SCI to tie up with PSUs for dredging venture

An alliance of PSU companies, led by Shipping Corporation of India (SCI), will soon be formed for carrying out dredging projects in the country.

Mazagon Dock (MDL), which builds warships and offshore platforms, will be a key member in the consortium besides Mumbai Port Trust (MbPT) and Jawaharlal Nehru Port Trust (JNPT).

The proposed dredging company will pose direct competition to the only Indian dredging company, Dredging Corporation of India (DCI), in which the Central government holds 78.56 per cent stake.

In last May, engineering and construction major Larsen & Toubro (L&T) had forayed into dredging business by acquiring 61 per cent stake in International Seaport Dredging, the Indian subsidiary of Belgian dredging multinational, Dredging International NV.

Sources said the technological expertise for the newly formed consortium will be provided by Mazagon Dock, that has experience in building dredgers and other advanced ships.

Earlier, the Central government was planning to involve DCI into this PSU alliance.

"But government want this proposed dredging company to compete with DCI as well as other leading international dredging majors. SCI will be leading this dredging consortium however stake details are yet to be finalised," a government official said.

In India, the market size for dredging is estimated Rs 700-800 crore, which accounts for just two per cent of the global market. The global dredging market is estimated at Euro 7 billion with an annual growth rate of about 5 - 6 per cent.

"Due to the shortage of dredgers, DCI was unable to undertake many dredging requirements of the country. Several dredging works for major and minor ports are pending," industry sources said.

MbPT has already extended an in principle agreement to SCI for participating in the mega alliance and the remaining partners are expected to follow suite.

"The joint venture company will primarily target the domestic dredging requirements. At a later stage, it will also cater to international dredging demands," sources added.

US and China controls over 50 per cent of the market which is closed to competition.

The other half of the market is open or partially open which is controlled by countries in Europe, Middle East and Latin America.

In the long term, it is expected that the US and Chinese market with an estimated value of Euro 2.5 billion would also open up. Poland, Turkey, Brazil and Argentina are also expected open up their markets in near future.