC or final operational certification by the LCA developer, the Aeronautical Development Agency ADA, Bengaluru.

Awaiting certification

HAL is contracted to manufacture the first 20 in this version; however, work can begin only after the enhanced fighter gets the final certification.

Almost two years back, the Defence Acquisition Council (DAC) approved the purchase of 83 LCA-Mark 1As estimated at Rs. 50,000 crore. A firm contract is anticipated after the overall price of an individual aircraft is finalised.

The MiG Complex at Nashik has been manufacturing most of the 272 Russian-origin Su-30MKIs under licence. However, by 2019-20, the last 20-plus would be delivered to the IAF and the Nashik unit “has nothing after them,” the then HAL CMD T. Suvarna Raju had said last year, raising fears about HAL’s future.

Another person familiar with production-related activities said that post-Sukhois, the accessories units in Lucknow, Hyderabad, Kanpur, Korwa and Kasaragod would also suffer.

The rotary or helicopter side is relatively better placed but fixed wing aircraft work means better revenues. The helicopter unit in Bengaluru is busy with Advanced Light Helicopters, which, too, will be completed around 2020.

HAL now banks on getting the first order for 15 Light Combat Helicopters which the DAC cleared last December.