New Delhi: The disinvestment of the Shipping Corporation of India (SCI), the country’s only state-owned merchant shipping company, has drawn flak from a parliamentary panel, which called the move to disinvest the profitable and core sector PSUs “irrational”.
In its report tabled in Parliament last week, the parliamentary standing committee on transport, tourism, and culture headed by YSR Congress Party leader V. Vijayasai Reddy said: “There is justification in disinvestments of unviable PSUs (public sector undertakings). But PSUs performing well, especially in core sectors, should not be sacrificed for short-term financial gains.”
The standing committee report made the comments while examining the Demands for Grants of the Ministry of Ports, Shipping, and Waterways for the 2023-24 fiscal.
Recommending that the government rethink its policy of disinvesting profitable PSUs, especially in core sectors, the panel further said that a strategic asset like SCI is critical not only to its blue economy policy but also to maritime security.
The Union Cabinet had approved the strategic disinvestment of SCI in November 2020. A month later, the Department of Investment and Public Asset Management (DIPAM) invited an Expression of Interest (EoI) to disinvest its entire stake of 63.75 per cent in SCI.
SCI has made a net profit of Rs 468 crore in the nine months of the current fiscal. It owns 59 vessels of 5.311 million DWT (deadweight tonnage), and 2.94 million GT (gross tonnage) and operates around 26 per cent of Indian tonnage.
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‘Balance to protect national interest’
While acknowledging that disinvestments enable the government to check fiscal deficits, the standing committee said balance should be maintained to protect national strategic interests.
“SCI is not only India’s largest merchant cargo carrier, but it has also diversified into the Indian offshore marine business and has gained expertise in manning and operating highly-specialised vessels,” the committee noted in its report.
During the examination of Demands for Grants, the shipping ministry informed the parliamentary panel that multiple EoIs were received and Qualified Interested Bidders (QIBs) were shortlisted by the DIPAM in 2021. The QIBs are conducting due diligence and site visits, the ministry told the standing committee.
“Bidders had insisted on demerger of non-core assets before disinvestment. Three hearings on demerger have been concluded,” the ministry informed the parliamentary panel.
The SCI board has fixed 31 March 2023 as the record date for its demerger under the disinvestment process.
For context, demerger is the separation of a larger company into two or more organisations.
The ministry further said that according to the process followed in strategic disinvestment, the reserve price for the transaction is fixed through a valuation exercise after the receipt of financial bids from QIBs. Following the fixation of a reserve price, the financial bids are opened, the ministry said in its submission.
Regarding whether the government considered any other option before disinvestment, the ministry has reiterated to the parliamentary panel that the decision was taken on the basis of NITI Aayog’s recommendation.
(Edited by Uttara Ramaswamy)
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