|Ready-for-privatisation Dredging Corporation of India Ltd. (DCI) is set to win the annual maintenance contract of the Cochin Port Trust by making the lowest bid of ₹88.5 crore.|
The price quoted by the BSEi-listed DCI is considered “aggressive” by dredging industry executives because Cochin Port Trust itself had budgeted ₹123 crore for the work. Mercator Ltd, the only other bidder, made a bid of ₹117 crore.
Deal on Monday
The Cochin Port Trust will sign off on the DCI bid by Monday, an official briefed on the bid said, asking not to be named.
The bid submitted by the Visakhapatnam-based company is seen as an attempt to win contracts against the backdrop of a planned privatisation of the State-run dredging contractor. This will be the first dredging work to be finalised by the Cochin Port Trust through the auction route in eight years.
From 2010, the port trust has engaged DCI on nomination basis (without a tender) and the last contract was valued at ₹140 crore.
“It’s a question of their survival,” a port trust official said, referring to the low rate quoted by DCI. Last year, DCI undercut its private rivals to take up a three-year maintenance dredging contract at the Mumbai Port Trust beginning October 2017 by quoting ₹83.99 crore against an estimate of ₹141 crore.
Dutch company Van Oord Dredging and Marine Contracting Co NV - the second lowest bidder - quoted ₹118 crore. Mumbai Port Trust officials said DCI “faltered on performing the work” according to contract terms, particularly on the deployment of special dredgers used to level the seabed after dredging to prevent patches from developing. Most of the issues have now been sorted out, a Mumbai Port Trust official said.
The government is considering disinvestment of its 100 per cent paid-up equity capital in DCI (73.47 per cent of the total paid-up equity) through strategic sale with transfer of management control. The government has called bids to engage a transaction and a legal advisor and an asset valuer to help manage the privatisation process in the face of vehement opposition from the employees.
India’s biggest dredging contractor earned ₹599.69 crore from running 19 dredgers of different categories and reported a net profit of ₹7.40 crore in the year ended March 2017. It has a debt of ₹700 crore on its books.
The company has 474 fulltime employees, 1,035 contract workers and 332 trainees.