New Delhi: The disinvestment of Shipping Corporation of India (SCI), the country’s only state-owned merchant shipping company, has been criticized by a parliamentary panel, which termed the disinvestment of profitable and flagship PSUs as “irrational”.
In its report tabled in Parliament last week, the Parliamentary Standing Committee on Transport, Tourism and Culture, headed by YSR Congress Party leader V. Vijayasai Reddy, said: “There is justification in disinvestment of unviable PSUs (public sector undertakings). But well performing PSUs, especially in core sectors, should not be sacrificed for short term financial gains.
The observation was made in the report of the Standing Committee examining the Demands for Grants of the Ministry of Ports, Shipping and Waterways for the financial year 2023-24.
Suggesting that the government reconsider its policy of disinvestment of profitable PSUs, especially in core sectors, the panel further noted that strategic assets like SCI are important not only for its blue economy policy but also for maritime security.
The Union Cabinet had approved the strategic disinvestment of SCI in November 2020. A month later, the Department of Investment and Public Asset Management (DIPAM) invited Expression of Interest (EoI) for disinvestment of its entire 63.75 per cent stake in SCI.
SCI has earned a net profit of Rs 468 crore in the nine months of the current financial year. It owns 59 ships of 5.311 million DWT (deadweight tonnage) and 2.94 million GT (gross tonnage) and handles about 26 per cent of Indian tonnage.
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‘Balance to protect national interest’
Acknowledging that disinvestment enables the government to check fiscal deficit, the Standing Committee said that balance must be maintained to safeguard national strategic interests.
“SCI is not only India’s largest merchant cargo carrier, but has also diversified into the Indian offshore maritime business and has gained expertise in managing and operating highly specialized vessels,” the committee said in its report.
During the examination of the Demands for Grants, the Ministry of Shipping informed the parliamentary panel that several EOIs were received and Qualified Interested Bidders (QIBs) were shortlisted by DIPAM in 2021. QIBs are conducting due diligence and site visits, the ministry told the standing. Committee.
“The bidders had insisted on demerger of non-core assets before disinvestment. Three hearings on the demerger have been completed,” the ministry informed the parliamentary panel.
SCI board has fixed March 31, 2023 as the record date for its demerger as part of the disinvestment process,
For context, a demerger is the separation of a large company into two or more organizations.
The ministry further said that as per the procedure followed in strategic disinvestment, the reserve price for the transaction is decided through an evaluation exercise after receipt of financial bids from QIBs. The ministry, in its plea, said that after fixing the reserve price, the financial bids are opened.
On whether the government considered any other option before disinvestment, the ministry reiterated to a parliamentary panel that the decision was taken based on the recommendation of the NITI Aayog.
(Edited by Uttara Ramaswamy)
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