Entities functioning under the Ministry of Ports, Shipping and Waterways will be given “first preference” to take over some of the non-core assets of privatisation bound Shipping Corporation of India Ltd (SCI) that are being demerged into a separate unit, multiple sources said.
The non-core assets include the 19-floors Shipping House, the company’s headquarters in Mumbai’s upscale Nariman Point, a maritime training institute spread over 42 acres at Powai in the suburbs of Mumbai, 120-odd residential flats for senior officers in South Mumbai, the office building in the heart of Kolkata city on freehold land owned by the company and office in Delhi.
“Only if they decline the offer, they will be sold in the market,” the source said.
The process has begun with SCI vacating the first and second floors of ‘Shipping House’, which will be handed over to the Directorate General (DG) of Shipping – the country’s maritime administration- based on a fair market valuation with the approval of the ministry.
The DG Shipping is currently functioning out of a rented building at Kanjurmarg after ‘Jahaz Bhavan’ as its dilapidated headquarters in Ballard Estate had to be vacated for constructing a new building almost a decade ago.
The construction of a new building is taking a lot of time. This is because the building is situated in an area that has been designated to be a “heritage zone”. Thus, entailing many restrictions, forcing frequent changes in plans.
The ministry has been coaxing the maritime administration to “optimise” operations by having all its affiliate offices close by.
“Some of us will move into ‘Shipping House’ and the balance staff will be relocated to Nau Bhavan (the office of the shipping master), also in the Ballard Estate area,” said a DG Shipping official.
Similarly, the maritime training institute is likely to be handed over to either the DG Shipping or the Indian Maritime University.
The Maharashtra Government had leased the land to SCI for 99 years to run the training institute on the condition that the land cannot be used for anything other than training and education.
On August 3, the board of SCI approved the scheme of arrangement for the demerger of non-core assets of SCI. Shareholders will get one equity share each in the resulting company for each share held by them in the demerged company (SCI), according to the demerger scheme.
The company formed to manage the non-core assets will be listed on the stock exchanges.
“The valuation of SCI will be substantially lower after the de-merger,” said a shipping industry executive tracking the development. “The 1:1 share entitlement ratio for the proposed demerger clearly indicates that the valuation of the non-core assets of the company is equal to the core assets,” he said.
In the process of privatising a state-owned company, the Government is creating another public sector undertaking, he added.
“To facilitate disinvestment process of the Company in an effective, efficient and rapid manner and also to unlock the value of the business and the assets, it is found appropriate that the non-core assets of the Company, the value of which is not getting reflected in the value of business of SCI, should be separated from SCI and should be kept in an independent entity and a separate strategy should be formed for unlocking the value of such non-core assets,” SCI said in a regulatory filing.