Govt fixes Rs 800-cr networth for SCI bidders

For a consortium bid, the lead bidder should have Rs 408 crore networth

RAVI KAPOOR

NEW DELHI, JANUARY 7: The government has fixed a net worth criterion of Rs 800 crore for the bidders of Shipping Corporation of India (SCI). As per a decision of the Cabinet Committee on Disinvestment (CCD), the government will sell 51 per cent of its stake in SCI to a strategic partner. The CCD has put a 25 per cent cap on foreign holding.

Apart from the net worth criterion of Rs 800 crore as per the latest annual accounts, the interested party or consortium should have ‘a satisfactory business and management track record,’ said official sources. They pointed out that in case of a consortium bid, the lead bidder should have a net worth in excess of Rs 408 crore.

The Ministry of Disinvestment (MoD) will receive expression of interest from prospective bidders by the end of next month. This will be followed by short-listing, with the qualified interested parties (QIPs) participating in the subsequent sell-off process.

The government is optimistic of good response to SCI privatisation for a variety of reasons. First, an official said, SCI is a very good company from the viewpoint of a prospective buyer. ‘It owns 40 per cent of Indian tonnage, with a fleet size of about a hundred vessels.’ SCI is a profit-making public sector undertaking, earning a net profit of Rs 382.6 crore in 2000-01, up from Rs 161.6 crore in 1999-2000. Second, the privatisation process has received a fillip in the recent past, officials said, adding that this must increase the confidence of bidders in divestment.

The government has been able to privatise a few PSUs, though smaller in size, officials said. More important, the Supreme Court’s judgement on the privatisation of Bharat Aluminium Company has been a shot in the arm for the MoD, they added.

Officials maintained that 25 per cent cap on foreign investment would have no negative impact on SCI privatisation. SCI has an authorised capital of Rs 450 crore with a subscribed and paid-up capital of Rs 282.30 crore. The government holds about 81 per cent equity in the corporation.

At present, the government holds about 81 per cent in the company which is the biggest domestic shipping company. The government had offloaded 19.88 per cent equity in the company in 1992 in favour of financial institutions.

SCI was set up in 1961 by the merger of Eastern Shipping Corporation and Western Shipping Corporation. Later, it also incorporated Jayanti Shipping Company and a public sector company Mogul Line.