| Passing the buck
New Delhi, April 28: The disinvestment ministry wants to scoop out surplus cash from Shipping Corporation of India (SCI) through a special dividend before putting it on the block.
Dividend-stripping by the government before selloff has now become a norm at cash-rich public sector units that are being privatised. The trend was first in evidence at aluminium major Balco before it was sold to Sterlite and later in Videsh Sanchar Nigam (VSNL) which went to the Tatas.
Sources say the government might withdraw Rs 200 crore as interim dividend from SCI before the financial bids are invited.
In the past, the government had declared a special dividend draining Balco of Rs 500 crore before the selloff process was initiated. In the case of VSNL, two tranches of special dividends — at 500 per cent and 750 per cent — siphoned off Rs 2,232 crore before privatisation.
The government today indicated it may draw a special dividend from Shipping Corporation of India (SCI) before the selloff. Disinvestment minister Arun Shourie said it would be examined to ensure that bidders do not eye the shipping firm for its surplus cash.
Shourie said that in the case of SCI, a decision on whether to pay extra-ordinary dividend or not will depend on various factors. “The decision will be taken to ensure that people don't eye an organisation just for its cash,” Shourie said.
Shourie said VSNL had reserves of over Rs 3,000 crore at the time of disinvestment. The company was asked to assess how much it needed for its business plan and the need for clearing dues. The rest was then taken out as extraordinary dividend.
Official sources said the inter-ministerial group on disinvestment of SCI is likely to meet tomorrow to finalise the selloff details. The Cabinet Committee on Disinvestment (CCD) had decided to call for fresh bids to enable foreign companies to participate in the privatisation of SCI. CCD is likely to finalise the expression of interest for selling the government’s 51 per cent stake in SCI.
Although Essar Shipping and Sterlite were still in the race to acquire SCI, the CCD on April 15 decided to seek fresh bids for a 51 per cent stake in the company for which any foreign company could participate in line with 100 per cent FDI allowed in the shipping sector.
Meanwhile, the disinvestment minister also said today that the initial public offering (IPO) of Maruti will come out in the market in the first week of June.
Shourie said, “The Maruti IPO is on track. The prospectus has been filed with the Securities and Exchange Board of India (Sebi). We would be able to approach the markets in the first week of June.”