The Centre will look into divestment of the state-run Shipping Corporation of India (SCI), although there is no current proposal before it to divest stake, a senior ministry official said on Wednesday.
Shipping secretary APVN Sarma told FE, ?Regarding further divestment in SCI, we will look into the issue. However, no current proposal is before us.?
Sarma?s comments follow a spurt in share prices of SCI on the BSE on Wednesday, on the back of reports that the government is examining a divestment of SCI. Shares of SCI rose as much as 8.8% on the Bombay Stock Exchange on the back of this news during intra-day trade. Shares closed at Rs 133.70, up 7.3% on Wednesday.
Minister of shipping GK Vasan said, ?The ministry is examining the economic climate and we will take a view on this…We have to examine according to the economy.?
?We have to improve the financial health of SCI. We want to do it. We would like to do it within a timeframe,? he said. However, he declined to give a time limit for the same.
When contacted, S Hajara, CMD, SCI, said, ?We have not yet got any intimation from the ministry regarding the divestment. The government as a shareholder, is to take the decision regarding a stake sale, and it is not necessary for them to involve the management regarding the same.?
SCI is also looking for a line of credit from the government for its acquisition plans as the foreign banks have stopped lending. ?We are pursuing the finance ministry to make a credit line available for the shipping companies. However, some conclusion is yet to come. SCI is also in discussion with Indian Banks Association regarding credits,? commented Sarma. The government holds around 80.12% stake in SCI, and according to reports, the ministry might revive a proposal to offload 15% stake in SCI. Earlier in 2005-2006, the government had proposed to sell 15% of its stake in the country?s largest shipping company, but the move was shelved on strong opposition from its then allies and the company?s employees.
According to industry analysts, until and unless it?s a large stake sale, it would not have any impact on SCI, financially or otherwise. A further divestment could be good for SCI?s shares as the public shareholding in SCI is around 5%. ?It?s not clear that what percentage would be divested, if the government goes for divestment. However, it won?t have any impact on SCI as it won?t be a large stake sale. However, the government is planning for stake sale in the PSUs mainly to fund its fiscal deficit,? commented an analyst on conditions of anonymity.
SCI owns and operates about 35% of the Indian tonnage. Moreover the company has 83 ships of 4.6 million DWT, and they are likely to acquire another 32 ships for around Rs 7,000 crore.