HAL Expects To Double Revenue Growth From FY24, Says R Madhavan

Hindustan Aeronautics Ltd. expects to double its revenue growth from fiscal 2024 onwards, aided by a stronger order book and growing export opportunities, according to R Madhavan.

For this fiscal, the state-owned defence company expects to see revenue growth of 6-7%. And it's expected to grow at a faster pace from FY24, Madhavan, chairman and managing director at HAL, to BQ Prime’s Niraj Shah. “That is when we hit the double-digit figures. From FY24-25 onwards, it will keep on increasing.”

Currently, the company's order book stands at around Rs 82,000 crore, of which Rs 20,000 crore is from a repair and spare parts order, and Rs 61,500 crore is for manufacturing Light Combat Helicopters based on a contract they gained last year. Deliveries for the helicopters are due from 2024 onwards, Madhavan said.

HAL is expecting orders worth Rs 60,000 crore for helicopters and basic trainers.

These orders, along with other engine orders, will take the company’s book-to-bill ratio—the ratio of orders received to the amount billed—from three times to five times.

“Keeping in view that there is a long cycle time for the order placement from the ministry, we have to start moving it now," he said. "Otherwise, we'll find that the helicopter manufacturing facilities, especially the one that we are setting up, will be underutilised.”

The company is aiming for a capacity of more than 90 to 100 helicopters in a year, Madhavan said. “The order book also should be in that range, so that at least the capacities we have built are utilised properly.”

According to him, India should “take advantage of the present geopolitical situation” as countries move away from China as a source due to “intrusion in their airspaces”, and the Russian support systems and platforms are “in doubt”.

In such a scenario, India can support these platforms already sold by Russia, he said. Moreover, Indian equipment is easier and cheaper to maintain in comparison with the western counterparts, Madhavan said.

The aeronautics and defence manufacturer is looking to add export orders as the company sees traction from the Indian Ocean Commission region as well as West Asia.

“We expect the order book from the export side will improve in the next couple of years,” Madhavan said.

Even as countries including India expand their defence budgets, there “isn’t much of a movement” from the large corporates in the defence industry in India, he said. However, the micro, small and medium enterprises have joined the “indigenous activities in respect of avionics and other mechanical systems”.

Despite challenges in the industry, including longer lead time to develop the product and entry barriers due to large capital requirement, the MSME sector has shown promising results for avionics and accessories, Madhavan said.

“But we expect that there should be some sort of a thrust from the bigger corporates as well, which is lacking as of now towards indigenous development of platforms and equipment.”

While a majority of the supplies are still imported, the ecosystem is “maturing but it has a long way to go”, he said.

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