The Centre has put on hold the sale of Pawan Hans (PHL), taking into consideration a recent NCLT-Kolkata ruling against Almas Global Opportunity Fund, the lead partner in the consortium that won the bid for the state-run helicopter firm.
This is the second instance in a span of five months where disinvestment in a state-run firm has been halted after the winning bidder was named by the government. In January this year, the sale of Central Electronics (CEL) to Delhi-based Nandal Finance and Leasing was stalled following allegations of undervaluation of the firm by the employees’ association.
In an April 20 order, the Kolkata bench of the National Company Law Tribunal (NCLT) said Almas Global could not honour its winning bid to acquire EMC, a Kolkata-based power system solutions company as it failed to pay Rs 568 crore to the creditors. Stating that Almas Global had taken the insolvency resolution “process for a ride”, the tribunal sought action against its management under section 74(3) of the Insolvency and Bankruptcy Code. If the special court concerned takes penal action in this case, the officials of the company could face jail terms of 1-5 years besides penalties.
“We will do legal examination of the NCLT order before proceeding further (with the sale of Pawan Hans). The letter of award has not been issued to the bidder thus far,” a senior government official told FE.
Analysts said as dozens of companies are on the government’s list for strategic sale, the ongoing litigation involving them could prove to be a stumbling block in completing the sale processes.
According to the government’s strategic disinvestment guidelines: “any charge-sheet by any governmental authority/conviction by a court of law for an offence committed by the interested bidder or any of the members of consortium or by any of their respective sister concerns or any of their promoters, promoter group and directors would result in disqualification.”
“The NCLT order clearly raises questions on the financial strengths and integrity of the consortium led by Almas to acquire Pawan Hans and could be viewed seriously by the department of investment and public asset management while considering the bid for Pawan Hans,” Manoj Kumar, partner at Corporate Professionals, a corporate advisory firm, said.
Separately, the All India Civil Aviation Employees Union also moved the Delhi High Court seeking a stay on the privatisation of PHL.
In the first week of May, the Centre had dismissed social media posts that the consortium, Star9 Mobility, that won the bid for the government’s 51% stake in the loss-making helicopter firm with an offer of Rs 211 crore did not meet the minimum net worth criteria of Rs 300 crore specified. It was hopeful to complete the sale of PHL to Star9 by June.
However, the NCLT order against Almas Global, which was delivered prior to the government approving the deal, has made the transaction untenable.
The consortium could muster a net worth of Rs 691 crore only with Almas Global in its fold.
The two other members of the consortium were air transport service operators (ATSO) with little net worth.
As per extant procedure, the reserve price for the sale of 51% shareholding of PHL was fixed at Rs 199.92 crore on the basis of valuation carried out by experts (transaction adviser and asset valuer). The other two financial bids received were below the reserve price.
The helicopter firm has incurred losses in FY19, FY20 and FY21. The company has a fleet of 41 helicopters, all of which are 15-34 years old.
State-run oil explorer ONGC holds the balance 49% in the helicopter firm. ONGC had earlier decided to offer its entire shareholding to the successful bidder identified in the government strategic disinvestment transaction on the same price and terms.