Divestment of Shipping Corporation of India (SCI) is on-course. The “eligible bidders were shortlisted” and the “due diligence process is underway in the second stage of the transaction”, the Finance Ministry said in a written statement to the Lok Sabha on Monday.
The SCI’s current fleet consist of 59 ship, making it the country’s largest shipping company.
As part of the transaction design, the non-core assets of SCI were to be demerged to Shipping Corporation of India Land and Asset holding company (SCILAL), Minister of State for Finance, Bhagwat Kisanrao Karad said. The entiry, SCILAL is yet to be listed on the bourses.
Strategic divestment
The Cabinet Committee on Economic Affairs (CCEA) had in November 2019 accorded “in-principle approval” for strategic disinvestment of the Centre’s 63.75 per cent in SCI. A Preliminary Information Memorandum was floated in December 2020 and “multiple EoIs” were received by March 2023.
In February, 2023, Ministry of Corporate Affairs issued the demerger order under the relevant provisions of the Companies Act.
According to Karad’s response, the process of strategic disinvestment of SCI “involves dis-investing government shareholding” along with management control to a strategic buyer.
Non-core assets are to be retained in the demerged entity, SCILAL, and these would not be transferred to the strategic buyer. The SCILAL “will continue as a government company”.
Land assets
The book vale of non-core assets of SCI before demerger was at ₹2,392 crore in FY21, which included MTI assets, flats, buildings and land. “There were no non-core assets in FY22 and FY23, since the fixed assets were transferred,” as per Karad’s response.
Land assets owned or under-possession of SCI, which have been transferred to the demerged entity, now include the corporate office (under 99 year lease from the Maharashtra government) in South Mumbai, freehold properties in Malad (Mumbai) and Kolkata — the two properties were purchased; and the land for a training institute in Mumbai — received as grant from Maharashtra government.