Shipping Corporation of India rallied on Friday on hopes that the government will soon invite price bids for divestment of 51% equity stake in the company.

The stock of the state-run shipping major was up by 6.4% at Rs 60.30 on the BSE in early-afternoon trades. 136,000 shares changed hands on the counter by the first couple of hours of trading.

The stock had slipped from its higher levels in the last couple of sessions after rallying earlier on divestment hopes. From a low of Rs 50.60 on 31 March 2003, the stock surged 18.5% in 6 sessions to hit a high of Rs 60 on 8 April 2003. It slipped on profit-taking in the next two sessions to Rs 56.65 on 10 April 2003. In any case, the delay in divestment had hit the stock adversely in recent months.

The Shipping Corporation of India scrip had advanced by 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 declined amid intermittent rallies.

The scrip bounced back today following reports that a meeting of the Cabinet Committee on Disinvestment is scheduled early next week (on 15 April 2003) to call financial bids for SCI.

Recent reports had indicated that there was a difference of opinion within the government regarding the foreign investment limit in SCI. While the finance ministry is in favour of offloading the entire 51% equity stake in SCI to foreign investors, the divestment ministry is in favour of an earlier decision by the CCD, which stipulated a 25% cap on investment by foreigners.

SCI had originally received 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 the management 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 investor cannot buy more than 25% stake in SCI in the strategic sale.

The delay in privatisation has already taken a toll on the number of bidders for SCI. G E Shipping, for instance, has pulled out from the race for SCI. The government holds 80% stake in SCI and plans to divest 51%.

Recently, Disinvestment Minister Arun Shourie gave SCI the green signal to acquire two new very large crude carriers in view of the uncertainty over divestment in 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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