The Hindu Business Line : SCI scrip dips on HC order

THE market valuation of Shipping Corporation of India stock was down on Tuesday in view of the Bombay High Court order on maintaining "status quo" vis-à-vis its disinvestments process.

The stock closed the day at Rs 121.65, down from Monday's Rs 124.65 on the NSE. The stock price touched a high of Rs 146 on October 8, when announcement of a dividend of Rs 17 per share was made.

The court has adjourned till November 14 a petition by the company's employees' union challenging the stake sale and reportedly asked the parties to maintain status quo till then.

While shipping industry circles were busy assessing the impact of the order on SCI's disinvestments process, the bidders and the target company preferred silence on the subject. It is not clear whether the status quo would mean that the submission and opening of bids as also declaration of reserve price could take place as scheduled.

According to the process, the Cabinet Committee on Disinvestments should meet within 7 days of submission of bids to consider the winner. By this time, the reserve price to the CCD would be made available. Since the last date for filing bids is October 20, the whole process, in the normal course, should be complete much before November 14.

Essar Shipping, Sterlite and Videocon are in the fray for 51 per cent stake in SCI. Lazard Cap and SBI Cap are advisors to the Disinvestments Ministry for SCI.

According to market sources, if the disinvestment process is not stalled, SCI privatisation would be a well-fought one.

The price-to-book value of SCI is at a discount of around 50 per cent compared to most global tanker shipping companies, according to analysts. The P/E commanded by SCI is one of the lowest amongst leading international shipping companies, especially in view of strong and diversified asset base, assured business from oil PSUs for two years after privatisation, booming freight rates (both for dry bulk and crude) totally depreciated and paid for maritime assets as also huge hidden reserves in real estates.

The potential net asset value per share for fiscal '04 could be Rs 122 on a book value of Rs 91 per share, analysts observed. The second quarter result, which is due on Thursday, is expected to be much improved.

The Government, which holds 80.12 per cent stake in SCI (the balance is held by FIs, FIIs, MFs and public), is to retain 26 per cent post-disinvestment. The draft share purchase agreement specifies an open offer after disinvestments for 19.88 per cent public holding. According to industry experts and market analysts, bid prices could be much higher than the current market price.

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