Govt's new shipping ventures may see split SCI entities' reunion

SCILAL was carved out of SCI in 2021 exclusively to set its (SCI’s) disinvestment in motion.

The proposal for merger, which will need a nod from the departments concerned in the finance ministry and the Union Cabinet, will allow SCI access to a kitty (cash and bank) of over ₹1,000 crore, this paper has learnt from two officials in the know.

The two ventures that will require SCI to invest as an equity partner are Bharat Container Shipping Line, slated to be India’s national container carrier, and a joint venture with oil-marketing companies for part ownership in crude-oil tankers.

According to officials in the know, investment in these two ventures is in the range of ₹12,000 crore.

“Of this, 5,000 crore-6,000 crore is expected to come from SCI as equity infusion. The idea behind the move is for SCI to generate this money on its own rather than seeking government support,” said an official.

The move is one of the two prominent measures mooted by the government to mobilise cash for these upcoming investments.

As regards the other step, the government is considering a five-year exemption for SCI from dividend distribution.

According to a second official, the exemption will give SCI liquidity worth roughly ₹2,500 crore over the next five financial years.

“The move will enable retention and effective deployment of internal accruals towards a strategic business expansion of SCI,” one of the officials mentioned above said.

Queries sent to the Ministry of Ports Shipping and Waterways and SCI Chairman and Managing Director B K Tyagi did not get a response till the time of going to press.

SCILAL was carved out of the non-core assets of SCI to facilitate the latter’s disinvestment “in an effective, efficient and rapid manner and also to unlock the value of the business and the assets”, according to the website of SCILAL.

According to the public-sector undertaking, the value of these non-core assets was not being reflected in the value of the business of SCI, which led to the argument that it should be separated from SCI and kept in an independent entity, and there should be a separate strategy for unlocking the value of such non-core assets.

The non-core assets include Shipping House, which houses the SCI headquarters, and a maritime training institute in Mumbai.

The government had initiated the move for demerger with its 63.75 per cent stake in the carrier along with a transfer of management control.

SCI has market capitalisation of ₹10,289 crore, according to the National Stock Exchange.

In the past, officials had said the government was reconsidering disinvestment in the carrier in view of India’s larger aims in shipping. Bharat Container Shipping Line will see a capital expenditure of ₹60,000 crore over the long term and will support the government’s ambition of increasing India’s share in global maritime cargo movement.