Comments
The employees of Dredging Corporation of India (DCI) are looking to place a bid to buy out the Centre’s stake in the dredging company that is up for privatisation, a company official has said.
“We are thinking on those lines,” B Hanuma Naik, a Joint General Manager (Technical) and President of DCI Officers Association, told BusinessLine. He did not, however, say how the management buy-out (MBO) plan would be funded.
At the current share price (₹684.5 at close on the BSE on Wednesday), DCI is valued at about ₹1,800 crore.
The buyer will have to make an open offer and spend an additional ₹1,000 crore to bring the dredgers up to speed.
It would be impossible for a buyer to get a reasonable return on investment, given that DCI does not earn more than ₹650 crore in a year, a dredging consultant said.
In 2017, the CCEA approved strategic disinvestment of the government’s stake in DCI, which is currently 73.47 per cent of the total paid-up equity, through strategic sale along with transfer of management control.
The management buy-out would need investors to bankroll the deal, but given the huge valuation involved and question marks over the returns, finding financial backers will be a tall order for the employees, an industry executive said.
“The management buy-out plan will not work out,” a former DCI employee, who now works for a private dredging company said, asking not to be named.
“The process has not reached the bidding stage yet,” said DCI’s Naik.
DCI, which is listed and a profit-making entity, has 19 dredgers and ancillary crafts with 474 full-time employees, 1,035 contract workers and 332 trainees.
While the fear of job losses is seen as a key factor driving the employees to pitch for an MBO, industry sources said it was “unfounded”.
“It is a mere apprehension of the employees,” said the industry official. “Private dredging contractors are finding it extremely difficult to find qualified people to run dredgers. In such a scenario, a private owner would not resort to retrenchment,” he said.
“The divestment process itself has a mechanism by which workers’ interests are taken care of,” Shipping Secretary Gopal Krishna had earlier told BusinessLine .
“There is assured employment for a specified number of years. The employees are not retrenched. So, it really doesn’t make a difference whether the company is controlled by the government or a private entity,” he said.
“So, who owns the company is not the issue,” Krishna added. “The issue should be whatever entity is there should function well. Whoever functions well can offer the employees better security.”
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.