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Tuesday, Feb 26, 2002

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Mitsui pulls out of race for SCI stake

P. Manoj

NEW DELHI, Feb. 25

THE Japan-based Mitsui O.S.K. Lines, a strong contender for acquiring a controlling stake in Shipping Corporation of India (SCI), has withdrawn its expression of interest (EoI) in a move that has surprised the Government and the industry.

Government sources said that Mitsui had submitted an EoI to the Government well ahead of February 18, the last date set by the Ministry of Disinvestment for the submission of EoIs by potential bidders.

"However, before the inter-Ministerial group on disinvestment met on February 23 to evaluate the EoIs, Mitsui had informed the global advisors - SBI Caps-Lazard India - that it was withdrawing the EoI,'' the sources said. A big candidate for acquiring SCI has thus withdrawn from the race even before the process could begin, they added.

Industry sources, however, are of the opinion that this is a tactical move by the Japanese shipping line to keep its competitors guessing.

"Mitsui can always enter the process at a later stage by joining hands with a qualified domestic bidder,'' they said.

As per the bidding criteria, a foreign bidder can acquire a maximum of 25 per cent of the 51 per cent stake being put up for sale. The remaining 26 per cent would have to be held by domestic partners.

Qualified foreign bidders would thus have to forge ties with qualified domestic bidders to be eligible for bidding.

However, if a foreign bidder fulfills the net worth criterion of Rs 800 crore by itself, it can join hands later with any domestic company. On the other hand, if a domestic company meets the net worth criterion by itself, it can participate in the bidding process alone without taking the help of a foreign partner.

The Government has given time till June 10 for foreign bidders to identify a domestic partner and comply with the equity holding stipulation.

Qualified domestic bidders can also chose their foreign partners before June 10 if need be, the sources said.

Mitsui already has a working relationship with the State-owned line - it has forged two joint venture projects with SCI worth $590 million for building three LNG tankers.

Meanwhile, the inter-Ministerial group has disqualified the EoI submitted by a ship management company for falling short of the net worth criteria of Rs 800 crore set by the Government for the entry of bidders.

Of the 12 EoIs received by the Government, 10 are in the fray now at the start of the bidding process.

They are Great Eastern Shipping Company Ltd (Gesco), Essar Shipping, Aban Lloyd, Sterlite Industries, Videocon International, BPL, and the Finolex group and Iffco-Kribhco combine.

The global entities in the race are Malaysia International Shipping Corporation Bhd (a subsidiary of Petronas, Malaysia), the Marseilles-based French container line, CMA-CGM, and the Hong Kong-based container line, OOCCL (which submitted an EoI along with an Indian company).

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