Mumbai: The disinvestment process of Shipping Corporation of India (SCI) has received its first setback. Three contenders - the Finolex group, the French container line CMA-CGM and the Hong Kong-based Orient Overseas Container Line Ltd - have dropped out of the bidding process of SCI.
In another move, Essar Shipping Ltd, which is bidding in a consortium, will encounter problems as Unit Trust of India has written to the central government that Essar Shipping, which owes them a lot of money, should not be allowed to bid in the disinvestment process as it would amount to diversion of funds.
The government is in the process of selling 51-per cent of its stake in SCI to a strategic partner along with the transfer of management control. The Finolex group has informed the SBI Caps-Lazard India combine, the advisors to the government on the SCI deal, that it is bowing out of the SCI bidding process for want of partners.
SBI Caps sources say Finolex was unable to strike a deal with Norwegian and Greek companies for undertaking a joint bid for SCI. Subsequently, the company has decided to withdraw the expression of interest. Finolex was keen on inducting its joint venture partners before starting the due diligence.
"Since this did not happen, the company decided not to pursue the deal further as inducting our joint venture partners after the due diligence would have led to complications," the sources say.
They add that CMA-CGM and OOCLL also have decided to drop out without undertaking the due diligence. They have cited the huge size and different operations of SCI as the reason for backing out.
The Essar Shipping, Malaysian International Shipping Corporation Bhd, Great Eastern Shipping Company and Aban Loyd-Qatar Shipping Company consortium have so far completed the due diligence, which started from 29 April 2002. Sterlite Industries, the Iffco-Kribhco combine and BPL have also completed their respective due diligence.
All these bidders have also started the financial due diligence of SCI to scrutinise the accounts of the company for the year ended 31 March 2002.
As per the decision taken by the cabinet committee on disinvestment, a domestic bidder can bid for the entire 51-per cent stake being put up for sale in SCI, whereas a foreign bidder can bid for a maximum of 25 per cent stake. For the remaining 26 per cent he would have to join hands with a domestic partner. The central government is hoping to complete the SCI deal by the end of August 2002.
In yet another significant development, Sterlite Industries, one of the bidders, has appointed Varun Shipping Company as their advisor for the SCI bidding.