SCI’s non-core assets are worth twice their book value

MUMBAI : The market value of Shipping Corporation of India Ltd.‘s non-core assets, which have been hived off into a separate entity, is twice their book value.

The assets of soon-to-be listed Shipping Corporation of India Land and Assets Ltd., including multiple apartments across Mumbai and Kolkata, have a cumulative market value of Rs 4,929 crore, according to NDTV Profit calculations based on data sourced from Anarock Research and other industry sources.

This excludes the Shipping House in Mumbai, which has a market value of Rs 708 crore. However, this is a leasehold property and SCILAL will likely receive rentals of nearly Rs 30 crore per annum. This is based on the average rentals in the area.

Based on the market prices, these assets are valued at Rs 121.43 per share, compared with a book value of Rs 66.64, according to NDTV Profit’s calculations. With a market capitalisation of Rs 10,300 crore of Shipping Corp.’s on Feb. 15, the opportunity for value-unlocking for its shareholders remains favorable.

The board of Shipping Corp., in May, approved an updated demerger scheme for hiving off the non-core assets of SCI to SCILAL, including Shipping House, Mumbai and Maritime Training Institute, Powai.

According to the balance sheet of SCI, the value of non-core assets held for demerger as of March 31, 2021, stood at Rs 2,388 crore.

The net assets of the company on the books on March 31, 2021 stood at Rs 3,115.12 crore, including a cash balance of Rs 1,000 crore. Based on the market value of freehold assets in books, the net assets are worth Rs 5,656 crore, 82% higher than the book value.

The company has total liabilities, including lease liabilities, of Rs 273 crore and net investments of Rs 6.68 lakh as of March 31, 2021.

The government-owned entity will be listed on the Indian stock exchanges in about a month. The demerger orders have been issued, but full implementation—including the allocation of shares of Shipping Corp. of India Land and Assets Ltd. and its listing on exchanges—is ongoing, DIPAM Secretary Tuhin Kanta Pandey had told NDTV Profit in an exclusive interview. 

The board of SCILAL was constituted recently and will have about a month’s time from the date of the constitution to see that the listing is done, Pandey said.

The government plans to monetise the these assets including land for the Maritime Training Institute owned by the company, whose market value is nearly Rs 3,850.7 crore, 62% higher from its book value on March 31, 2021. The shareholders will get one share of SCILAL for each share of Shipping Corp.

The other part is also to have the no-objection certificate and clearance for the land because the land and assets, which belonged to Shipping Corp. of India, will now be deemed to be the assets of SCILAL—the new company—and that requires changes in the lease books of the Maharashtra government, he said.

The Maharashtra government has declared the exemption of stamp duty charges and the demerger.

The process will now move on to the collection of NoCs for the lease changes, so that there is no overhang of the transaction on SCI—the demerged main entity.

After both the listing and NoC stages, SCI will begin the process of seeking financial bids, Pandey had said.