The Board will approve the transfer of Shipping House, other assets to demerged company
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NEW DELHI :
The privatization of Shipping Corp. of India (SCI) is making slow progress since the company is yet to transfer its non-core assets to a demerged company, a government official said. The government will invite financial bids only after the demerger process is complete.
The company’s South Mumbai headquarters Shipping House, a training institute in Powai and some other properties will not be sold, but instead be transferred to the demerged Shipping Corp. of India Land and Assets Ltd.
“The demerged company will be a mirror company of SCI, with the same shareholding pattern as SCI and will house all the non-core assets. Shipping House will be transferred to this company and will not be sold. These assets will be dealt with later after the disinvestment of the shipping business," the official said, asking not to be named as the process was still on.
The official added that the dividend issued by the company and certain cash will also have to be transferred to the demerged entity to meet regulatory requirements. The demerger of non-core assets is in the process of being approved by the board of the central public sector enterprise, and the transfer of assets will take about three to four months.
“Once this process is complete, financial bids will be called. Bidders have already expressed their interest; so, we will move forward," the official added.
As part of its strategic disinvestment strategy, the government will transfer its entire shareholding of 63.75% in SCI along with management control to a private entity. The remaining equity of the BSE-listed entity is held by the public.
With 59 vessels and 3,281 employees, SCI is the largest Indian shipping company by capacity, and also manages a large number of vessels on behalf of various government departments and organizations.
The government had issued the preliminary information memorandum for SCI divestment in November 2020 and called for expressions of interest, which stated that the non-core assets that will not form part of the deal will be revealed at the time of issuing request for proposals. According to reports, several companies including US-based Safesea group, a consortium led by NRI-businessman Ravi Mehrotra’s Foresight Group and Hyderabad-based Megha Engineering, were among the bidders that had shown interest. However, the covid-19 pandemic slowed most disinvestments being undertaken by the government over 2020 and 2021.
Queries to the finance ministry sent on Saturday remained unanswered till press time.
The demerger of non-core assets has also delayed strategic disinvestments of BEML Ltd and NMDC Ltd as well.
In October 2020, the Centre had approved demerging NMDC’s steel plant at Nagarnar in Chhattisgarh, and strategic disinvestment of the demerged entity – NMDC Steel - by selling its entire stake in it to a strategic player. NMDC is likely to complete the demerger process by August-September, coinciding with the commissioning of the unit.
Expressions of interest will be called by the department of investment and public asset management (DIPAM) after this process is complete, the official quoted earlier said.
In BEML’s case, about 140 acres of land in Bengaluru and Mysore will be demerged into a separate entity called BEML Land Assets Ltd, which has been approved by the defence PSU’s Board last year.