The Hindu Business Line : `We aim to become a world-class firm' — Mr Neerav Kumar Gupta, CMD, Dredging Corporation of India

The country's dredging sector holds great business potential and the Dredging Corporation of India, the state-owned and the largest dredging company in the country, would like to tap as many of the opportunities as possible. However, DCI does not have expertise in capital dredging for which it proposes to tie up with a world major. The Government's new dredging policy has thrown a challenge before it in regard to maintenance dredging. Meanwhile, the IPO has proved to be a big hit, despite many odds working against it. Mr Neerav Kumar Gupta, CMD of DCI, spoke to Business Line in Visakhapatnam recently on these and other issues.

Excerpts from the interview:

The figures published recently suggest that DCI's performance in 2003-04 was more or less the same as that in 2002-03. Why?

Most of our contracts, which were for two years, just ended. Besides, one of our dredgers, Dredge XI, was decommissioned for eight months last year after it caught fire in Paradip . To that extent we lost revenue. Operationally also we were put to difficulties. The contracts signed for Dredge XI had to be executed by other dredgers.

What are the prospects for this fiscal?

Very difficult to comment right now. As you are aware, DCI accounts for more than 90 per cent of the maintenance dredging in the country's major ports but the government's new dredging policy has thrown a new challenge before us. We will no longer get business on nomination basis, a practice followed so far. Which means the days of assured business are over.

The contracts that are not long-term in nature will be on tendering basis and we have to compete on our own strength to secure business. This year we have already lost the contract for Kochi port to Jaisu, a private-sector dredging firm. Perhaps the new dredging policy will benefit DCI in the long run.

How are you gearing up your machinery to meet the new challenge?

I'm working on a multi-pronged strategy. The essence of the strategy is to reduce cost (particularly in dry docking and acquisition of spares), improve efficiency through mechanisation of operation and explore new opportunities.

New opportunities?

We are looking for opportunities both within the country and outside. Within the country, we might resume the dredging of the inland waterways. Earlier, we used to do it but withdrew from it a few years ago and sold our inland dredgers to the Inland Waterways Authority of India.

With the government having decided to spend a lot for the development of the IWT system, DCI too could play a useful role. We have plans to acquire specialised dredgers for undertaking dredging in rivers and canals.

There are plenty of opportunities outside the country and we have initiated measures to secure overseas contracts. For example, Aquarius, a huge dredger, has been put on time charter to Dredging International, a foreign firm. We will charter out two of our dredgers, Dredge XVII and Dredge VII to a Bahrain company, Al Ghanah WLL.

We have also appointed PricewaterhouseCoopers to suggest how to form joint ventures and special purpose vehicles to undertake jobs both within and outside the country. The initial response from various foreign dredging firms, some even from East Asia, is believed to be good. We want to team up with foreign dredging giants to enhance our expertise and experience.

We have virtually no expertise in capital dredging but tenders for several capital dredging jobs amounting to more than Rs 1,000 crore will be floated. We must have a share of that huge business.

Are you not planning to trim the workforce?

We have just concluded a VRS for the shore-based staff. But the response has been less than satisfactory. Only eight of a total of 400 responded. We are planning to repackage the scheme by dropping the age clause of 55 years and re-launching it.

No VRS for floating staff?

Not immediately. We have shortage in certain categories of the floating staff. But we are rationalising our manning pattern for on-board staff in discussion with all the three unions. Hopefully, the new pattern will be in place within the current year. Our discussion is in advanced stage,

The bulk of you activity is concentrated in the Hooghly river near Haldia dock, isn't it?

You are right. Nearly 60 per cent of our earnings is accounted for by the Hooghly dredging. No other port requires so much of maintenance dredging as Kolkata port which is a riverine port. Precisely for the same reason, no other port spends so much on maintenance dredging and no other port gets so much of the government funding for the purpose.

Do you have any special plan for the Hooghly operation?

The Hooghly is a difficult river and dredging it requires special skill. Our performance in past two years has vastly improved which is also acknowledged by the port authorities. At any point of time, as many as five of our dredgers are active in the Hooghly and we are planning to acquire a 5,000 cubic metre hopper capacity trailer-type dredger particularly to facilitate our Hooghly operations.

How do you see the future of the country's dredging scene?

Promising, for both capital and maintenance dredging. For example, Jawaharlal Nehru, Kolkata, Ennore, Paradip and Kochi ports are to float tenders for big capital dredging contracts. JNPT's tender alone might be worth several hundred crores of rupees.

The same it true about Kolkata port, whose River Regulatory Scheme involves huge capital dredging. Together, the total value of these jobs may be Rs 1,500 crore, if not more. Almost all major ports, and also minor ports, need maintenance dredging to maintain the navigability of the channels and the total value of the jobs, now about Rs 600-700 crore, is likely to go up in the coming days.

DCI must join hands with the world leaders in the field and emerge as a world-class firm to undertake all kinds of dredging activities.

You recently concluded an IPO. How do you assess its success?

The IPO went off very well. It was oversubscribed 18 times, the highest oversubscription among all the PSU that went for IPOs at that time. But we really had to work very hard, more so because the government advanced the IPO timing by two weeks.

We were under tremendous pressure. We could not hold all the roadshows, within the country and outside, as per our plans. Our plans for advertisements too did not materialise because of certain restrictions. DCI is an under-researched and relatively unknown company. Its activities were not clear to many in the market place. Still we made it a success.

The only regret is that the retail investors did not get many shares. But the IPO helped DCI to organise itself properly, thanks to the exposures to fund managers and analysts. Following the IPO, DCI becomes the second dredging company in the world, after Boskalis, whose shares are listed on the stock exchange

What are your acquisition plans?

As I have stated we are planning to acquire a high capacity dredger to facilitate the Hooghly operation and smaller dredgers for undertaking operations in the rivers and canals. We also have a plan to acquire a 2000 cubic metre hopper capacity cutter, suction-type, most probably by 2006.

Any scrapping?

Not really. Two of our dredgers, Dredge V and Dredge VI, though 30 years old, are doing fine. The average age of our fleet is 17 years, which is comparable to the world standard.

Your major headache?

My biggest headache is how to attract talent. It is difficult to identify good professionals keen to come to Vizag at the salaries we offer.