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Wednesday, Feb 20, 2002

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Global majors join race for SCI; 12 EoIs received

P. Manoj

NEW DELHI, Feb. 19

THE Union Government has received 12 expressions of interest (EoIs) from potential bidders keen on acquiring a 51 per cent controlling stake in Shipping Corporation of India (SCI). These include Mitsui O.S.K.Lines, CMA-CGM, V-Ship, OOCCL, Aban Loyd, Videocon International, Sterlite Industries Ltd and BPL.

Great Eastern Shipping Company Ltd (GESCO), Essar Shipping Ltd, Malaysia International Shipping Corporation Bhd (a subsidiary of Petronas, Malaysia), Finolex Group and a joint bid submitted by the co-operative fertiliser majors, Iffco-Kribhco were also in the fray to buy a strategic stake in the profit-making public sector shipping company being put on the block for privatisation, Government sources said.

CMA-CGM is a container shipping line based in Marseilles, France, whereas the Greek V-Ship owns and manages a large fleet of vessels worldwide. The Hong Kong-based OOCCL was mainly into container shipping and was learnt to have submitted the EoI in consortium with an Indian partner, industry sources said.

For Japan's Mitsui O.S.K.Lines, the acquisition of SCI would fit well into its business plan. Mitsui has already forged two joint venture projects with SCI for building three LNG tankers worth $590 million. One of the LNG tankers, built originally for the now-troubled Dabhol Power Project, was taken delivery of by the SCI-MOL consortium in November last year.

Aban Loyd is a Chennai-based company primarily into drilling business. The company has bid for IOC's floating storage off-loading (FSO) project proposed at Sandheads near Haldia.

The Government sources said Sterlite Industries Ltd, Videocon International and BPL had also filed their EoIs before the deadline for submission which expired on February 18.

Many of the foreign companies have submitted EoIs on their own, overlooking a stipulation that they can only hold a maximum of 25 per cent of the total 51 per cent stake being put up for sale by the Union Government.

The foreign bidders will thus have to join hands with the eligible Indian partners (who must hold the remaining 26 per cent of the strategic stake) to qualify for bidding.

The attention will now be focussed on how the EoIs filed by foreign companies are processed by the global advisors, SBI Caps-Lazard Capital combine, to check whether they meet the qualification criteria set forth by the Government.

While many of the foreign bidders may meet the Rs 800-crore net worth criterion framed by the Government, problems may arise while applying the equity holding stipulation.

In the case of Indian bidders, this would not pose a problem if they passed the net worth criteria, the Government sources said.

Industry sources reckon that some of the qualified foreign bidders may align later with qualified Indian parties to stay in the bidding process.

The Union Government has decided to privatise SCI by selling 51 per cent of its stake in the company to a strategic partner along with transfer of management control.

The Government currently holds 80.12 per cent stake in SCI on a paid-up capital of Rs 282.30 crore with a face value of Rs 10 per share.

The strategic sale involves the sale of a little over 14 crore shares (making up 51 per cent of the Government's equity) and the Government is looking at a per share price in the region of Rs 70 - Rs 80 to mop around Rs 1,200 crore from SCI privatisation.

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