After years of efforts to sell off key state-owned companies, the Modi government is said to have changed course. It now plans to invest billions of dollars to revive some of these firms, with helicopter operator Pawan Hans at the top of the list.
After four failed attempts and the scrapping of a successful bid in 2023, the government now plans to revive the company by funding new fleets, Reuters reported. Pawan Hans is expected to receive around $230 million to $350 million to modernise its aging helicopter fleet, according to the news agency.
It is among nine state-owned units whose privatisation has been put on hold after opposition from relevant ministries, the report said, citing government panel documents. Other firms on this list include Madras Fertilizers, Fertilizer Corporation of India, MMTC, and NBCC (India).
Long-Flawed Privatisation Bid
Set up in 1956, Pawan Hans is a 51:49 joint venture between the central government and oil giant ONGC. Initially established to primarily provide services to ONGC’s offshore operations, it has since expanded its business to include connectivity to inaccessible areas, charter services, search and rescue missions, VIP transportation, corporate and special charters, heli-pilgrimage, among others.
The helicopter operator was first put up for sale in 2016, but the process did not take off. In the first attempt, the Preliminary Information Memorandum (PIM) was issued in October 2017, inviting Expressions of Interest (EOI), but out of four EOIs received, only one was found eligible, leading to the cancellation of the process. The second round in April 2018 saw two eligible bidders who were issued the Request for Proposal (RFP); however, the process failed again as the only bid received was incomplete and non-compliant. The third round in July 2019 also ended in cancellation after receiving four EOIs, of which only one was deemed eligible.
In the fourth and final attempt, the government invited EOIs on December 8, 2020. It received seven responses and shortlisted four qualified bidders. After thorough due diligence, three financial bids were submitted, with Star9 Mobility emerging as the highest bidder at Rs 211.14 crore, while the other two bids stood at Rs 181.05 crore and Rs 153.15 crore.
However, soon after the announcement, concerns emerged over Star9 Mobility’s eligibility. Reports indicated that Almas Global, a key partner in the consortium, had regulatory issues and lacked experience in the aviation sector.
"The government has decided that the successful bidding consortium, M/s Star9 Mobility Pvt Ltd, is disqualified from the strategic disinvestment process of Pawan Hans Ltd in terms of provisions of PIM and RFP," the Department of Investment and Public Asset Management (DIPAM) said in July 2023. It also annulled the strategic disinvestment process altogether.
Pawan Hans Turns Profitable
Meanwhile, despite years of disinvestment uncertainty, the once loss-making Pawan Hans has turned profitable. According to a report by The Hindu, in FY24, the company made an operating profit of over Rs 50 crore after recording a net loss of around Rs 22.32 crore in the previous year.
Pawan Hans’ publicly available annual report for 2022-23 also showed an improvement in its revenue over the years. The company’s revenue from operations grew by 7.8% in 2022-23, with an average monthly helicopter deployment of 27 out of a fleet of 42.
It claims to be one of Asia’s largest helicopter operators, though five aging Dauphin helicopters have been classified as impaired assets. Additionally, the operational fleet was reduced to 41 following the loss of a Sikorsky S76D in a 2022 accident.
After the annulment of strategic disinvestment, Pawan Hans received approval to acquire 23 helicopters through global tenders to replace aging aircraft. The helicopter operator has also been awarded multiple networks under the UDAN scheme across various states.
Government’s Plan Ahead
In December 2024, the Ministry of Civil Aviation (MoCA) informed Parliament that it is considering modernising Pawan Hans’ fleet.
“A proposal from PHL for its fleet modernisation is presently under consideration,” said Minister of Civil Aviation Kinjarapu Rammohan Naidu. The reply also noted that most of the firm’s fleet is over 30 years old and needs replacement.
According to The Hindu, the government views Pawan Hans as operating in a fast-growing strategic sector, which could allow it to pursue new opportunities as a PSU. The company could be deployed to provide last-mile connectivity in remote regions.
In December, Pawan Hans also secured a 10-year contract worth over Rs 2,000 crore to provide four helicopters to ONGC for transporting its personnel to offshore duty locations.
