MCA concludes demerger hearing of Shipping Corp, may approve soon: Sources

The move could expedite the Centre's stake sale plan for the national carrier

The Ministry of Corporate Affairs (MCA) has concluded its final hearing on the proposed demerger of the core and non-core assets of Shipping Corporation of India (SCI).

Sources indicate that the ministry is likely to give its nod to the demerger plan, which could pave the way for the Centre to disinvest its stake in the national carrier. However, the order is awaiting.

“The matter was with MCA for sanction of the scheme of arrangement for the demerger of SCI. We heard and concluded the hearing last Thursday. The order however would yet to be pronounced," said a government official privy to the development.

As part of the strategic sale process, the government had proposed hiving off Shipping House, a training institute and some other non-core assets of SCI.

Under the revised demerger scheme, it has proposed transferring Rs 1,000 crore from the firm’s surplus cash to the non-core firms spun off from the listed business. The original demerger scheme involved transfer of Rs 450 crore to the non-core firm, Shipping Corporation of India Land and Assets Ltd (SCILAL).

MCA was tasked to vet the revised demerger plan. After the MCA signs off on the revised scheme, it will be filed with the Registrar of Companies to make it effective.

“The ministry had examined in detail the responses and objections received, and whether SCI would be able to liquidate the liability following the transfer of Rs 1,000 crore surplus cash to its non-core company," the official cited above said.

The Department of Investment and Public Asset Management (DIPAM) had, in December 2020, invited expressions of interest (EoIs) for strategic disinvestment of the government's entire stake of 63.75 per cent in SCI, along with the transfer of management.

However, the stake sale plan was delayed following the demerger scheme involving splitting of the firm's core and non-core assets.

The ministry had, in April 2022, directed SCI to expedite the process of demerger of its non-core assets to SCILAL and also requested the board to review the demerger scheme for hiving off the non-core assets, including Shipping House, Mumbai and Maritime Training Institute (MTI), Powai.

In 2021, the government had received multiple bids for the privatisation of Shipping Corporation of India.

In November 2020, the Cabinet had given in-principle approval for SCI's strategic divestment. The company's privatisation is now likely to be completed in FY24

Shipping out 

• Proposal includes hiving off Shipping House, a training institute, and other non-core assets  
• Transferring Rs 1,000 crore from the firm’s surplus cash to the non-core firms spun off from the listed business
• DIPAM in December 2020 invited EoIs for disinvestment of the government's entire stake of 63.75% 
• Plan got delayed following the demerger involving splitting of the core and non-core assets