Report: India is Ready to Proceed with Privatization of Shipping Corp.

India Shipping Corporation
India's Shipping Corp. has a large fleet consisting primarily of bulkers and tankers (SCI file photo)

Published Apr 11, 2023 2:16 PM by The Maritime Executive

The long-delayed sale of the Shipping Corporation of India by the country’s government is ready to proceed now that a number of prerequisites have been completed. Reuters is citing unnamed government officials in a report stating that a final decision is expected by the end of this week with bidding due to begin in May.

It is not the first time that the government of Indian Prime Minister Narendra Modi has moved to privatize the shipping company, which is considered to be the country’s leading shipping line and a key part of the Indian economy. The Mondi government announced in 2019 its plans to privatize several leading Indian companies including the Shipping Corporation in an effort to raise money and encourage investment. 

The Indian government continues to seek opportunities to encourage investment while also saying that the modernization of the country’s shipping operations is a high priority along with expanding the shipbuilding industry. At the end of February 2023, the Directorate General of Shipping (DGS) based in Mumbai released sweeping new regulations designed to support the modernization of Indian registered or operated shipping. The rules impose bans on buying or chartering nearly all commercial ships after age 20 with most classes of ships required to be retired by age 30.

The 62-year-old company, which was formed by the government through an amalgamation of the predecessor Eastern Shipping Corporation and Western Shipping Corporation, reports it currently has a fleet of 59 vessels representing over 530,000 dwt. The average age of the fleet is approximately 15 years and the operations are diverse ranging from crude oil and product tankers to bulkers and gas carriers. SCI has also added five VLCCs and two containerships as well as offshore support vessels and a ship management operation.

The government holds a 63.75 percent stake in SCI, which it is believed will be sold in a bidding process, with the first round according to Reuters expected to start as early as next month. The company’s market capitalization is approaching $500 million with the government’s shares valued at over $300 million based on the current share price. The value of the stake has risen by more than a third since 2019 when the plans to privatize the company were first announced.

Bidding had begun for the government’s stake in SCI only to be delayed in 2021 by a series of issues. In February 2023, regulators cleared a planned spin-off of the company’s land-based, non-shipping assets into a new publicly traded company which Reuters reports will begin trading by the end of next week. Internal debates over the division of capital have also been reportedly resolved to clear the way for India’s cabinet secretary to make a final decision by April 14 according to Reuters’ sources. It is anticipated it could take up to a year to complete the privatization process.

The 2019 plan also called for the privatization of the Container Corporation of India, a logistics company responsible for moving containers.  CCI reports it has built a network with 61 terminals to support the inland rail transportation of containers since it was launched 35 years ago. The company has also expanded into the management of ports and air cargo as well as building a cold chain. In its report, Reuters is saying that the government is also considering moving forward with the efforts to sell its position which represents nearly a third of the shares in CCI.