Government to disinvest from Shipping Corporation of India

The minister of state for shipping, Mansukh Mandaviya, told the Lok Sabha on Thursday (December 12) that the government has decided to divest from the Shipping Corporation of India (SCI).

Answering to question raised by Mimi Chakraborty and Shanmuga Sundaram, Mandaviya said, “The government has decided for disinvestment of Shipping Corporation of India (SCI). The present stake of the government in SCI is 63.75% and the proposal of its entire stake sale is in process.”

The Department of Investment and Public Asset Management (DIPAM) had earlier appointed investment banking firm RBSA Advisors as the transaction advisor for SCI’s privatisation. The government has a 63.75% equity stake in the Indian flag carrier, which will be sold along with complete management control.

The government’s move comes despite SCI enjoying a healthy balance sheet. It currently has market cap of ₹2766.85 crores, but a consolidated revenue of ₹4,144 crores crore and a balance sheet size in excess of ₹14,000 core. Its market cap is 50% of its last year’s revenue. SCI is India’s largest shipping companies in terms of Indian-flagged tonnage.

Also read: Centre approves biggest privatisation drive, to sell stake in BPCL, SCI, Concor

Answering to another question on whether any steps have been taken by to utilise the ships in war or national emergency after its sale, Mandaviya said, “The government can requisition any Indian assets, including Indian ships, during a war or national emergency.”

SCI is involved in the business of transporting goods and passengers. SCI’s fleet includes bulk carriers, crude oil tankers, product tankers, container vessels, passenger-cum-cargo vessels, and several other vessel types. In addition, SCI manages a large number of vessels on behalf of various government departments and organisations.

The SCI has also been involved in rescue of fishermen during national calamities and has undertaken five such rescue operations in the last five years.

The government which is facing shortfall in revenues is looking to accelerate the process of divestment and is looking to complete all its strategic divestment sales before the end of FY20 With just about three months remaining for the financial year to end, the government has a tough task ahead mobilising disinvestment proceeds of ₹1.05 trillion. If this is done it would be a record mobilisation for any government in India.