Lok Sabha Question No. 277 (STARRED), answered on 2021-03-15
Subject: Disinvestment of SCI
Ministry: FINANCE
Asked by: Suresh Kodikunnil

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF INVESTMENT AND PUBLIC ASSET MANAGEMENT (DIPAM)

## LOK SABHA

## STARRED QUESTION No.*277

TO BE ANSWERED ON MONDAY, MARCH 15, 2021

PHALGUNA 24, 1942 (SAKA)

## DISINVESTMENT OF SCI

## *277. SHRI KODIKUNNIL SURESH:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Department of Investment and Public Asset Management (DIPAM) has decided to invite expressions of interest for the strategic disinvestment of its  63.75%  per  cent  stake  in  the  Shipping  Corporation  of  India  (SCI),  the country's  largest  shipping  company  along  with  the  transfer  of  management control;
- (b) If so, the details thereof and the time by which it is likely to be finalized;
- (c) the details of amount likely to be accrued from the sale of stake;
- (d) the objective and reason for which the Government proposes to disinvest its stakes in SCI which has been earning profit; and
- (e) whether the Government is aware of protests and opposition to the decision of disinvestment and if so, the reaction of the Government in this regard?

## ANSWER

## THE MINISTER OF FINANCE (SMT. NIRMALA SITHARAMAN)

- (a)   - (e):    A statement is laid on the Table of the House.

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## STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (e) OF LOK SABHA STARRED QUESTION No. *277 TO BE ANSWERED ON MONDAY MARCH 15, 2021 REGARDING DISINVESTMENT OF SCI

- (a): Yes, Sir.
- (b): Based on the recommendations of NITI Aayog, Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 20.11.2019 accorded 'in-principle' approval for strategic disinvestment of Government of India's shareholding of 63.75% in Shipping Corporation of India (SCI) along with transfer of management control to a strategic buyer.  Preliminary  Information  Memorandum/Expression  of  Interest  (PIM/EoI)  was floated on 22.12.2020. The last date of submission of EoIs was 01.03.2021 and date by which physical copies could be received is 15.03.2021.  In response to PIM, multiple EoIs have been received. In the second stage of transaction, after due diligence by Qualified Interested Bidders (QIBs), Request for Proposal (RFP) would be supplied to QIBs for submission of financial bids.
- (c): As per the strategic disinvestment process, the sale price is determined based on the outcome of the financial bidding and the reserve value.  As such, it is not possible at this stage to specify the details of the amount likely to be accrued from the sale of stake.
- (d): NITI Aayog had been mandated to identify and recommend CPSEs for strategic disinvestment, which are not in 'priority sector', based on the criteria of (i) National Security; (ii) Sovereign functions at arm's length; and (iii) Market Imperfections and Public  Purpose.   These  CPSEs are reckoned as 'low priority' for the  Government notwithstanding that they may be profit making companies.  Strategic disinvestment is guided by the basic economic principle that  the  government  should  discontinue  its engagement  in  manufacturing/ producing goods and services in  sectors  where  the

competitive markets have come of age, and such entities would most likely perform better  in  the  private  hands.    The  unlocking  of  real  value  through  better/  efficient management  and  use  of  latest technology by the private sector may bring much higher  dividends  for  the  economy  as  a  whole  in  terms  of  growth,  productivity  and employment.

(e):                Representations  have  been  received  from  the  Staff  Union  &  Officers' Association  of  the  company  to  reconsider  the  decision.    Government  intends  to proceed with the decision taken by the CCEA.

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