The Indian government could hold roadshows to drum up support for the sell-off of Shipping Corp of India (SCI) as early as next week.
The investor meetings are being planned in expectation of a favourable outcome to legal hearings over the transfer of the state shipowner’s surplus cash to a new non-core holding company, domestic media reported.
The government is selling off its entire 63.75% stake in SCI. This would be worth INR 43.35bn ($524m) based on its current market capitalisation.
The state investment department is pressing ahead with the privatisation as unions and a section of the company’s management raise objections to the INR 10bn cash transfer.
The Ministry of Corporate Affairs (MCA) has concluded the final hearing on the issue, which involves a proposed split of core and non-core operations.
Sources told the Business Standard that the ministry is likely to approve the plan.
“The matter was with MCA for sanction of the scheme of arrangement for the demerger of SCI. We heard and concluded the hearing last Thursday. The order, however, [is] yet to be pronounced,” said a government official.
The state wants to hive off SCI’s Shipping House headquarters in Mumbai, a training institute and other non-shipping assets.
They will be held by a new company, Shipping Corp of India Land & Assets.
The move leaves the core shipping company with INR 2.7bn of liquidity for general corporate purposes. A further INR 1.3bn is ring-fenced for vessel acquisitions.
Backing from big lenders
SCI’s main financial backers, State Bank of India, Exim Bank and Standard Chartered, have approved the divestment, but six smaller unsecured creditors voted against the plan.
The shipowner is already selling off its inland shipping interests.
The value of non-core assets held for demerger stood at INR 24bn at the end of March.
The government is likely to call for bids in the sell-off in the first quarter of this year.
This would represent another delay in the long process that began in December 2020.
SCI has a fleet of about 60 tankers, bulkers and offshore vessels, according to its website. It also has stakes in four LNG carriers on long-term charters to Petronet LNG and ExxonMobil.
The three bidders for SCI are a consortium comprising UK-based owner Ravi Mehrotra’s Foresight Group and vessel demolition buyer Global Marketing Systems; US tanker and bulker owner Safesea Group; and domestic conglomerate Megha Engineering & Infrastructure.
SCI has been led by Binesh Kumar Tyagi as chairman and managing director since September.
Tyagi was previously head of the liner & passenger services division.
