Shares of Shipping Corporation of India (SCI) inched up today on hopes that today's meeting of the Cabinet Committee on Disinvestment would consider a 40 percent strategic sale in the carrier.
The stock closed at Rs 27.15, up 4.02 per cent over its previous close, but slightly off its intra-day high of Rs 28.00 on the Bombay Stock Exchange (BSE).
Last month, the disinvestment secretary had said that the government planned to go for a strategic sale as against an earlier plan to sell shares to the general public and institutional investors. If cleared the government would invite expression of interest.
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The government which has a 80 percent stake, finally chose the strategic partner route after much deliberations since it felt that a strategic partner would bring in the much-required technical and management expertise apart from capital infusion.
Besides, it would also help in fleet expansion and enhancement of ancillary businesses in the Indian shipping sector. In the last 16 sessions, SCI fell 18 per cent to Rs 26.10 on December 24, 2001, from Rs 31.75 on November 28, 2001. Volumes dropped to 11,868 shares from 1.85 lakh shares in the same period.
Earlier, the stock had risen 56 per cent over 42 trading sessions from Rs 20.35 on September 25, 2001. Volumes rose from 42,066 shares in the same period.
The government has decided to sell a 40 per cent stake in SCI and the Central Cabinet has already approved of the disinvestment. At present, the government holds 80 per cent stake in the company. While the remainder is in the hands of financial institutions and mutual funds (18 per cent). Floating stock in the company is a minuscule 1 per cent. The current FDI limit in the company is around 74 per cent.
In November 2001, the government planned to go in for a strategic sale in SCI, reversing an earlier plan to sell shares in SCI to the public and institutional investors.
SCIL was incorporated in 1961 with the amalgamation of the Eastern Shipping Corporation and the Western Shipping Corporation. The company is engaged in transportation of crude oil, LPG, bulk cargo and containers. It has specialised in the energy sector with the transportation of LNG. The company has identified container cargo transportation as one of the areas of growth besides energy transportation.
With the global slowdown, the shipping industry is currently witnessing pressure on bulk and liner freight rates. Earlier, the government okayed acquisition of two tankers by SCI. The acquisition will be financed by external commercial borrowings and internal resources. The company is to acquire two large Range-II size crude oil tankers of about 1,40,000 dead weightage tonne (DWT) each at a cost of $97 million. It is reported that the tankers will be acquired on a cash basis.
The corporation has been permitted to avail of external commercial borrowings (ECB) up to 80 per cent of the contract price of each vessel from international banks and financial institutions. SCI will pay the balance amount of 20 per cent from its internal resources.
For the quarter ended September 30, 2001, the company posted a 23.30 per cent decline in net profit to Rs 64.40 crore compared to Rs 83.97 crore for the corresponding period last year.
Total income decreased 6.11 per cent to Rs 747.65 crore from Rs 796.32 crore in the second quarter of 2000. While the future economic and shipping outlook, both on the international or the domestic front, does not appear to be all that rosy, the company is confident that with a pragmatic approach and the continuous efforts to change for the better, the company would be able to maintain its bottomline for the coming years as well.