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The Dredging Corporation of India's (DCI) proposal to deploy its fleet in Dubai has found no takers in the shipping ministry yet. The country’s largest dredging company has instead been told to focus on dredging within their own country before venturing outside.
It is not for the first time that commercial interests have been bypassed. The company is still struggling to recover almost two-thirds of its annual revenue from Sethusamudram Corporation (SCL). The total outstanding amounts to over Rs 426 crore. DCI had employed all its dredgers in the Sethusamudram project in 2006 during T R Balu’s tenure. The project was Balu’s ‘pet project’ during UPA-I.
Later in 2012, during Mukul Roy’s tenure as the state shipping minister, DCI had shifted most of its equipment to Kolkata Port Trust. But DCI is yet to receive full payment. Senior officials have observed that dredgers of the mini-ratna company are pursuing political interests of ministers and not its business interest. “Public sector companies like DCI cannot focus on an optimum cost model if it is not given adequate freedom and made to dance to the tune of its political masters,” a senior maritime sector analyst said.
The Dubai contract is expected to help the company in strengthening its balance sheet. “We will get foreign exchange from the project which will then help us in writing off our loan,” said D K Mohanty, DCI chairman. DCI currently has a loan of Rs 1,000 crore taken for acquisitions. The company has to bear a monthly outgo of Rs 160 crore towards the payment of this loan.
Mohanty did not comment on the political interference with the company's business. Dredging is one of the crucial and primary requirements for strengthening the port infrastructure of the country. Deeper the draught, bigger the vessels a port can dock. DCI enjoys the tag of being the preferred dredger for the 12 major ports and the Indian Navy. Under the overall strategy for the maritime sector, all ports have to increase the draught to 14 metres and thereafter to 16 metres.
With increased competition from international dredging companies, DCI stands to lose out a big opportunity unless it upgrades. Industry experts say that besides managing its costs, DCI’s problems also include its fleet of old dredgers and high level of labour cost. Since DCI does not anymore enjoy the first right of refusal or the 10% preference it did a couple of years ago for government contracts, it has been exposed to competition from private and international firms.
The biggest challenge for the DCI has been collecting its dues from various ports. The company has earned revenue of Rs 635 crore and made a profit of Rs 20 crore.
DCI also faces the problem of losing trained manpower to private dredging companies. “Government companies are a training ground. DCI has a lot of strengths. We have the knowledge of Indian waters, good equipment, good manpower. We have bagged tenders at Kandla and Kochi ports and hope to build our efficiencies,” Mohanty added.
The union budget allots funds for dredging projects every year to various ports. The amount is then used to pay DCI. The shipping ministry was allotted Rs 137 crore for capital dredging at Tuticorin and Chennai port trusts. No such allocation was made for the Sethusamudram project this year. The government however had appointed a sole arbitrator to settle the outstanding claims made on SCL for dredging works executed, foreign exchange variation, fuel escalation, environmental monitoring claims etc., in respect of the Palk Strait and Adams Bridge area of the Sethusamudram Channel Project.
DCI currently has 15 dredgers with an average age of 25 years. It acquired two new dredgers this year and is expecting the delivery of the third dredger in February 2014 from the Netherlands. The company has a dredging capacity of 70 million cubic meters annually.
