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India drops strategic sale plan for SCI

The Indian government has shelved plans to sell a stake in Shipping Corporation of India to a strategic partner, a leading financial daily said on Tuesday.

The Business Line, quoting unnamed government sources, said that the government has instead decided to sell shares in India's biggest shipping company to public and institutional investors. The Indian government owns 80.12 per cent of SCI.

The sale of stake may excite domestic institutional investors, who currently own almost all the remaining shares of the company, as it would help them consolidate their ownership in a profitable and a cash-rich company.

But it could dampen spirits of foreign funds - many of them had Shipping Corp on their India buy list - as a strategic sale would have led to a new private management replacing the current government controlled board of directors.

The revised plan may still leave the government in command.

Earlier in May, the company reported a net profit of Rs 1.69 billion for the quarter ended March 31, up from 1.09 billion in the year-ago period. Profit for the full year was Rs 4.02 billion.

The paper added that the government was also considering a similar plan for diluting its stake in the state-run power equipments maker Bharat Heavy Electricals Ltd.

The newspaper said that the SCI's stake sale plan was being drafted by the department of divestment, a government department piloting India's privatisation programme.

The paper said the plan would then be considered by the Cabinet Committee on Divestment, a ministerial panel headed by the prime minister, that gives the go-ahead to pivatisation plans.

The size of the share offer and timing would be decided by the CCD, the paper added.

Analysts say the government should sell its stake in Shipping Corp this year to benefit from the current buoyancy in global freight rates.

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