Defence Ministry headquarters, Delhi (File image)
Shares of Larsen & Toubro Limited (L&T) and Hindustan Aeronautics Limited (HAL) were up more than 2 percent each on March 8 morning after the companies bagged contracts from the ministry of defence.
Though both proposals were cleared by the Cabinet Committee on Security (CCS) on March 1, the companies signed the contracts on March 7. Share prices of L&T and HAL have risen 3.4 and 7.3 percent since the clearing of proposals.
70 trainer aircraft contract
HAL signed a Rs 6,800-crore contract with the ministry for the supply of 70 HTT-40 trainer aircraft to the Indian Air Force.
The new trainer aircraft will provide a fillip to the initial training of air force pilots. Basic trainers figure on the long list of weapons and systems that India has imposed an import ban on for the last 30 months. HAL will supply the HTT-40 planes to IAF over six years.
Also Read: Defence ministry inks Rs 6,800-cr contract with HAL to procure 70 basic trainer aircraft
“The procurement has the potential to provide direct and indirect employment to thousands of people spread over more than 100 MSMEs,” the defence ministry said.
The contracts is in line with the government's plan for self-reliance in defence manufacturing which had earlier in the same vein also raised the foreign direct investment limit from 49 percent to 74 percent and provided notification for hundreds of weapons and systems that cannot be imported.
Cadet training ships
L&T was trading higher after signing a Rs 3,100-crore supply contract for three cadet training ships.
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The ships will cater to the training of officer cadets at sea after their basic training to meet the future requirements of the Indian Navy and will be indigenously designed, developed and constructed at L&T shipyard in Kattupalli, Chennai.
“The project will generate an employment of 22.5 lakh man-days over a period of four-and-a-half years. This will encourage active participation of Indian ship-building and associated Industries, including MSMEs,” the ministry said.
As per JD Patil, VP, L&T Defence, the company will deliver the platforms ahead of the five-year schedule the navy fixed. The delivery is expected to begin in 2026.
At 10.35 am, HAL and L&T were trading 1.68 percent and 1.95 percent higher on the National Stock Exchange at Rs 2,756.80 and Rs 2,182.95. The benchmark Nifty was down 0.084 percent at 17,696.65 points.