The Hindu Business Line : DCI kicks off IPO roadshow

(From right) Mr N.K. Gupta, CMD, Dredging Corporation of India, Mr Yogesh Kapur, Vice-President, Enam Financal Consultants, and Mr J.K. Jain, Director Finance, DCI, at a press conference in Mumbai on Friday. — Paul Noronha

Mumbai , Feb. 20

THE excitement in the Indian primary market continued on Friday when the State-owned Dredging Corporation of India (DCI) kicked off its road show in Mumbai for its IPO of 56 lakh equity shares constituting 20 per cent of the fully diluted post-offer paid-up capital. The offer is slated to open on February 26 and close on March 4.

DCI, the 7th largest dredging company in the world in terms of capacity, will be taking its roadshows to New Delhi, Singapore, Hong Kong and London over the next few days.

The floor price will be announced by the Government a day before the offer opens.

Post-offer, the Government's stake in the company will come down to 78.56 per cent and the public holding will go up to 21.44 per cent.

With the offer being made through the 100 per cent book building process, a maximum of 50 per cent of the offer shall be offered on a discretionary basis to qualified institutional buyers. Not less than 25 per cent shall be available for allocation to non-institutional bidders, while another 25 per cent shall be available to retail individual bidders.

DCI's cardinal marketing plank is that it controls about 90 per cent of the Indian dredging market, which is expected to register significant growth in tandem with the expansion and developments in the Indian ports and inland waterways sectors.

The company has a major presence in the domestic maintenance dredging market, but is yet to have a significant presence in the capital dredging market involving green field port projects that require dredging on a much larger scale.

Market analysts said that the capital dredging market will witness faster growth with new ports proposed in the Sagar Mala project. However, DCI is not worried on this count.

Mr N.K. Gupta, Chairman and Managing Director, said: "For one, we are sharpening our focus on the capital dredging market. Then, capital dredging is always followed by maintenance dredging. As a thumb rule, for every Rs. 1,000 crore capital dredging work, there will be a recurring Rs 100 crore annual maintenance dredging work."

The company has laid out a capital expenditure programme involving an outlay of about Rs 300 crore, which includes purchase of a trailer suction dredger for Rs 165 crore and cutter suction dredger for Rs 85 crore that are likely to be delivered by 2005-06 and 2006-07 respectively.

Mr Gupta also said that the company was increasing its focus on overseas dredging contracts, the thrust being on West Asia and South East Asia.

Further, the company was looking for joint ventures and special purpose vehicles with foreign companies to undertake capital dredging projects in India and abroad.