Shipping min reverses decision to cede majority stake in JV that would hold and operate key shipyards of the PSU company
The government has shied away from its earlier bold decision of giving majority stake to a private sector player in the joint venture planned to revive the sick the public sector shipyard Hooghly Dock and Port Engineers.
From the earlier decision to cede majority 74% stake in the JV that would own two key shipyards of the PSU along the Hooghly river, the shipping ministry would now give only 26% equity to the private sector bidder, the Request for Proposal said. Curiously, the private sector bidder would be given the management control.
"The private sector player will get a 26% stake in the joint venture company but management control would be in their hands so that there could be employment opportunities," P K Sharma, head, corporate finance, Hooghly Dock and Port, told dna.
The chairman and managing director of the JV would be appointed by the selected bidder, the RFQ document said. Shipping minister Nitin Gadkari was believed to be pushing for 74% stake to the private sector partner in the JV that would be given the rights to operate and revive units at Salkia and Nazirgunge. In consideration Hooghly Dock would earn lease rents for a period of 30 years.
To keep the deal attractive enough the government has put in a clause wherein the private sector minority partner can sell 50% of its stake in the joint venture after five years, presumably when the company would have revived the operations, thereby attracting a better valuation than the current transaction. And at the end of 10 years, the private sector partner can divest its stake in full, subject to the approval of Hooghly Dock.
"The new investor has been given the option to liquidate some of their investments after a period of five years. This improves the attractiveness of the whole deal," Sharma said.
Hooghly Dock has also dropped plans to hold conventional road shows and, instead, would be reaching out directly to shipbuilders.
"We would be meeting shipbuilders located at Mumbai, Goa, Kochi, Chennai and other places where there are several prospective bidders," the official said.
The estimated cost for carrying out minimum infrastructural development at these two shipyards is Rs 66 crore while the JV has to be set up with initial capital of Rs 22 crore.
Set up in 1819, Hooghly Dock was nationalised in 1984 and after turning sick the Cabinet in 2011 decided to revive the company by partnering with private sector. The government also decided to write off of its loans and interest payments of about Rs 629 crore existing in its books in that year.
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