The finance ministry has sweetened the terms to sell helicopter operator Pawan Hans in its fourth attempt, reducing minimum net worth for potential bidders and the lock-in period of investment, and allowing the successful bidder to sell assets after one year.
The investor is now allowed to sell assets one year after acquisition instead of two years proposed in the EoI issued last year. While change in shareholding among consortium partners was not allowed earlier, the new offer document allows it if the lead investor holds a minimum of 26% stake and other members hold at least 10% each.
The lock-in period for investment has been reduced to one year from three years earlier.
However, a new clause of business continuity has been added to ensure that the successful bidder will not liquidate or close down the business for three years. The minimum net worth of bidders has also been reduced to ₹300 crore from ₹350 crore earlier and the profitability criteria has been abolished.
“This will increase the universe of bidders for Pawan Hans. All perceivable hurdles have been removed. Valuation of the company has not been decided now. We are at EoI (expression of interest) stage. If we get some EoI responses, then we will move to valuation,” a finance ministry official said under condition of anonymity.
Pawan Hans is a Mini Ratna under the administrative control of the ministry of civil aviation. It was incorporated in 1985 as a public sector undertaking to primarily provide helicopter services for the exploration activities of Oil and Natural Gas Corp. Ltd (ONGC) and to the North-East region of India. The PSU is now India’s leading helicopter company with the largest fleet size, engaged in providing helicopter services for various purposes such as offshore operations, inter-island transportation, connecting inaccessible areas, pipeline surveillance, casualty and rescue work, charter services, VIP transportation, services under Regional Connectivity Scheme and various other customized services.
As on 31 July, the company had 686 employees—363 regular employees and 323 contractual employees. Both the Centre (51%) and ONGC (49%) have decided to disinvest their entire equity shareholdings in Pawan Hans in a strategic disinvestment with transfer of management control. Last date of submission of EoIs is 19 January.
The company’s authorized capital as on 31 March 2020 was ₹560 crore. The PSU’s revenue has been falling since FY16 and it recorded losses in FY19 and FY20. In FY20, total revenues stood at ₹376.8 crore and Ebitda (Earnings before interest, taxes, depreciation, and amortization) loss of ₹8.1 crore.
“Drop in revenue from operations in FY16 onwards can be attributed to lower flying hours due to a reduction in operational fleet caused by 3 accidents during 2015. Revenue has further declined in FY20 due to ageing of helicopters as vintage clauses enforced by various customers act as a hurdle to participate and win new businesses,” the EoI document said.
The government has set a disinvestment target of ₹2.1 trillion for FY21, including the privatization of Air India and Bharat Petroleum Corp. Ltd. So far this year, the government has garnered ₹6,734 crore through minority stake sales and the initial public offering of Mazagon Dock Shipbuilders Ltd. It is, however, yet to carry out any strategic disinvestments so far this fiscal year.
The Pawan Hans deal is unlikely be completed during the current fiscal.
