Panel on divestment approves privatisation of Shipping Corporation

The panel on divestment headed by Cabinet Secretary Rajiv Gauba has approved the expression of interest and preliminary information memorandum (PIM) for Shipping Corporation of India, paving the way for its privatisation.

The Core Group of Secretaries on Divestment (CGD), in its meeting on Monday, approved the conditions for privatising the government-owned company that owns a fleet of bulk carriers, crude oil tankers, among others. This would now be taken up by the alternative mechanism or ministerial panel on divestment, said a top government official.

The conditions approved by the CGD include the new buyer having a minimum net worth of little less than Rs 2,500 crore, said the official.

The market capitalisation of the company was Rs 3,922 crore, and the government’s 63.75-per cent stake in the shipping company was valued at Rs 2,500 crore as on market closing price on Monday.
Other conditions of the sale, such as a lock-in period for a new buyer and a business continuity plan, will not be a part of the PIM, but will be included in the share purchase agreement, added the official.

Once the Department of Investment and Public Asset Management receives the minutes of Monday’s meeting, the proposal will be tabled before a ministerial panel that includes the finance minister, Minister for Road Transport and Highways, and minister representing the respective administrative departments, said the official.

The proposal is likely to be tabled before the ministerial panel by December 18.

The company, whose interest spans across segments in shipping trade, had received good response from investors during road shows. The majority stake sale, along with transfer of management control, that’s being targeted for completion this year, will help the government in mopping up divestment receipts at a time when its revenues are strained.