Government’s plan to divest equity stake in state-owned Pawan Hans Helicopters seems to have been delayed by bureaucratic processes and involvement of multiple agencies. The government had listed the company as a divestment candidate in its draft civil aviation policy.
Pawan Hans IPO is still far behind as the company is yet to finalize an advisor. The company needs to secure approvals from petroleum and finance ministries before it can get listed on stock exchanges. It is noteworthy that Pawan Hans is a profitable company but has been marred in some controversies regarding loans taken from the government.
Pawan Hans, which operates a fleet of 46 helicopters, took a loan of INR131 crore from the government in 1986 which resulted in accumulated interest of INR329 crore until 2001 when the government decided to not charge any more interest. Pawan Hans had asked the finance ministry to waive off the loan and has also offered to trade the loan with equity as the ministry has decided against waiving off the loan. Since INR329 crore is substantial amount for a company that earned a profit of INR38.6 crore in FY 2013/14 on top line of INR529.9 crore, it has potential of impacting valuations of Pawan Hans.
Through the civil aviation ministry, the government of India owns 51% equity stake in Pawan Hans while the rest is owned by Oil and Natural Gas Corporation (ONGC). Pawan Hans plans to invest INR560 crore to expand its fleet by 10 helicopters and two sea planes in FY 2015/16.
India’s IPO market has become active and debt-laden companies in the aviation sector are looking to pare some of their debt through IPO proceeds. Important among the players looking to bring their IPOs are IndiGo parent InterGlobe Aviation Limited and airport operator GVK Airport Developers.