Govt hopes to complete Shipping Corp privatisation in H1 FY22

A cargo ship in the ocean. | Representative Image.

More than a year after approval by Cabinet, the centre has invited expressions of interest for the privatisation of state-owned Shipping Corporation of India. The centre plans to offload its entire 63.75 percent stake and management control in the company.

The Finance Ministry’s Department of Investment and Public Asset Management aims to complete the transaction in the first half of the fiscal year 2021-22, informed sources told Moneycontrol. As per the preliminary information memorandum, the last date of submission of EOIs by interested bidders is February 13, 2021.

As per the eligibility criteria, Indian as well as foreign companies, and alternative investment funds (AIFs) can bid for Shipping Corp. Other state-owned enterprises can also participate in the bid process. There seem to be no restrictions on whether prospective buyers should have previous experience in the maritime industry or not.

As per the PIM, the publicly-listed Shipping Corp has a fleet of 59 ships, including container vessels, dry bulk carriers, very large crude carriers, offshore supply vessels and others. Based on the company's share price in early trade on December 22, the centre’s 63.75 percent is valued at Rs 2,521 crore.

The centre would, of course, like a healthy premium on its stake. However, the PIM itself contains the risks and headwinds to the shipping industry due to Covid-19.

“With the given forecast on economic activity, seaborne trade, which is directly linked with economic activity may also see a decline. However, given the divergent dynamics of the shipping industry, things may well take a different course during different time periods,” the PIM said. It added that China’s increasing ore production and spiking prices in the tanker segment constitute a ‘silver lining’ for the industry.

As per the PIM, the short term implications for marine trade include a slowdown of major ports and delay of cargo leading to accumulations concerns, reduced demand for shipping and cargo turnovers and financial challenges for ship owners following the fall in demand for shipping.

The Union Cabinet had given approval for the privatisation of Shipping Corp, Bharat Petroleum and Container Corp in November last year. Shipping Corp’s privatisation was very much on DIPAM’s agenda for this year, along with the companies mentioned above, and Air India, as it sought to meet the highest ever divestment target of Rs 2.1 lakh crore.

However, the Covid-19 pandemic and the nationwide lockdown in the first quarter of the fiscal year put paid to any chances of meeting that target, even as the last date for Bharat Petroleum and Air India EOIs kept on being extended multiple times.