The privatisation of the Shipping Corporation of India Ltd (SCI) appears to be faltering as potential bidders withdraw their interest, citing the removal of key incentives from the deal. This shift signals a severe setback to the government’s ambitious plan to privatise the national carrier, with insiders suggesting that the transaction might be effectively defunct.
Initially, there was substantial interest in SCI, particularly due to its valuable non-core assets, including its cash reserves, the Shipping House in Mumbai, the Maritime Training Institute, and various officers’ flats in Mumbai and Kolkata. However, these assets have now been separated into a distinct entity, and the core shipping company has transferred Rs1,000 crores to this newly formed company. This restructuring has diminished the appeal of SCI to prospective buyers.
An executive from one of the remaining bidding groups remarked, “The deal seems dead; if not, it’s certainly buried. The only step left is to acknowledge its demise.” The sentiment reflects a broader disillusionment among bidders, who were initially drawn by the non-core assets that have now been divested. Furthermore, unlike the Tata Group’s acquisition of Air India, which included lucrative landing rights, the SCI deal does not offer such significant perks. The absence of valuable contracts or strategic assets has dampened enthusiasm. As one corporate lawyer noted, “The absence of key incentives and the condition to retain a unionised workforce for two years complicates the transaction.”
Despite these setbacks, the government remains committed to the privatisation process. The Secretary of the Department of Investment and Public Asset Management (DIPAM) stated on 26 July that a review of bidder interest will be conducted. He emphasised that the plan has not been shelved and that efforts will be made to ensure the successful completion of the privatisation process. The government’s approach may also be influenced by broader strategic considerations, given the current geopolitical climate and ongoing conflicts such as the Russia-Ukraine war. There is a clear recognition of the strategic importance of maintaining a robust national shipping fleet.
In a parallel move, SCI has initiated tenders to purchase six second-hand ships worth over Rs2,000 crores, following the lifting of an unofficial freeze on ship acquisitions. This indicates the corporation’s commitment to fleet expansion, even as its privatisation efforts encounter hurdles. Overall, while the government continues to navigate the complexities of privatisation, the current challenges underscore the difficulties in attracting investors amidst shifting deal parameters and broader strategic concerns.
