Merging company

Congress raises questions about Pawan Hans divestiture, asks why merger with ONGC not being explored

The Ministry of Finance said on Friday that Star9 Mobility Pvt Ltd will buy the government’s 51% stake in helicopter service provider Pawan Hans Ltd.

The Ministry of Finance said on Friday that Star9 Mobility Pvt Ltd will buy the government’s 51% stake in helicopter service provider Pawan Hans Ltd.

On Sunday, Congress raised questions about the deal to sell the center’s 51% stake in helicopter service provider Pawan Hans Ltd (PHL), asking why the government hasn’t considered merging the business with ONGC instead of deciding to hand it over to a consortium that is just six months old.

The Ministry of Finance announced on Friday that Star9 Mobility Pvt Ltd will buy the government’s 51% stake in helicopter service provider Pawan Hans Ltd (PHL), along with the transfer of management control, for ₹211.14 crore .

The reserve price for the strategic sale, which comes after three failed attempts, has been set at ₹199.92 crore based on the valuation made by the transaction advisor and asset evaluator.

Attacking the government over the move, Congress spokesman Gourav Vallabh said that in the series of miscalculated and misguided divestment decisions to justify their financial policies, “they are making a series of mistakes.”

The reserve price for the sale of this 51% majority stake was set at ₹199.92 crore and the other two bidders who participated made bids of ₹181.05 crore and ₹153.15 crore respectively, a underlined Mr. Vallabh.

Mr. Vallabh said that while this may seem like a normal divestment, there are several things that raise eyebrows, such as the Star9 Mobility Private Ltd, a consortium of Big Charter Private Limited, Maharaja Aviation Private Limited and Almas Global Opportunity Fund SPC , set up – barely six months ago, on October 29, 2021.

Star9 Mobility Private Ltd does not own any helicopters, while Big Charter Private Limited has only 3 helicopters in its fleet, he said. Furthermore, Almas Global Opportunity Fund SPC is created under the jurisdiction of the Cayman Islands and has no correlation or experience in this sector, he added.

Mr. Vallabh also claimed that there was an ongoing legal case between Big Charter Private Limited and Ezen Aviation Private Limited in the Delhi High Court. He pointed out that the Pawan Hans employees’ union had expressed interest in participating in the divestment process and had also recommended that Pawan Hans be merged with ONGC or made a subsidiary of it, but the government “swept it away”.

“Pawan Hans made a net profit of Rs. 242.78 crores in 2016-17 but has been falling since 2018-19, resulting in losses of Rs 63.67 crores in 2018-19 and Rs 33.15 crores in 2019 -20,” he said.

Asking the Modi government about the decision, Mr Vallabh said that with details available of the bidders and their consortium, there were red flags, and how did the government agree to such a deal.

“There were three bidders who participated in the divestiture process, but only one bidder bid above the reserve price. What was the government’s reason for going ahead with a single suitable bid?” said Mr. Vallabh.

Has the government considered merging Pawan Hans with ONGC, bearing in mind that they already have a 49% stake and that Pawan Hans plays a very strategic role with ONGC, HAL, etc., a- he asked.

Pointing out that a company that has consistently made net profits has suddenly started posting losses since 2018-19 around the same time the divestment was first dealt with, Mr Vallabh asked if it was again from an attempt to reduce the valuation to facilitate the sale to someone who would benefit.

Mr. Vallabh pointed out that Pawan Hans is the largest helicopter company in Southeast Asia with a fleet of 42 helicopters.

Offshore operations, connecting inaccessible areas, charter services, search and rescue work, VIP transport, corporate and special charter flights, insulator washing and heli-pilgrims such as Kedarnath, Badrinath, Amartnath, Maa Vaishno Devi, are some of his major services.

PHL, loss-making, is a 51/49 joint venture between the government and the CGSB. ONGC had previously decided to offer its entire stake to the successful bidder identified in the government’s strategic divestment operation, at the same price and on the same terms as the government.

Last December, the government received three financial offers for the purchase of the company.

Mr Vallabh accused the BJP of inept management of the economy and said that after eight years of disastrous financial management, the economy is in shock.

The BJP government forced out stretched sectors that needed support and magically put good companies and sectors in trouble, he alleged.

They violate all prudence and common logic to find a way out of the financial mismanagement caused over the past 8 years, Mr. Vallabh said.

Pawan Hans has suffered losses over the past three years (FY-19, FY-20 and FY-21). It has a fleet of 42 helicopters, 41 of which are owned by the company.

Owned helicopters have an average age of over 20 years and three-quarters of them are currently not manufactured by the original equipment manufacturer.