I take great pleasure in welcoming you all to the 33nd Annual General Meeting of your Company. The Annual Report for the financial year 2017-18 has been circulated and with your permission I take it as read.
Financial year 2017-18 had been a year of challenges and the Company made efforts to retain its leadership position in the helicopter industry and its long term customers as well as start helicopter services in new areas/charter business. Further, Company has taken many new initiatives and earn new business during the year. Company has also signed MoUs with various State Governments & Administration to develop heli-tourism in their States such as Goa, Andhra Pradesh and Daman-Diu. Helicopter industry is facing severe shortage of experienced helicopter pilots and Pawan Hans has also suffered high rate of attrition of pilots in last two years affecting its business. Recently, Company has signed an MoU with Indian Air Force for intake of pilots on deputation and permanent absorption basis to overcome the hardship. Further, the Company has taken a new initiative to establish PHL Aviation Academy and has signed MoUs with Mumbai University, Jamia Millia University to provide dual Certificate/Degree to its students of AME courses i.e. DGCA Certificate and BSc Aeronautics Degree, besides launching a CHPL-Cadet Pilot Scheme in association with Mumbai University and Jamia Millia University. The Company continued to earn profit after tax and paid dividend to shareholders.
The Helicopter industry is becoming more and more competitive and 85% of total operating revenue of Pawan Hans is now earned from contracts won through competitive tenders resulting in less profit margins. Pawan Hans has participated in RCS-UDAN Scheme of MoCA to provide helicopter services in various hilly & North Eastern States and has been awarded 11 routes in 4 States. This has a great business potential and Company hopes to do well in this sector.
Further, I would like to inform that CCEA, GOI has approved in-principle the strategic disinvestment of its 51% shareholding with management control and the process of disinvestment is in progress by MoCA and DIPAM. Further, an option has also been given to successful bidder to purchase 49% stake held by ONGC at the same price paid/to be paid for the stake of Government of India. This has resulted in hold of induction of new Directors consequent to PSEB selection process in June, 2017 and also CAPEX expenditure has been put on hold resulting in no purchase of new helicopters since 2016. This has reduced the fleet strength from 46 helicopters in 2015 to 42 helicopters in 2017 in view of loss of helicopters in various accidents. Furthermore 17 Dauphin helicopters has crossed vintage of 31 years and facing high un-serviceability/high maintenance cost which is adversely impacting business of the Company. Due to disinvestment decision of GOI there was restriction on helicopter purchase, as such PHL could not acquire new helicopters for replacing three helicopters lost in accidents in 2015 and one helicopter lost in accident in January 2018 and loss of revenue continued in 2017-18 due to non-availability of helicopters. Accordingly, the Company's total revenue during 2017-18 was Rs. 458.02 crores as against Rs.507.73 crores during 2016-17.
Average monthly deployment of helicopters during the year ended 31.03.2018 was 30 helicopters out of the fleet size of 43 helicopters. Inspite of all odds, average fleet serviceability during the year was 97% as against 88% in the previous year but due to less no. of helicopters in offshore flying, the total flying hours in 2017-18 reduced to 23,329 hours as against 26,054 hours during the previous year. The revenue from operations earned by PHL during 2017-18 is Rs.395.42 crores. There has been five fold increase in lease rentals at AAI Airports at Mumbai, Guwahati and Safdarjung consequent to MoCA arbitration award effective from 2014. This has increased the rental expenditure and affected revenue adversely. Further, decrease in deployable helicopters due to losses in accidents has also affected the overall revenue.
Further, net profit after tax during 2017-18 was Rs. 19.61 crores as against Rs.253.92 crores in 2016-17 as per audited accounts based on Ind-AS Accounting System. Due to disinvestment decision of GOI there was restriction on helicopter purchase, as such PHL could not acquire new helicopters for replacing three helicopters lost in accidents in 2015 and one helicopter lost in accident in January 2018 and loss of revenue continued in 2017-18 due to non-availability of helicopters.
Reserves and surpluses of the Company during 2017-18 were Rs. 564.06 crores as against Rs.747.08 crores in 2016-17. As on 31.3.2018, the long term borrowings was Rs.19.28 crores (Previous Year Rs.24.98 crores).
