Indian Government May Sell its Stake in SCI
The government-owned Shipping Corporation of India (SCI), the largest deep sea shipowner in the country, may soon be up for sale as part of a larger privatization bid.
New Delhi is said to have an interest in selling its stakes in three large companies - SCI, downstream firm Bharat Petroleum and logistics firm Container Corporation of India (CONCOR). The Economic Times of India reports that preparations are already under way for an international roadshow to market shares of Bharat Petroleum to foreign buyers. A group of top ministers gave approval for the sale to go forward on Monday, and a cabinet note to formalize the decision is being prepared.
The administration of Prime Minister Narendhra Modi is hoping to use proceeds from these sales and from a variety of other privatization initiatives to plug budget gaps left by new corporate tax cuts. India's corporate tax rate was 30 percent, among the highest in Asia, but Modi's government recently reduced to an effective average of about 25 percent for all domestic companies.
Selling New Delhi's 64 percent stake in SCI could prove challenging, analysts told Hindu Business Line. The company is highly diversified: it owns 20 oil tankers, 13 product tankers, one gas carrier, 16 bulkers, two Panamax container ships and 10 offshore vessels. This broad combination might not be attractive to the typical private-sector shipowner, and the largest sale value might be achieved by splitting up the company - a politically and procedurally difficult prospect, analysts said. It is also possible that the government may sell stakes in SCI, Bharat and CONCOR to other state-owned companies in a consolidation move.
In mid-September, shortly before the first news of the government's plans emerged, SCI chairman and managing director Capt. Anoop Kumar Sharma completed his tenure. The company's director of finance, H.K. Joshi, will serve as chairman and managing director in the interim.