Govt dilutes terms to attract bidders for Pawan Hans after failing to privatise
New Delhi: Having failed to privatise Pawan Hans last fiscal, the government has significantly diluted the terms of sale pertaining to employee retrenchment, asset sale and tax liability to attract bidders this time around, sources said.
As per the revised terms of sale proposed by the government, the successful bidder would be required to retain all permanent employees for a period of at least one year, as against two years stipulated earlier.
The government has also decided to indemnify the buyer against Rs 577 crore worth tax liability of Pawan Hans in case an ongoing tax dispute is decided against the company.
The revised terms of sale have also reduced the time period for stripping of assets of Pawan Hans by the buyer to two years, from three years specified earlier.
The relaxation in norms will provide greater freedom to the successful bidder to manage Pawan Hans, the sources said.
The government had last fiscal tried to sell the helicopter service provider but no buyer came forward. The government holds 51 percent stake in Pawan Hans, which has a fleet of 43 helicopters. The remaining 49 percent is with ONGC.
After the new government took over, it decided to sweeten the deal by diluting certain crucial terms of sale in view of the concerns raised by potential bidders when Pawan Hans was first put on the block.
As of April 30, 2019, Pawan Hans had 718 employees, of which 415 were regular and 303 on contract. The company's manpower comprises 116 pilots, 101 aircraft maintenance engineers (AMEs), 52 executives, 157 technicians and 292 other technical and non-technical employees. The firm posted revenues of Rs 410 crore in 2018-19, while employee cost was about Rs 180 crore.
According to the revised sale terms, the successful bidder would be permitted to provide voluntary retirement scheme (VRS) to existing Pawan Hans employees as per the terms specified by the Department of Public Enterprises.
As regards stripping of assets held by Pawan Hans, the successful bidder would be permitted to sell, transfer or lease the assets two years after consummation of the transaction.
The government on July 11 had come out with a fresh Preliminary Information Memorandum (PIM), a document inviting bids from companies having minimum net worth of Rs 350 crore.
The last date for submission of Expression of Interest (EoI) is August 22, 2019, and the short-listed bidder will be intimated on September 12.
If the Pawan Hans sale goes through, it would add to the disinvestment kitty and kickstart the process of privatisation. The Budget has set a disinvestment target of Rs 1.05 lakh crore for current fiscal, up from Rs 85,000 crore raised last fiscal.
The government had first floated an offer to sell its 51 percent stake in Pawan Hans in October 2017, but in view of subdued response from bidders, the EoI was withdrawn in April 2018. At that time, some investors had suggested that the government and ONGC should sell their stakes together.
Later in April, 2018, the government again issued an information memorandum for 51 per cent strategic stake sale in Pawan Hans and had sought EoI from interested bidders by June 18, 2018.
On July 2, 2018, ONGC wrote to the government saying its board has resolved that it would prefer to exit Pawan Hans simultaneously with the government, following which the Centre came out with a fresh PIM in August 2018, putting 100 per cent stake in the helicopter company on the block.
When the financial bid process concluded on March 6, 2019, only one investor had put in a "conditional bid", which was not accepted. The Pawan Hans sale process was then put on hold till the new government took charge post the general elections.
