Pawan Hans flags need for more due diligence in selling PSU assets
The Union government has rightly put on hold the sale of public sector helicopter service Pawan Hans after the credentials of the lead partner in the buyers consortium, Almas Global Opportunity Fund, has been questioned by the National Company Law Tribunal (NCLT). The government will examine the NCLT order before proceeding with the sale. The Kolkata Bench of the NCLT had said Almas Global had failed to honour its winning bid to pay `568 crore to acquire EMC, a Kolkata-based power system solutions company. Blaming the company for taking the insolvency resolution “process for a ride”, the tribunal has sought action against its management under the Insolvency and Bankruptcy Code.
Since the Pawan Hans sell-off has come under a cloud, it would be prudent for the government to also examine other questions raised in respect of the eligibility criteria. It appears that Almas Global is not registered with the market regulator SEBI, a requirement to allow it to invest in India. Secondly, does the buyer have the required minimum net worth of `300 crore, considering Pawan Hans is a large operator with around 41 choppers? Of the three entities that make up the buyer consortium, Maharaja Aviation and Big Charter are both with small net worth below `10 crore. The net worth of the lead partner, Almas Global, is unclear, but then it could not muster up `568 crore for a committed acquisition just months ago.
This episode has also brought focus on the need for proper processes in the sale of public sector assets. In another recent incident, disinvestment in the state-run firm Central Electronics (CEL) was halted after allegations of undervaluation by the employees’ association. In the case of Pawan Hans, it is an established company connecting remote areas and offering chopper services for emergency and rescue operations. Can these essential services be left to chance? Finally, a cursory look at Pawan Hans’ financials shows that it was in the black till three years ago, and only started making losses from FY2019 after a few accidents. Perhaps reviving the company is an option the government can examine.