Shipping Corporation of India flowed higher on Friday on anticipation of a positive development on its disinvestment at the Cabinet Committee on Disinvestment meeting today.
The scrip of the state-run shipping major edged up 2.2% to Rs 56.20 in early trades on BSE. The scrip had hit a high of Rs 56.45 earlier. A total of 82,750 Shipping Corporation of India shares were traded in the first few minutes of trade.
The CCD meeting, it is anticipated, will revitalise the much-delayed disinvestment process in the shipping major.
The scrip has been on the ascendant recently . From Rs 50.60 on 31 March 2003, the scrip has surged 11% to the current Rs 56.20. In any case, the delay in divestment had weighed heavily on the scrip's fortunes after a solid earlier surge on divestment hopes. SCI had moved up a whopping 320% within a few months from a low of Rs 26.10 on 24 December 2001 to a high of Rs 109.85 on 4 June 2002. The scrip subsequently came off amid some intermittent rallies.
As per reports, the government has scheduled a meeting of the Cabinet Committee on Disinvestment on Friday to review an earlier decision on the quantum of shares to be offered to a foreign buyer. The government is divided over the issue. While the finance ministry is in favour of offloading the entire 51% to foreign buyers, the disinvestment ministry prefers an earlier decision by CCD, which stipulated a 25% cap on foreign buyers. The finance ministry feels that SCI will fetch a better value if a foreign buyer is offered majority control. The ministry is also of the view that foreign companies will bid only if they were assured majority control.
SCI had originally attracted expressions of interest from several multinational shipping companies, but they withdrew when several conditions on their bidding, including the cap of 25%, was imposed. As of now, Essar Shipping with American Marine Associates, Sterlite and Videocon are interested in bidding for SCI. CCD, at a meeting on 21 December 2001, had decided that majority control of SCI should be transferred to Indians. The committee had said that foreign bidders would have to jointly bid with Indian partners and that a foreign buyer could not buy more than 25% in SCI in the strategic sale.
The delay in divestment has already taken a toll on the number of bidders - G E Shipping, for instance, earlier pulled out from the race for SCI. The government holds 80% in SCI and plans to divest 51% stake.
Recently, divestment minister Arun Shourie gave SCI the green signal to acquire two new very large crude carriers in view of the uncertainty over the divestment of the state-run company.
SCI is India's largest shipping company. It operates in two segments -the liner segment and bulk segment. The liner segment includes break-bulk and container transport. The bulk segment covers tankers (both crude and product), dry bulk carriers, gas carriers and phosphoric acid carriers.
Recently, the government approved the sale of SCI's 20% stake in liquefied natural gas venture Greenfield Holding Company to Japanese partner Mitsui.
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