Shipping Corp. of India Will Not Be Restructured

Tuesday, March 06, 2001
The Indian government will not follow the advice of PricewaterhouseCoopers and break up the state-run Shipping Corp of India (SCI) into three units ahead of its privatization, Reuters reported. The Business Line, without citing sources, said after discussion between the SCI management, the Ministry of Shipping and PricewaterhouseCoopers, “the government has finally decided to go ahead with the disinvestment plan without undertaking a restructuring of the company.” The report said PricewaterhouseCoopers had recommended splitting the company into three entities with each in “command of vessels of a particular shipping segment.” It cited two major reason why the government had decided not to do so. “For one, it will take time and we have to complete the divestment in SCI before the shipping cycle, which is currently on a historic high, dips so as to maximize the proceeds from the sale.” Secondly, the government believed the benefits from restructuring were not substantial, and in fact could have a negative impact on the price received. “The overwhelming view was that it (the PricewaterhouseCoopers restructuring) would create unviable units, which would impact on the valuation of SCI for determining the reserve price,” the report quoted an unnamed source as saying. Currently, the government owns 80 percent of SCI. The other 20 percent is owned by banks, other financial institutions, mutual funds and private investors. The Disinvestment Commission had recommended selling a 40 percent stake to major domestic oil companies. But the poor response received to that proposal prompted the government to instead think of selling a major stake to a strategic partner. - (Reuters)

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