The Hindu Business Line : DCI to form separate ventures with two foreign majors

IF you cannot beat them, join them. This seems to be the new business lexicon adopted by State-owned Dredging Corporation of India vis-à-vis the foreign dredging majors that are threatening its monopoly over the domestic dredging market.

Dredging Corporation of India (DCI) has decided to join hands with two of the four major foreign players operating in India to form separate joint ventures, which would bid for specific projects, both in India and abroad.

"We are in talks with Boscalis of Holland and Dredging International of Belgium to form separate joint ventures. The joint ventures are likely to be finalised within a month or two," said Mr N.K. Gupta, Chairman and Managing Director.

Apart from these two international dredging majors, Van Oord ACZ and Jan de Nul are the other two foreign companies that have been competing with DCI in the domestic dredging market, ever since the sector was thrown open to foreign companies.

In fact, DCI, which had been getting maintenance dredging contracts from Indian ports on nomination basis, will now have to face competition. Against this background, DCI's joint ventures with the two international dredging majors assumes significance, as it may well set a new trend for future bidding in the domestic market.

With the domestic dredging demand set to surge in the wake of the Rs 2,427-crore Sethusamudram project, few more foreign dredging companies from Japan and Korea have been eying the Indian market.

Mr Gupta told presspersons here on Tuesday that the joint ventures would not have any equity participation between the two partners.

"The idea is to create a synergy between their (the foreign partner's) technological expertise and our manpower efficiencies," he said.

Asked why DCI chose to form two different joint venture, he said the alliances would be project specific. "If one particular foreign partner does not wish to bid for a particular project, we can always go for the project through the second joint venture," he pointed out.

He said the joint venture would incorporate a clause that would not permit the partners to bid for the same project on their own. However, the individual companies could bid for other projects on their own, if none of the two joint venture were to participate in the bid.

Asked about the Sethusamudram ship canal project, Mr Gupta said DCI had already been awarded, on nomination basis, the first of the four sections in the 167 km canal. The first section involves dredging to the extent of 13.5 million cubic metre to get a draft of 12 metre. The other three sections are open to competitive bidding, with DCI and the foreign dredging majors competing. Totally, the project envisages dredging of 82.5 million cubic metre.

New acquisitions: Mr Gupta said DCI was in the process of acquiring a trailer suction dredger of 5,000 cubic metre capacity and a cutter suction dredger, at a total cost of Rs 575 crore.

The size of the Indian dredging market is estimated at Rs 700-800 crore, which is only two per cent of the global market.

"The National Maritime Development Project is a major development initiative, which will open up new dredging opportunities to the extent of Rs 6,000 crore," he pointed out.

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