Indian Finance Ministry on Tuesday demanded a letter of intent for the entire sale of its 63.75 percent stake in Shipping Corporation of India. The government’s goal is to completely privatize the shipping corporation and provide the management control of the company to the new owners. As a result, the government can raise Rs 2,500 crore by selling shares at the current market price.
Shipping corporations own one-third of India’s total cargo capacity. They have ship business in the field of oil tankers, LPG carriers, container vessels, passenger ships etc. from ships carrying general goods.
The government has appointed RBSA Capital Advisors as transaction advisors for this strategic liquidation process. The last date for submission of interest papers is 13 February. According to official sources, 8-9 companies including Vedanta and DP World in Dubai have shown interest in investing in various road shows organized by the government for the purpose of selling to Shipping Corporation.
In 1992, the Center sold a 16.51 percent stake in the company to various financial institutions, mutual funds and banks. That same year Shipping corporations are listed on the stock exchange in the same year. Two years later, the government sold another 1.37 percent stake.
Later in 2000 it was declared ‘Miniratna’ by the Shipping Corporation. In 2008 the company was recognized as ‘Maharatna’. Two years later, in 2010, the government sold another 16.38 percent stake in the company, reducing its ownership to 63.75 percent. In the last financial year, the Shipping Corporation made a profit of Rs: 338.5 crore.
According to the Center Department of Investment and Public Asset Management (DIPAM), interested companies should have a minimum net worth of Rs 2,000 crore and a three-year interest and tax benefit in the last five years. In the case of the consortium, the principal member has total assets of Rs 1,001 crore and his stake in the consortium should be 50.01 percent.
The government has set a target of raising Rs 2.1 lakh crore in the liquidation sector in the current financial year. The list includes state-owned companies such as Air India and BPCL. However, so far, the government has been able to raise only Rs 12,225 crore. According to experts, the global corona epidemic may fail to reach the target in the current fiscal year. Incidentally, the government failed to meet the allocation target in the last financial year as well.
About 90 percent of the world’s goods are shipped on Cargo ship. It is responsible for 75% of the world’s shipments. Maersk Group, Mediterranean Shipping Company, China Shipping Company, CMA CGM Group and Hapag-Lloyd captured by these five companies. The top five countries in the world in terms of shipping capacity are Greece, Japan, China, Germany and Singapore. Of these, 39 percent are owned by Germany, China and Greece.