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The strategic disinvestment of Shipping Corporation of India (SCI) and Bharat Earth Movers Limited (BEML) is likely to be delayed further, a senior Government official has indicated.
“The processes that are involved before disinvestment, such as the demerger, are taking time. Once they are completed, only then disinvestment process could be taken to conclusion” the official said on Sunday.
The Government wants to sell its entire 63.75 per cent shareholding in SCI along with the management control, while in BEML it has proposed to disinvest 26 per cent of the equity with the transfer of management control. The Government issued a Preliminary Information Memorandum (PIM) for strategic disinvestment of SCI on December 20, 2020. For BEML, PIM was issued in January 2021.
From the company perspective, SCI estimates that the demerger will come through by June. The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) approved on March 2, 2022. The following day, the final scheme of the Arrangement for Demerger was presented in the public domain.
According to the scheme, SCI analysed its business and, in consultation with the Ports, Shipping and Waterways Ministry, determined the company’s Core Business Assets and Non-core Assets . Accordingly, the Shipping Corporation of India Lands and Assets Limited was incorporated last November.
The new company has been incorporated to hold and dispose of the non-core assets of SCI distinct from the disinvestment transaction. Non-core assets imply immovable property, surplus cash etc. and are not required in the furtherance of business. The Resulting Company is a wholly-owned subsidiary of the demerged company. However, once the scheme is implemented, the resulting company will have a replica shareholding of the SCI, and thereafter it will function as an independent Listed Company.
Such structures are called ‘Mirror Shareholding’. An official explained that, in this case, it is 1:1 shareholding. This means every person owning one share in SCI will own one in the demerged entity too. Unlocking of values for SCI by transfer of Non-Core Assets would enable optimal exploitation, monetisation and development of both the companies (SCI and the resulting companies). The scheme further states that its implementation would attract focused investors and strategic partners having the necessary ability, experience and interest in this sector and allow the pursuit of inorganic and organic growth opportunities in such businesses.
BEML
As informed to the stock exchanges, the Corporate Affairs Ministry has heard the petitions supporting or opposing the Scheme of Arrangement between BEML Limited and BEML Land Assets Limited on April 29. However, it appears that the hearing is yet to be completed. The BSE and NSE have already submitted ‘No Adverse Observations’ report. Here too, non-core assets of the company will be handed over to the new company.
Once the demerger of core and non-core assets of Shipping Corporation and BEML is complete, the authorities would invite financial bids for their strategic sale.
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