After three previous unsuccessful attempts at disinvesting its stake in Pawan Hans, the central government has been forced to put the divestment of the helicopter services provider on hold after concerns were raised over one of the majority stakeholders of Star9 Mobility.
“We are examining it legally. We haven’t issued a Letter of Award to the successful bidder,” Tuhin Kanta Pandey, secretary of the Department of Investment and Public Asset Management (DIPAM) — the nodal agency of the government’s disinvestment process, said.
According to Dipam’s guidelines, an entity will be disqualified if the company or its directors are facing any conviction by a court of law or indictment or adverse order by a regulatory authority which casts a doubt on its ability to manage a public sector unit when it is privatised.
Almas Global Opportunity Fund, a majority stakeholder in Star9Mobility, has come under the scanner as it was earlier prosecuted by the National Company Law Tribunal. Almas Global is a fund managed by Dubai-based Almas Capital based in the Cayman Islands.
NCLT, in its order, had strongly reprimanded Almas for its failure, and called for action against the company under Section 74(3) of the Insolvency and Bankruptcy Code. It had also asked for a copy of its order to be sent to the Insolvency and Bankruptcy Board of India and the Secretary, Ministry of Corporate Affairs.“
The strategic disinvestment transaction was implemented through an open, competitive bidding process supported by a multi-layered consultative decision-making mechanism involving (an) Inter-Ministerial Group, (a) Core Group of Secretaries on Disinvestment and the empowered Alternative Mechanism,” the Ministry of Finance said in a press release.
The NCLT had questioned the financial health of the Cayman Islands-based Almas Global Opportunity Fund SPC (AGOF), the majority stakeholder in Star9 Mobility Pvt Ltd, the winning bidder for Pawan Hans.
The April 22 NCLT order was in connection with Almas Global’s successful bid of INR 568 crore for EMC Ltd in insolvency proceedings. EMC was admitted into the Corporate Insolvency Resolution Process on November 12, 2018, for defaulting on INR 6,500 crore loans.
Almas’ resolution plan was approved in October 2019 but the company did not pay any amount except the bank guarantee, leading to a delay in the resolution proceedings.
On May 14, All India Civil Aviation Employees Union, the employees union of Pawan Hans, had also moved the Delhi High Court seeking its direction to set aside the impugned notice inviting expression of interest dated December 8, 2020, issued by the central government for the proposed strategic disinvestment of Pawan Hans.
The government had received three bids for the Pawan Hans sale. Star9 Mobility had emerged as the highest bidder, quoting INR 211.14 crore, which was above the reserve price.
The reserve price for the sale of 51% shareholding of Pawan Hans was fixed at INR 199.92 crore based on the valuation carried out by the transaction adviser and asset valuer. The other two bids were for INR 181.05 crore and INR 153.15 crore.
On April 29, an empowered cabinet group had given the green signal for Star9 Mobility to buy the government’s 51% stake in the loss-making Pawan Hans.
ONGC, which holds the remaining 49% in Pawan Hans, had earlier said it would offer its shareholding to the successful bidder on the price and terms decided by the government.
This consortium of Big Charter Pvt Ltd, Maharaja Aviation Pvt Ltd and Almas Global had offered INR 211.14 crore against the reserve price of INR 199.92 crore fixed by the government. Almas Global holds 49% of the special purpose vehicle (SPV), while Big Charter has 26% and Maharaja Aviation owns 25%.
Star9 Mobility, was only created in October 2021 and the company has not filed a single annual return, and its paid-up capital was INR 1 lakh. Some reports also said Star9 Mobility doesn’t have any helicopters of its own, while Big Charter had just three. Further, Almas Global was alleged to have no experience in this sector.
This is the second instance when the Narendra Modi government’s sale of government assets to private companies has raised questions about the new owners.
In January, the government had paused the privatisation of Central Electronics Ltd as allegations were raised that the winning bidder Nandlal Finance and the other shortlisted bidder JPM Industries Limited were inter-related.
Pawan Hans was founded in 1985 as a joint venture of the Ministry of Civil Aviation and the public sector Oil and Natural Gas Corporation (ONGC). It is the largest helicopter service provider in the country.
In the past three years, Pawan Hans has been registering losses. In FY18-19, it recorded its worst loss of around INR 70 crore, which has improved to losses of around INR 18.5 crore in FY19-20 and around INR 17.6 crore in FY20-21. This came after a sharp profit that it registered in FY16-17 of INR 254 crore.
That year, the government converted the debt of INR 130 crore that Pawan Hans owed into equity and wrote off interest dues of around INR 339 crore – which is what had resulted in the high profit. In the year that preceded it, that is FY15-16, the company had made a profit of around INR 57 crore.
In the year that followed, that is FY17-18, the company made a profit of around INR 20 crore. The chart and table below track it’s revenue and profits since 2016.
Pawan Hans provides its helicopters for search and rescue operations during natural calamities, carries personnel and material for the Border Security Force, and the Border Roads Organisation supports the Power Grid Corporation and helps in the surveillance of pipelines of not just ONGC, but GAIL and Oil India Limited as well.
Pawan Hans helicopters have been deployed by the security forces and have been chartered for a variety of purposes by private persons and government bodies.