Shipping Corporation (SCI) - What Are Its Non-Core Assets

By Research Desk
about 15 days ago

We have carried an item on Shipping Corporation (SCI) here on 20th September, of Strategic stake sale of Govt’s entire shareholding in SCI, being 63.75%. SCI has determined the Core Assets and Non-core Assets of the company. Non-core Assets of the company, the value of which is not getting reflected in the value of business of SCI, is separated from SCI and moved in an independent entity, for unlocking the value of such Non-core Assets.

What are the non-core assets owned by SCI?

Freehold Land, with book value of Rs. 2,376 cr, as at 31-3-21, with land   in cites of Mumbai, Delhi, Chennai, Kolkata, and Bangalore, NPV of which is estimated at over Rs.7,500 crore by the experts. Of this land, SCI owns about 60 acres of land in Powai, Mumbai, which can be developed in a 60 lakh sq. feet residential project, having NPV of this land alone at Rs.2,750 cr.

Apart from this, Building with book value of Rs. 11.11 cr as at 31-3-21, include Shipping House at Nariman point, Mumbai, with BV of just Rs. 1.34 cr. Shipping House is a 19 storey Building, rated as one of the best building in the area, with an estimated Built Up Area of 1.20 lakh sq. Feet, with NPV of Rs.500 cr.

Ownership flats and  buildings, having BV of Rs.1.10 cr, which includes value of Rs.73,000, being cost of shares in Housing society, where such flats are located, which are largely posh flats in Mumbai and Delhi.  Each flat is having Rs. 500 as shares held by SCI for 1 flat. This indicates about 150 flats owned by SCI, NPV of which is estimated at Rs. 1,000 crores.

Sr. No.

Asset Description

Book Value
(in Rs. Cr.)

Estimated Market Value
(in Rs. Cr.)

1

Freehold Land

2,376

7,500

2

Building

11.11

1,500

3

Ownership Flats and Buildings

1.10

1,000

4

Other

-

1,000

 

 

Total

11,000

So, aggregate NPV of Non-Core assets works out at Rs. 11,000 cr, being Rs. 236 per share. Taking 50% discount, as seen with share price of Hemisphere Properties, the share of Non-core assets company, should rule at over Rs. 100 per share.

With Baltic Exchange Dry Index having risen from 2,018 as at 31-3-21 now to 4,650, a rise of 130% in less than 6 months, will see record profits in H2FY22 of SCI, which will also see rich valuation of its core assets, by its potential acquirer. SCI  is the largest Indian shipping company, with 59 owned vessels, with 5.31 Million DWT and 2.94 million GT, as at 31-3-21, which includes 15 Bulk carriers, 18 Crude oil tankers, 13 Product tankers, 2 Container vessels, 1 LPG / Ammonia carrier, 10 Offshore Supply Vessels.

There is a say that "Catch Them Young". And SCI is definitely Young now.

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