Last month, the Centre issued a statement saying that the revenue collection for FY22 exceeded by ₹5 lakh crore from the budget estimates – ₹27.07 lakh crore against estimates of ₹22.17 lakh crore. It also said the indirect tax “GST has seen an exemplary growth” as the CGST revenue increased from ₹4.6 lakh crore in FY21 to ₹5.9 lakh crore in FY22. These were intended to signal a robust economic recovery.

At the same time, the Centre is rushing to sell or disinvest in PSUs whose valuations and buyers have been questioned at a time when the market is highly volatile. The latest example is Pawan Hans Limited (PHL), the premier helicopter service in India owning 43 helicopters – none of the private service providers come anywhere close to it – for just ₹211 crore. There are several reasons why this deal raises eyebrows.

Distress sale of Pawan Hans

On April 29, the Centre announced that its entire 51% stake in PHL, which provides strategic and emergency services to oil PSU ONGC and to the rest of the country, is being sold off for ₹211 crore to Star9 Mobility Private Limited registered exactly six months earlier on October 29, 2021. The ministry said, this was the one of three bidders which bid above the reserve price of ₹199.9 crore.

Why this sudden rush when, going by the unexpected jump in revenues, the economy is on the recovery path and revenue collection is far above the expectations? Why couldn’t the government wait for better bids – as it had done thrice earlier?

ONGC owns the rest 49% of PHL and is expected to sell off its stake to the same buyer at the same valuation. The PHL employees’ union told Fortune India that they had expressed interest in the privatisation process and sought it to be merged with ONGC when the privatisation talk began in 2016 – but the Centre did not entertain their ideas. At that time, ONGC was not supposed to offload its stakes as PHL is critical to its operations in high sea oil rigs. In fact, they say PHL was set up in 1985 to provide offshore services. At present, PHL connects inaccessible areas in the northeast region, Lakshadweep, Andaman and Nicobar Islands, Daman, Jammu and Kashmir, anti-Maoist operations in Gadchiroli (almost all of which private operators refuse to service), besides providing rescue and relief services during national calamities and other emergencies.

The Centre’s statement said the ONGC had earlier decided to offer its entire stakes to the successful bidder as if the oil PSU acts of its free will. Had that been the case, ONGC wouldn’t have wasted its financial resources by buying bankrupt Gujarat State Petroleum Corporation (GSPC) in 2017 – GSPC had declared a loss of ₹17,061 crore that year – or borrowed ₹24,881 crore from the market to pick up Centre’s stakes in another oil PSU, HPCL, in 2018. Once a cash-rich and debt-free “maharatna”, ONGC is now cashless – cash and bank balance dipping from ₹9,956.6 crore in FY16 to ₹302.6 crore in FY21 – and heavily indebted – its current borrowings zooming from zero in FY16 and FY17 to ₹8,695.1 crore in FY21. These details are provided in its annual report for FY21.

As for the buyer, Star9 Mobility Private Ltd, it is a consortium of three companies – Big Charter Private Limited, Maharaja Aviation Private Limited and Almas Global Opportunity Fund SPC. The official website of Almas Global says it is registered in the tax haven Cayman Islands and is into “investment”. Maharaja Aviation Pvt Ltd provides air transport service and claims to own three helicopters. The Big Charter Pvt Ltd is a “transportation/trucking/railroad company” and its official website (only found on LinkedIn) doesn’t declare how many helicopters it owns.

PHL employees say, none of these is known to provide offshore services and has just three helicopters and is taking over the “maharaja” of helicopter services in India for a pittance. Curiously, the Centre’s statement declaring the sale doesn’t provide any information about the credentials and competencies of the consortium and its three constituents (only reveals their names). The Department of Investment and Public Asset Management (DIPAM), the nodal agency for disinvestment and privatisation, doesn’t disclose even that; all it provides is two documents – one is the “preliminary information memorandum” of December 2020 for inviting expression of interest (EOI) and the other, dates for filing EOI to its “global invitation”.

As for the poor valuation of the PHL, the Centre’s statement says it was making losses for the last three years (FY19, FY20 and FY21) and that it has an ageing fleet of helicopters. It doesn’t tell why a profit-making PSU turned loss-making from FY19. PHL employees, talking to Fortune India, attribute it to several key factors since 2016, when the privatisation decision was first taken: (i) ONGC banned more than 5-year-old helicopters for a crew change at its offshore oil rigs (ii) at the same time, the aviation ministry refused permission to buy new helicopters (capital expenditure) because it had decided to privatise the PSU (iii) pending government dues and (iv) demoralised employees (due to the privatisation decision).

CEL privatisation

Why the distress sale of PSUs amidst booming govt revenue?