Shipping Corp Strategic Sale: Government Official Signals Smooth Progress without Further Delay

Shipping Corp of India share price surged by 7.5% on June 12, as investor sentiment was boosted by anticipation of the company's imminent divestment. A senior government official mentioned that the strategic sale of Shipping Corporation of India Ltd. (SCI) is now expected to proceed without further delays, following the approval of a stamp duty waiver from Maharashtra and the conclusion of the general elections.

“Now, there will be no delay in SCI disinvestment. Due to the elections, SCI's strategic sale was a little delayed. The Maharashtra cabinet has already given a stamp duty exemption on this demerger. SCI building in Maharashtra is now with its demerged entity, Shipping corporation of India Land and Assets Limited (SCILAL),” the official said. The stamp duty waiver of around ₹300 crore, if not granted, would have been a major hitch.

Additionally, the listing of SCILAL on March 19 has set the stage for inviting financial bids for the strategic sale of Shipping Corp. The next step for the government is to solicit these financial bids for the sale, which is anticipated to generate approximately ₹3,000 crore for the government exchequer. Meanwhile, trading volumes were robust, with one crore shares of the company being exchanged on the markets, surpassing the one-month daily average of 71 lakh shares.

SCILAL was established in November 2021 to manage the non-core assets of SCI, which is overseen by the Ministry of Ports, Shipping and Waterways. The government separated SCI's real estate assets, including Shipping House, a 19-storey building, and the Maritime Training Institute in Mumbai. Consequently, all designated non-core assets, such as real estate properties, buildings, and non-shipping related assets, have been transferred to SCILAL.

A key component of the sale is the demerger of SCI’s non-core assets to ensure that the core shipping business is sold independently, enhancing its appeal to prospective buyers. The Ministry of Corporate Affairs approved the demerger of SCI and SCILAL into distinct entities in February 2023; however, the process has encountered several delays since then.

The Union Cabinet granted in-principle approval for the strategic sale of SCI back in November 2020. Following this, in December 2020, the Finance Ministry’s Department of Investment and Public Asset Management (DIPAM) invited expressions of interest for the disinvestment of the government’s entire 63.75% stake in SCI.

SCI boasts a fleet of 70 vessels, making it the largest shipping company in India, serving both international and coastal transportation needs. Shipping Corporation of India Limited operates across several segments, including Liner, Bulk, and Technical and Offshore. With a market capitalization of ₹12,283.12 crore, the company is classified as a small-cap entity.