Amid controversy, MoD to meet HAL, armed forces chiefs

The Defence Minister Nirmala Sitharaman is set to meet Hindustan Aeronautic (HAL) head R Madhavan along with the chiefs of armed forces on Wednesday.

The meeting holds significance as the Bengaluru-based defence PSU, has been reeling under financial stress due to the paucity of funds.

"We are expecting the defence minister to make sure that some of the dues to be cleared by March 31, so that it doesn't impact the operation," a source within the company told DH.

The defence PSU has taken loans over Rs 1,000 crore to pay its staff till now, as it is facing the dearth of funds. The company hasn't received any funds from the government, since past 1.5 years, according to the sources within the company.

"Our cash balance is highly negative. We don't have any funds right now. We can borrow money for the day to day operations, but for projects, we can't," a highly placed source within the company told DH.

With a headcount of Rs 29,035 people, the company pays Rs 358 crore of its Rs 1,400 crore of monthly expenditure as the salaries to the employees.

The dues for the company, from its biggest customer, Indian Air Force (IAF) have also skyrocketed and are expected to touch a whopping Rs 20,000 crore by the end of the current financial year. As of now, the IAF owes the Bengaluru-based PSU a whopping sum of Rs 15,700 crore.

The company is also staring at projects getting stalled as a result of this fund crunch by April.

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 arrears for the previous years.

Madhavan, Chairman and Managing Director of Bengaluru-based defence PSU, travelled to New Delhi on Wednesday for purpose of the meeting.