State-run Shipping Corporation of India (SCI) is having a tussle with Islamic Republic of Iran Shipping Lines over valuation of a 39-year-old joint venture company that is being wound up.
The joint venture, Irano Hind Shipping Lines, has become unprofitable due to the Western sanctions on Tehran and several companies over the country’s nuclear energy program, the Economic Times reported on Friday.
SCI, which has demanded that it be paid for its 49% stake in the company, has assessed the value of assets at $132 million.
However, its Iranian partner, IRISL, has pegged it at $95 million. “The matter is being negotiated between the two companies. If we are unable to reach a resolution, we will approach the external affairs ministry since they would be better placed to get us a good bargain,” an Indian senior official told ET.
The cabinet committee on economic affairs had cleared winding up of the company last year. In April, former National Security Adviser Shiv Shankar Menon had advised SCI that one party should retain the assets and the other should be paid for its share. This was after SCI said it is difficult to implement the Cabinet decision of dissolving the company and then splitting the assets since it contradicted an Iranian law that suggests the opposite.
“We are hoping that some compromise will be reached by the end of this month,” said SCI chairman Arun Kumar Gupta. Irano Hind owns six vessels including tankers and bulk carriers of 0.66 million DWT, two of which have been impounded by China. Only one vessel is generating income for the company.
The company was set up as a mark of friendship between the two countries after former prime minister Indira Gandhi’s visit to Tehran in 1975. SCI had invested for its stake. Although SCI’s profit from the venture is not known, people with knowledge of the matter said it has been able to earn much more than the investment. Besides enhancing economic ties, the aim of the venture was to reduce transportation costs and time between India and Russia through a multi-modal transportation system via Iran.
