MoST for retaining majority equity in SCI

NEW DELHI, Aug 2: Faced with the contentious issue of disinvestment of equity, the Ministry of Surface Transport MoST has said that it wa...

NEW DELHI, Aug 2: Faced with the contentious issue of disinvestment of equity, the Ministry of Surface Transport MoST has said that it wants to retain majority control of the profit-making undertaking Shipping Corporation of India SCI.

While stating this, it has objected to the Disinvestment Commission8217;s decision to list SCI among the non-core sector undertakings, with disinvestment of upto 74 per cent.

Instead, the transport ministry has described the shipping major as the quot;transportation arm of the oil sectorquot; 8211; this sector alone accounts for about 40 per cent of the cargo carried by the Indian lines. According to sources, the ministry informed the Disinvestment Commission about its desire to retain control of SCI 8211; which controls about 40 per cent of the country8217;s merchant fleet 8211; at a high-level meet recently. The meet, attended by the transport secretary Yogendra Narain, SCI chairman-cum-managing director P.K. Srivastava and Disinvestment Commission secretary P.Shankar, discussed allocation of shares to oil companies and SCI employees. While the Disinvestment Commission proposed allocation of shares to SCI8217;s clients particularlty the Oil Coordination Committee OCC, MoST is keen on offering a sizeable number of SCI shares to the public to make it an actively-traded scrip.

In addition, both the Disinvestment Commission and the transport ministry have agreed on reserving shares for offer to the small investors and PSU employees. Under the disinvestment norms, such offer can only be at a price upto 10 per cent below the issue price to Indian institutional investors or investors in the GDR market. While a ceiling of 200 shares is recommended for such allotment of small investors, if the shareholding exceeds 200 there is a provision for a lock-in period for three years for such preferential allotment.

With a share capital of Rs 282.30 crore, the Shipping Corporation of India is listed at the Mumbai Stock Exchange. Of this, the government controls about 80.12 per cent equity in SCI. The remaining 19.88 per cent is held by state-owned Unit Trust of India/financial institutions 16.05 per cent, banks/mutual funds 2.49 per cent and the public 1.34 per cent. Though its net profit dipped to Rs 302 crore in 1996-97 from Rs 323 crore the previous year, its share price firmed up to Rs 48 in July, 1997, from Rs 30 in March 1997. Last year, it was referred to the disinvestment panel along with 39 other PSUs with the objective to broadbase ownership and protect employee interests.