Unions protest as CSL stake sale revives ‘privatisation’ fears

The central government’s recent decision to dilute its stake in Cochin Shipyard Ltd. (CSL) through Offer for Sale (OFS) has revived concerns among employee unions over what they fear is gradual privatization of the for-profit public sector enterprise.

Trade unions affiliated with the CPI(M) and the Congress staged a protest outside the South Gate of the shipyard on Wednesday, demanding that the Center withdraw the proposed stake sale and keep the company under full public ownership. The protest meeting was attended by Cochin Shipyard Employees Federation (CITU), Cochin Shipyard Employees Organization (INTUC), Cochin Shipyard Employees Union and Cochin Shipyard Workers Union (CITU).

Unions claimed successive rounds of share dilution would eventually weaken the government’s control over the strategic shipbuilding and ship repair company.

In a statement, union leaders said that around 32.14% of the government’s stake has been gradually diluted since the Center initiated disinvestment in the company through initial public offering (IPO) in August 2017.

While the government’s share fell to 75% after the IPO, before making the final OFS announcement, the government periodically reduced its holding to 67.91% through small share sales.

The government announced OFS with a base bid of 2.52 per cent of its paid-up equity capital and an additional 2.52 per cent as a green shoe option in case of oversubscription. Thus, the government’s share drops to 62 percent.

M Anilkumar, president of Cochin Shipyard Employees Federation (CITU), said, “Majority of the shares still remain with the government due to the initial reaction of the unions to the disinvestment move. There is no basis for privatization of the company, which has been consistently recording profits.” He claimed that the small share sales were aimed at gauging stakeholders’ reaction to the Centre’s attempt to privatize the organisation.

Meanwhile, CSL management stated that the unions’ fears were unfounded. “The latest OFS will not impact operational aspects of CSL at any time. We will remain a state-owned company with 62.86% shares. Based on the information I have, I do not think there will be further dilution in the near future,” said Jose VJ, chairman and chief executive officer of CSL.