MC Exclusive: Govt aims to invite financial bids for Shipping Corp of India by September; list SCI Land & Assets in a month

As part of the divestment of SCI, the central government is looking to sell its 63.75 percent stake in SCI.

The long-awaited divestment of the Shipping Corp of India Ltd (SCI) is likely to enter its next phase by September when the government expects to invite financial bids for the company, multiple sources told Moneycontrol.

"Financial bids for SCI (will be invited) after the listing of the demerged entity. Likely to get Rs 3,000 crore from the SCI sale. (We are) talking to SEBI to sort out the issues for listing, (and these are) on the verge of getting resolved," a senior government official told Moneycontrol.

He added that SCI has received the all-clear from Maharashtra Housing and Area Development Authority (MHADA) to transfer ownership of a training institute that was built on MHADA land to its demerged entity, Shipping Corporation of India Land and Assets Ltd (SCILAL).

"Financial bids (are likely to be invited) by September, and (we) aim to complete the transaction by December," the official said, adding that the Alternative Mechanism (AM) for SCI has approved the divestment plan for the company.

The AM on strategic disinvestment consists of the Finance Minister, the Minister for Road Transport and Highways, and the minister representing the respective administrative department to decide on matters relating to the terms and conditions of the sale.

The AM for SCI comprises the ministers of finance, road transport and highways, and shipping.

Another government official also told Moneycontrol that financial bids for SCI will be invited as soon as the listing of the demerged entity is completed.

As part of the divestment of SCI, the central government is looking to sell its 63.75 percent stake in SCI.

Emails sent to the Ministry of Finance, the Ministry of Ports, Shipping, and Waterways, SCI, and the Securities and Exchange Board of India (SEBI) remained unanswered until the time of publication.

A senior executive from SCI told Moneycontrol that a meeting between officials of the government, SEBI, and SCI is scheduled for next week, following which the listing date for SCILAL will be finalised.

"The listing of SCILAL will be completed in a month's time after getting SEBI approval. If all things go well at the meeting next week, the listing date will likely be (finalised for) around August 15," the executive said.

He added that SCI had completed all formalities for the demerger of SCILAL and SCI in May and had submitted to SEBI the documents to list SCILAL on the stock exchanges.

"SCI had issued 46.5 crore shares of SCILAL to eligible shareholders on April 6," the executive said, adding that due diligence by SEBI has taken longer than usual in the case of SCILAL.

Earlier, the government had planned to list SCILAL on the stock exchanges by June. But the listing process was delayed due to issues pointed out by SEBI.

The first government official mentioned here also said that there were a lot of institutional problems while getting SEBI approval for the listing of SCILAL.

"SCI was still operating under the old Employees' Provident Funds Scheme, 1952, which delayed the receipt of SEBI approval for the listing of SCILAL," the official said.

The government expects three to five players to bid for its stake in SCI.

Sources said that companies such as Vedanta, DP World, and shipping firms from Norway and South Korea have shown interest in SCI in the virtual road shows that have been conducted.

Based on the current stock market price, the government would rake in over Rs 3,010 crore for its stake in SCI.

The company reported net sales of Rs 1,418.14 crore in the quarter ended March 2023, up 7.91 percent from Rs 1,314.16 crore in the corresponding quarter last year.

Net profit came in at Rs 359.83 crore, up 175.27 percent from Rs 130.72 crore a year ago. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) stood at Rs. 498.95 crore in the quarter, up 32.31 percent on year.

SCI has a fleet strength of 70 vessels and is the largest Indian shipping company in India, catering to the overseas and coastal transportation of goods.

The Ministry of Corporate Affairs approved the demerger of SCILAL in February this year, and the process was completed in March.

As part of the strategic sale process, the government hived off the real estate assets of SCI — Shipping House, a 19-storey building, and the Maritime Training Institute, both in Mumbai, and certain other non-core assets, to SCILAL.

Per the balance sheet of SCI, the value of non-core assets meant for demerger as of March 31, 2022, stood at Rs 2,392 crore.

SCILAL was formed in November 2021 to hold the non-core assets of SCI, which falls under the Ministry of Ports, Shipping, and Waterways. The SCI’s board of directors authorised a demerger scheme in August last year.

SCI had announced the demerger of its land and assets in a 1:1 ratio, which was completed on March 31, 2023. Thus, if an investor held 100 shares of SCI, he would get an equal number of shares of SCILAL.

In April 2022, the Ministry asked SCI to expedite the demerger.

In November 2020, the Union cabinet gave in-principle approval for the strategic divestment of SCI.

In December 2020, the Department of Investment and Public Asset Management (DIPAM) had invited expressions of interest (EoIs) for the disinvestment of its entire stake of 63.75 percent in SCI.