JM Financial to advise govt on HPCL stake sale to ONGC

NEW DELHI: JM Financial has been appointed as the transaction advisor to the government's over Rs 37,000 crore stake sale in HPCL to ONGC.

Besides, Cyril Amarchand Mangaldas has been selected as the legal advisor for handling the stake sale.

With ONGC and HPCL under the administrative control of the oil ministry, the latter has appointed 'Protocol Valuers Ltd' for suggesting valuation at which the government's 51.11 per cent stake in HPCL should be sold to ONGC, sources said.

The process of selection of transaction advisor was kicked off by the Department of Investment and Public Asset Management (DIPAM) in July and as many as five consultants – including JM Financial, EY, PWC, ICICI Securities and Rothschild (India) Pvt Ltd had submitted expression of interest (EOI).

"JM Financial has been selected as the transaction advisor which will act as merchant banker for valuation and Cyril Amarchand Mangaldas will suggest the DIPAM on legal aspects of the strategic stake sale," sources said. The other law firms who were in the race as legal consultant included Crawford Bayley and Co, Luthra and Luthra, Suman Khaitan and Company and Hammurabi and Solomon Partners. The Cabinet Committee on Economic Affairs (CCEA) had on July 19 given 'in-principle' approval to strategic sale of the government's existing 51.11 per cent stake in Hindustan Petroleum Corporation Ltd (HPCL) to Oil and Natural Gas Corporation (ONGC) along with the transfer of management control. At the current market price, the HPCL stake is valued at more than Rs 37,500 crore.

The merchant banker will assist the government on "modalities of disinvestment and the timing" as well as recommend the need for intermediaries required for the process.

It will do business valuation of HPCL, structure the transaction, suggest measures to fetch optimum value and assess positioning of the strategic sale. Besides, it will prepare all documents like information memorandum (IM), confidentiality and transaction agreements such as pact to sale and the share purchase agreement.

The legal advisor will review and advise on all legal contracts, titles of properties, assets, real estate, intellectual property rights and contracts with employees. It will also draft transaction related documents and advise on the structure of the transaction, including compliance with Sebi guidelines and stock exchange listing norms. NEW DELHI: Technical snags faced by A320 neo aircraft operated by Indigo and Goair pose a "safety issue", Civil Aviation Minister Ashok Gajapathi Raju has said, hoping that they would be addressed and sorted out.

At least eight A320 neo (new engine option) planes of Indigo and two of Goair have been grounded due to issues related to Pratt & Whitney engines that power these aircraft.

"Obviously, any failure is a safety issue. So the operating procedure we changed... What is attractive is fuel efficiency. Fuel efficiency is one thing and risking life is another," Raju said in an interview.

He was responding to a query on whether the engine issues were a safety concern.

Indigo, which has A320 neo planes in its fleet of 136 aircraft, was forced to cancel many flights due to engine woes.

The aviation regulator DGCA asked the American engine maker to expedite the supply of spare engines to India.

On whether there could be harsher action with respect to the engine issues, Raju said some of the planes have been grounded because of regulations, implying that existing norms are strict.

"Why are they grounded that is because of the regulations. You don't want to take risks with life...

Everybody is working on it (addressing the engine issues). As long as glitches don't massacre human beings it is okay. They will be addressed and sorted out," he noted.

The Directorate General of Civil Aviation (DGCA) directed Indigo and Goair, in February, to conduct inspections of the P&W engines once they complete 1,000 hours of flying, instead of 1,500 hours as recommended by the engine maker.

"What makes it (P&W engine) attractive?... We want to not risk lives and we also want fuel efficiency," Raju said.

P&W claims their neo engines are 16 per cent more fuel efficient than the earlier variant A320 ceo (current engine option).

Last month, Indigo President Aditya Ghosh indicated that the airline could examine procuring aircraft with engines from a different manufacturer such as GE for 280 A320 neos it has ordered out of the total 430 planes.

Last month, Indigo had said it would also look at GE engines for its planned 280 A320 neo planes.

The issues related to its A320 neos are due to two specific components of P&W engines wearing out faster than expected even as he assured it is not a safety issue, the airline's President Aditya Ghosh had said.

"Our engine supplier P&W is implementing some design changes and we believe those changes will be implemented over the next 12-18 months... We are right now focused on getting enough spare engines from P&W so that the operational headaches go away," he had told shareholders.

Apart from Indigo and Go Air, Air India and Vistara have A320 neo aircraft but with engines from a different manufacturer. NEW DELHI: Sending out a stern message against employees' lapses, Air India chief Rajiv Bansal has said the airline will "act on those who fail to act" in ensuring on-time flights.

Taking over the reins of the disinvestment-bound national carrier less than two weeks ago, Bansal has initiated steps to cut down costs at various levels along with focus on bettering on-time performance (OTP), increasing passenger yields and improving customer satisfaction.

The airline, which operates nearly 400 flights everyday, has been facing flak for delays.

"We will affirmatively act to improve our performance and we will act on those who don't act," Bansal said in an interview.

The chairman and managing director of the airline stressed that whatever action is required will be taken with respect to ground handling, crew, in-flight, engineering checking and food supplies, among other aspects.

"We are working on that actively to ensure there are no delays. I will act on those who fail to act," he said, adding that the message has been conveyed to those down the line.

Air India has some "very good time slots", but if the flights do not operate on time, then the value of the slot is lost, Bansal said.

The OTP of Air India's domestic flights from four metro airports stood at 65.5 per cent in July, way lower than many other local carriers, according to official data.

Asserting that there will be zero tolerance for flight delays due to issues of ground handling and technical glitches, he said these are matters internal to the company.

"There are around 400 flights a day and I cannot focus on each of them, but my first priority is to look at the first flights of the day from Delhi and Mumbai. I am trying to push for better OTP round the clock," he made it clear.

Apart from running the airline profitably and ensuring better OTP, two other key priorities for Bansal are increasing passenger yields and improving customer satisfaction.

"We plan to invest in technological upgradation in the fare management system. That is the pricing tool. I am doing it both in Air India and Air India Express, where I have much larger market share," he said.

Air India Express is the lowcost international arm of the carrier and a major player on Gulf routes.

On how the employee morale would be kept high amid the government working on the modalities of stake sale, Bansal acknowledged that there is "obviously uncertainty" even as he said there is a general feeling that divestment would not necessarily lead to job cuts.