Shipping firms gear up for dredging projects

THE BIG CLEAN-UP

Dredging is the latest buzz in the shipping and logistics companies. Buoyed by the upcoming dredging projects in the country, corporate houses such as Adani Group, Great Offshore, Sical Logistics, Chellaram Shipping, Essar Shipping, Mercator Lines, Shipping Corporation of India (SCI) are planning a foray into this segment.

At present, state-run Dredging Corporation of India (DCI) is the largest dredging company in India while engineering and construction major Larsen & Toubro (L&T) had entered this space by acquiring a majority stake in International Seaport Dredging, a subsidiary of Belgium-based Dredging International NV.

Dredging is the process of deepening shipping channel to improve navigation. Dredging is of two types-- capital (creating depths) and maintenance (maintaining depths). "The huge dredging component of Rs 2,500 crore-Sethusamudram Ship Channel Project (SSCP), envisaging a ship channel across the Palk Strait in Tamil Nadu, has evoked new interest among these players. Moreover, the dredging prospects at major and minor ports cannot be handled by the DCI alone. To add, the DCI is not equipped with sufficient fleet to cater to the dredging requirements of the country,"an industry analysts pointed out.

An industry source added: "Indian companies are targeting capital and maintenance dredging projects within India as well as in international markets. Small-time domestic dredging companies are keen on forging alliances with international dredging majors. For shipping companies, dredging is no more a separate line of business."

For instance, Mumbai-based shipping company Mercator Lines has acquired a 2006-built dredger. Sources said the company had plans to invest about Rs 2,000 crore in three years to build a dredging fleet, which would match the size of an international dredging company. Though not as core focus, Essar Shipping has also acquired a dredger, which will be hired to ports and other projects.

Meanwhile, an alliance of PSUs led by SCI, will soon be formed for dredging projects. Mazagon Dock (MDL), Mumbai Port Trust (MbPT) and Jawaharlal Nehru Port Trust (JNPT) would be other members of this PSU consortium. Hyderabad-based Dharti Dredgers is also planning an alliance with international companies to capitalise the dredging prospects.

Of the estimated global dredging market of ¤7 billion, the US and China account for 2.5 billion euros, though 50 per cent of these markets are protected and closed to competition, according to industry analysts.

So what's the policy on dredging? All major ports can invite open competitive bids for dredging works. And Indian companies owing Indian flag dredgers, including the DCI, shall have the right of first refusal if the rate is within 10 per cent of the lowest valid offer.