Adani Ports, ace investor Rakesh Jhunjhunwala’s Dharti Dredging and Construction, Mercator and a few other domestic dredging players are in the race to buy the government stake in Dredging Corporation of India (DCI). The government has a 73.47% stake in the PSU. “As the central government has decided to divest stake in a few loss making PSUs, a formal proposal on DCI disinvestment is likely to be put up before the Cabinet soon. As per initial interests, Adani Ports is leading the race to buy the entire stake. The company is yet to decide whether it would be an individual buyout or form a consortia for the buyout,” highly-placed government official told FE on condition of anonymity.
“We believe in both organic and inorganic growth strategies and are always focused on identifying opportunities to grow. We will surely look at potential opportunities whenever they arise,” Adani spokesperson from Adani Ports and Special Economic Zone (APSEZL) said.
The company operates a fleet of 19 dredgers and has the largest capital dredging capacity in the country. Incidentally, Adani group has also shown interest for setting up a greenfiled port in AP. “With reference to greenfield port in Andhra Pradesh, the Andhra Pradesh government had opened the bidding process for the Bhavanapadu port and we have submitted our bids for that project and are awaiting the government’s decision on the allotment,” the spokesperson added.
In a presentation to the Andhra Pradesh government, the PSU said that DCI is forced to compete with private players which are not in the same level playing field. The Indian arms of international players are undercutting the prices because of slump in international market. The Indian players have substandard equipment and quoting low. Earlier, DCI used to get works on nomination basis from GoI and now DCI has to compete for every work. DCI, which is the only listed PSU in Visakhapatnam and a major PSU in Andhra Pradesh has, a networth of around Rs 1,500 crore. The total fixed assets is around Rs 1,900 crore and has invested over R1,000 crore for procuring new dredgers.
The Centre had disinvested stake in DCI, on four separate occasions. Its present holding in the PSU totals to 73.47%. Having a paid-up capital of Rs 28 crore, it has about 50,000 shareholders.
“The present proposal, it seems, is for outright sale which is causing agony amongst the employees who have toiled for the past 40 years to help grow this company,” NS Neelakanta Rao, general secretary, DCIL Officer’s Association told FE.
“If the proposed sale happens, the private or foreign players who till now been concentrating on securing markets by undercutting etc to outdo DCI, will get leverage to manipulate rates to their advantage and the government will have no control over the same,” he added.
Meanwhile, DCI had also proposed to set up a dredger training institute-cum-repair yard in Antarvedi, Andhra Pradesh at a capital investment of about R800 crore. The proposed sale will put a question mark on the future of the project as well.
With a fleet of 17 dredgers of various types, DCI is the top most dredging company and ranks amongst the top 10 dredging companies in the world and is the largest and most reliable dredging company in India. “Selling a company like DCI will endanger the safety and security of the ports and nation. Even now, ports fall back on DCI in times of crisis/urgency and failure of private contractors. The dues from other ports like Kandla Port, Goa Port, Cochin Port, Kolkata Port have been mounting over the years and inspite of DCI offering a discount for settlement of the same so as to have the cash flows,” Rao said.
DCI had plans to purchase further new dredgers of higher capacity but need to be shelved for the present because of shortage of funds the same have been slowed down.