Shipping Corporation of India to be privatized
May 8, 2022
New bids in September
The long-awaited privatization of the Shipping Corporation of India (SCI) is expected to take several more months. New Delhi has been attempting to privatize India's flagship line for the past 18 months as part of a broader privatization push that has included a tender and the selection of finalists.
The government has put the process on pause until non-core property interests are separated off, and a new date of September has been decided to seek new bids due to the company's complicated structure.
The government is selling SCI’s Shipping House and its training college in Pune, as well as several other non-core assets, as part of the strategic sale process.
India's Shipping Corporation is separating its real estate holdings
The government plans to segregate the real estate assets of the Shipping Corporation of India, including its corporate offices in Mumbai, from the planned privatization. “The Shipping Corporation of India (SCI) is in the process of the demerger. We're planning to split off all of the company's real estate. As a result, they will be excluded from the privatization process” said a top government official.
Earlier, Economic Times stated that Maharashtra's state government was hesitant to hand up Shipping House to a private party due to security concerns because the building is just across from Maharashtra chief minister Uddhav Thackeray's office.
Another official told that they were conscious of the state government's worries over the building's transfer and that it will be transferred under a different company, with no conflict as of yet. Officials claim that while this has slowed the process, the divestment is still on track, and is expected to be completed in the coming 4 to 6 months.
SCI's 63.75 percent share in the government is being sold. The winning bidder must also submit an open offer for the remaining 26 percent of the firm held by public shareholders. After the process of demerging non-core assets is done, the government is expected to solicit financial bids for the Shipping Corporation of India by September, according to an official.
Hiving off non-core assets
Last week, the board of Shipping Corporation of India Land and Assets Ltd (SCILAL) authorized an updated demerger scheme for selling off SCI's non-core assets, including Shipping House in Mumbai and MTI (Maritime Training Institute) in Powai, to complete the process of de-merging all non-core assets to the new company SCILAL.
The value of non-core assets retained for demerger as of March 31, 2022, according to SCI's financial statement, was Rs 2,392 crore. The SCI board of directors adopted a demerger strategy in August of last year to sell the company's identified non-core assets, and SCILAL was created in November 2021 to retain those assets.
In April 2022, the Ministry asked SCI to speed the process up of demerger of non-core assets of SCI to SCILAL, as well as asking that the Board of SCI evaluate the demerger plan for selling non-core assets such as Shipping House in Mumbai and MTI in Powai. The government received various offers for the privatization of the Shipping Corporation of India in March last year.
In December 2020, the Department of Investment and Public Asset Management (DIPAM) requested expressions of interest (EoI) for the strategic disinvestment of its whole 63.75 percent ownership in Shipping Corp of India, as well as management transfer. The Cabinet gave in-principle agreement for the strategic disposal of Shipping Corp in November 2020.
SCI's privatization is now expected to be completed this fiscal year. CPSE disinvestment is expected to bring in Rs 65,000 crore in the current fiscal year 2022-23. Although the government has already raised Rs 3,000 crore from the sale of minority shares in ONGC, another Rs 21,000 crore is expected to come in this month from the ongoing IPO of Life Insurance Corporation, and another Rs 211.14 crore by June from the handover of Pawan Hans management control to Star9 Mobility Pvt Ltd, a consortium of Big Charter Pvt Ltd, Maharaja Aviation Pvt Ltd, and Almas Global Opportunity Fund SPC.