What A Potential Buyer Will Get In Dredging Corp
Government might sell entire stake in Dredging Corporation of India.
A fleet of 21 dredgers bought about two decades ago. Some even twice as old. And at times, these vessels don’t meet the equipment standards of some ports.
That’s what the state-run Dredging Corporation of India says in its annual report. Yet, the government hopes to find buyers. It has decided to sell its entire 73.47 percent stake in the company, newswire PTI reported citing official sources.
The move came over four months after the Department of Investment and Public Asset Management and NITI Aayog identified Dredging Corp for divestment. The company, however, told the bourses that it’s not aware of such announcement.
Investors are betting on a revival as shares of the public-sector undertaking gained 41 percent in two days. The sale could fetch the government close to Rs 1,500 crore, as per market capitalisation after Thursday’s close.
Dredging Corporation removes underwater deposits like soil or rocks. Being the only such state-owned firm, it’s the preferred dredger for major government ports and the Indian Navy. That hasn’t helped its fortunes though. Its revenue and net profit have swung over the past five years.
The company’s fleet comprises vessels of small to medium size dredgers. That increases operating costs and provides little room for competitive bids, it said in an annual report.
Dredging Corporation is banking on Rs 114 crore dues for the Sethusamudram project to build a canal in the straits between India and Sri Lanka. The amount, pending for more than four years, will be reimbursed by the Government of India to compensate the actual expenditure, the company said in its presentation.
The company expects to be called upon for cleaning the Ganga, boosting its revenue. The Sagarmala plan to improve India’s connectivity through ports is expected to drive the third-party dredging demand to about Rs 2,500 crore by 2030 from Rs 1,750 crore last year, the annual report said.
The Industry
The Indian dredging market comprises third-party dredging and captive dredging by private ports using their own vessels.
Two listed companies, Adani Ports and Special Economic Zone Ltd. and Mercator Ltd., offer dredging services. They are not pure-play dredgers though.
Adani Group started investing in a fleet in 2005 and has 19 dredgers, which are seven years old on an average. Mercator Ltd. has nine with an average age 11. Mercator’s dredging business contributed 13 percent to its total operating income in the year to March.
Other key players include Boskalis Dredging and Dharti Dredging and Infrastructure.
