PSU disinvestment: SCI demerges, spins off non-core assets into separate company

• The new entity will be called Shipping Corporation of India Land and Assets Limited
• The demerger will take effect after approval from competent authorities

New Delhi: The Board of Directors of disinvestment-bound Shipping Corporation of India (SCI) has given its nod to the demerger and hive-off of its non-core assets into a separate company ahead of the privatisation process. In a regulatory filing to the stock exchanges on Wednesday, SCI said, "In continuation to our announcement dated 11.11.2021 and pursuant to Regulation 30 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, we hereby inform that: The Board of Directors of Shipping Corporation of India Land and Assets Limited in "its meeting held on 16th November, 2021, has considered and approved the Scheme of Arrangement for Demerger of 'Non-Core Assets' between The Shipping Corporation of India Ltd ("Demerged Company") and Shipping Corporation of India Land and Assets Ltd ("Resulting Company"). 

"The Company is taking necessary actions to obtain all necessary approvals from the Competent Authority/ies to bring this Scheme into effect. Once the necessary approvals are obtained, the Company will furnish the details to the Stock Exchanges," SCI told the bourses.

Demerger of non-core assets will require nod from Corporate Affairs Ministry

"The above Scheme of Arrangement shall be subject to the approval of Ministry of Corporate Affairs (MCA) of relevant jurisdiction, Securities Exchange Board of India (SEBI), Stock Exchange (s), Shareholders and Creditors of all the Companies. The listing/ admittance to trading on the Stock Exchanges of the equity shares of the Resulting Company is subject to approval/exemption from SEBI in terms of Rule 19 (7) of the Securities Contract (Regulations) Rules, 1957 read with the applicable provisions under the Circular bearing No SEBI/HO/CFD/DIL 1/CIRl2020/249 dated December 22, 2020 issued by SEBI, as amended from time to time," SCI said in the filing.

Asset monetisation of disinvestment-bound PSUs

The government has plans to hive off non-core assets of disinvestment-bound PSUs in order to make the deal more lucrative for investors. According to sources in DIPAM, the idea behind doing so is to allow investors to pay only for the core assets that they wish to acquire and not for surplus land and assets that have nothing to do with the core business. Disinvestment-bound BEML Limited has also hived off its non-core assets into a separate company ahead of the privatisation process. 

While presenting the Budget for 2021-22, Finance Minister Nirmala Sitharaman had said that idle PSU assets will not contribute to Atmanirbhar Bharat. While mentioning that non-core assets consisted largely of surplus land with government ministries/departments and Public Sector Enterprises, the minister had proposed to use a Special Purpose Vehicle (SPV) in the form of a company to carry out monetisation of idle land.

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