Congress raises questions about Pawan Hans divestment and why merger with ONGC has not been considered

Congress on Sunday raised questions about the sale of Center’s 51 percent stake in helicopter service provider Pawan Hans Ltd (PHL) and asked why the government had not considered the company’s merger with ONGC rather than deciding to do so to hand over a consortium just six months old.

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

The reserve price for the strategic sale, which follows three unsuccessful attempts, has been set at ₹199.92 crore based on the valuation carried out by the Transaction Advisor and Asset Valuer.

Congress spokesman Gourav Vallabh attacked the government over the decision, saying it “makes a series of mistakes” in the series of miscalculated and ill-considered divestment decisions to justify its fiscal policies.

The reserve price for the sale of this 51 per cent controlling interest was set at £199.92m and the other two bidders who took part made bids of £181.05m and £153.15m respectively, Herr pointed out Vallabh.

Mr Vallabh said while this might seem like a normal divestment, there are several things raising eyebrows such as Star9 Mobility Private Ltd, a consortium of Big Charter Private Limited, Maharaja Aviation Private Limited and Almas Global Opportunity Fund SPC. just six months ago, on October 29, 2021.

Star9 Mobility Private Ltd has no helicopters of its own, while Big Charter Private Limited only has 3 helicopters in its fleet, he said. Also, Almas Global Opportunity Fund SPC was incorporated under the jurisdiction of the Cayman Islands and has no correlation or experience in the sector, he added.

Mr Vallabh also claimed that legal proceedings are pending between Big Charter Private Limited and Ezen Aviation Private Limited in the High Court in Delhi. He pointed out that the Pawan Hans workers’ union had expressed an interest in participating in the divestment process and had also recommended Pawan Hans to merge with ONGC or make it a subsidiary, but the government “brushed it off”.

“Pawan Hans had a net profit of Rs.242.78 crore in 2016-17 but has declined since 2018-19 making losses of Rs.63.67 crore in 2018-19 and Rs.33.15 crore in 2019-20,” said he.

Mr Vallabh put questions to the Modi government on the decision, saying that given the details available about the bidders and their consortium, there were red flags and how the government agreed to such a deal.

“There were three bidders who participated in the divestment process, but only one bidder bid above the reserve price. What was the Government’s reason for proceeding with only one correct bid?” Mr Vallabh said.

Has the government considered the merger of Pawan Hans with ONGC considering they already have a 49 percent stake and Pawan Hans plays a very strategic role in ONGC, HAL etc. he asked.

Mr Vallabh pointed out that since 2018-19 a company that has been consistently making net profits has suddenly turned into losses, around the same time the divestment was first processed, and asked if this was another attempt at valuation lowering it to make it easier to sell to someone 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 transportation, corporate and special charter flights, hotline washing of isolators and heli-pilgrims such as Kedarnath, Badrinath, Amartnath, Maa Vaishno Devi, are some of the main services.

The loss-making PHL is a 51:49 joint venture between the government and ONGC. ONGC had previously decided to offer its entire interest to the successful bidder identified in the government’s strategic divestment transaction at the same price and terms as the government.

The government received three financial offers to buy the company in December last year.

Mr Vallabh accused the BJP of being clumsy with the economy, saying the economy was reeling after eight years of disastrous financial management.

The BJP government has pushed sectors in need of support to the breaking point and magically made good companies and sectors fight, he claimed.

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

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

The company’s own helicopters have an average age of over 20 years and three quarters are currently not manufactured by the original equipment manufacturer.