The Board of Directors have recommended dividend of Rs.6.16 crores @ 30% of Profit after Tax plus corporate tax on dividend of Rs.1.27 crores (P.Y. dividend @ 5% of adjusted net worth : Rs.36.99 crores plus corporate tax on dividend of Rs.7.53 crores). The dividend is payable on the entire paid up capital of Rs.557.482 crores. The Company has earned/posted profit and paid dividend to the Shareholders continuously for last six years. The recommended dividend amount is subject to the approval of DIPAM in this regard and in case DIPAM does not approve the same, dividend amounting to Rs.56.08 crores (being higher of 5% of Net Worth or 30% of Profit after Tax as per DIPAM Guidelines) has been recommended by the Board.
The following significant developments have taken place:-
i) The Company increased its authorized share capital from Rs.250 crores to Rs.560 crores and through Right Issue of shares allotted additional share to President of India (GoI) through Ministry of Civil Aviation of Rs.159.05 crores and ONGC Ltd. of Rs.152.816 crores in July 2017.
ii) PHL has been awarded a contract by ONGC for 04 helicopters for 5 years with expected annual revenue of Rs.80 crores.
iii) Pawan Hans has persuaded inclusion of helicopters in RCS-UDAN Scheme and has participated in bidding process. PHL has been awarded 13 RCS routes in January 2018 under Regional Connectivity Scheme (RCS) in Assam, Himachal Pradesh, Manipur & Uttrakhand for which Helicopter services to be started in the next six months time. Under RCS scheme PHL is likely to get annual estimated revenue of Rs.60 crores. This is a new revenue stream and Company is going up to start Commercial Operations under RCS Scheme.
iv) The Company has been awarded consultancy work for construction of 31 Heliports in five States i.e. Arunachal Pradesh, Assam, Manipur, Uttarakhand and Himachal Pradesh under RCS UDAN-II Scheme. This work comprises of three stages of feasibility study, preparation of DPR and consultancy during execution. Expected revenue for the first two stages is Rs.14 crores approx. and for the third stage it is Rs.30 crores approx.
v) PHL has been awarded Project Management Consultancy work for night landing facility at Helipads in 3 islands of Lakshadweep for a total project cost to the tune of Rs.10.36 crores approx. in which expected revenue for PHL will be Rs.1.50 crores approx.
vi) Pawan Hans has developed first time, a vision document "Strategic Corporate Plan:2020" and New Business Plan 2027. However, in view of proposed strategic disinvestment, the plan is presently on hold due disinvestment process. A new medium term plan 2024 has been now prepared. There is a need to review this decision since business of the Company is affecting adversely.
vii) The Company is complying Guidelines on Corporate Governance issued by DPE. Industrial relations during the period continued to be cordial and regular meetings with employee's representative bodies were held. The Company is playing a vital role in the growth of helicopter industry in India which has a vast scope of growth.
viii) Earned new contract of deployment of one helicopter with Shri Machail Mata with estimated revenue of Rs.1.50 crores.
ix) Pawan Hans has been awarded with various awards and accolades at National and International level for its excellent services and contribution in Civil Aviation as listed below :
- In April 2018, Pawan Hans being honored for its outreach programs by Hon'ble Minister of State for Road, Transport and Highways Shri. Mansukh L Mandaviya along with Smt. Krishna Raj, Minister of State for Agriculture the event was organized by Governance Now.
- In August 2017 Pawan Hans has been conferred with Best General Civil Aviation CPSE by ASSOCHAM "Promoting Heli Tourism and Remote Area Air Connectivity Award".
- In September 2017 Pawan Hans has been recognized by Indian Chamber of Commerce for its outstanding achievements on developing Nation's first Integrated Heliport.
- In November 2017 Pawan Hans has received Best General Aviation Company Award by PHD Chamber of Commerce & Industry for providing Rural Connectivity in the country.
- Pawan Hans has been awarded with "Recognition for Empowering Woman Pilots" by IWPA in International Conference held in December, 2017 in Delhi.
I take this opportunity to thank you all for the confidence reposed in the management. I am also grateful for the support and guidance of the Government of India, Ministry of Civil Aviation, DGCA and other various agencies in efficient management of the Company. I deeply appreciate the confidence reposed by ONGC, GAIL,GSPC, NTPC, Ministry of Home Affairs, BSF, the State Governments of Meghalaya, Mizoram, Himachal Pradesh, Sikkim, Maharashtra, Tripura, Assam, Odisha, J&K, Andaman & Nicobar Islands and Lakshadweep Islands in the Company and also services rendered by its employees towards Company's growth.
Air Cmde. Sh. T.A. Dayasagar
Chairman & Managing Director
Dated: 28th December, 2018