Procedural delay likely to hit Shipping Corporation privatisation process

Procedural delays in the divestment of Shipping Corporation of India (SCI) may push the privatisation process by a quarter.
 
The government had earlier targeted to complete the divestment of SCI by December, but procedural delays such as preparing the draft Share Purchase Agreement (SPA) and Request for Proposal (RFP) has further pushed the due diligence process bidders will have to undertake. This will impact the timeline set for more steps involved in the divestment exercise, pushing its completion to March, said an official.
 
The Shipping Corporation was asked to draft the SPA and insert clauses based on the response received in road shows. The Department of Investment and Public Asset Management (Dipam) will then finalise these proposals and get it approved by the inter-ministerial group, and Core Group of Secretaries on Divestment (CGD).
 
The plan of action for the sale of the public sector company, which owns a fleet of bulk carriers and crude oil tankers, was discussed in the meeting conducted by Dipam last week.
 
Once finalised, the draft SPA will be shared with potential buyers and the terms would be negotiated.
 
Due to the delay at SCI’s end, the due diligence process has been put on hold, and access to the virtual data room (VDR) will only be given once the draft SPA and RFP are shared. “The government is clear that once the draft SPA and RFP is prepared, potential buyers will be allowed to undertake due diligence,” the official quoted above said.

 
Completion of transactions is crucial for the government’s divestment programme this year, as it aims to garner Rs 1.75 trillion through stake sales and privatisation. The second wave of Covid-19 is also expected to delay the process in several other privatisation candidates such as Bharat Petroleum Corporation, Container Corporation of India (CONCOR) that were among the first set of companies, including SCI, to be identified for privatisation in November 2019.
 
The government is selling its entire 63.75 per cent stake in the shipping company. Safesea Group, Megha Engineering and Infrastructure, and Ravi Mehrotra’s Foresight Group have reportedly shown interest to acquire the company.
 
News reports last week said one of the bidders, Safesea Group, would be disqualified, given the dispute between SCI and the group. However, the official quoted above said these dues have been acknowledged by SCI, and the same has been recorded in the minutes of the board meeting, so the question of disqualification does not arise. Now, this issue is being raised to scuttle the process by those with a vested interest, he added.