HAL restructuring on cards as delays mount in defense deliveries
What's the story
The Indian government is considering a major restructuring of Hindustan Aeronautics Limited (HAL) with an aim to improve its efficiency and expedite military deliveries. The move comes in light of HAL's massive ₹2.7 lakh crore order book, which has been limiting its capacity and delaying key projects like the Light Combat Aircraft. An external consulting group has been roped in for this purpose, according to The Economic Times.
Operational overhaul
HAL to be divided into independent entities
The government is looking at restructuring HAL into independent entities focusing on different aspects of aeronautical manufacturing. The external consulting group has started examining HAL's current structure and operations, holding talks with senior management. This comes as part of a larger effort to create a roadmap for improving the company's efficiency and speeding up delivery timelines for military orders.
Order challenges
Order book raises concerns over HAL's efficiency
HAL's current order book, which includes fighter jets, utility helicopters, attack choppers, and engines, is more than eight times its annual revenue. This has raised concerns that it could limit the company's capacity to deliver on timelines efficiently. HAL is already facing delays in supplying Light Combat Aircrafts to the Indian Air Force (IAF), which has raised alarms over its shrinking combat strength.
Information
Restructuring to enhance operational efficiency
The overloaded order book has also become a liability for HAL's participation in the mega initiative to develop next-generation fighters under Advanced Multirole Combat Aircraft program. The restructuring plan is expected to address these challenges and improve HAL's operational efficiency, thereby speeding up military deliveries.