Expansion into dredging and ship building


Shipping Corporation of India, the country’s largest shipping company that controls nearly 40% of Indian tonnage, is fast gearing up to transform into a multifarious conglomerate. With a presence in 10 different industry segments, the 45-year old company is bracing to expand in other shipping related activities.

The latest foray under consideration is the dredging business, which involves deepening or dredging water channels (even at ports) to increase their depth (or draft) for facilitating entry of large vessels. This work is carried out by specialized vessels called dredgers.

Sources say, the proposal to participate in the dredging business has come from the shipping ministry and SCI, in which the government holds a little over 80%, is open to the idea considering the bright prospects of the industry.

India’s dredging industry is estimated to be worth Rs 600-700 crore and is promising good growth on the back of new projects like the Rs. 2,500 crore Sethusamudram ship canal project and extensive capital dredging to be carried out by both major and minor ports. The dredging prospects have already drawn global majors like Dredging International, Van Oord ACZ, Royal Boskalis Westminister, Jan De Nul and Penta-Ocean to India.

SCI’s CMD, S Hajara confirmed that such a proposal is in the offing but added that it’s at a very nascent stage. A team of SCI officials are already visiting the Vizag-based Dredging Corporation of India to consider the future course of action.

DCI, which was carved out of SCI in 1976, controls about 75-80% of maintenance dredging work at major ports. State run DCI is a flush with orders with the government awarding second section of the Sethusamudram project to the company. DCI is in desperate need for dredgers which costs a few hundred crore each. It’s here that SCI can fill the gap by buying dredgers and then leasing it out to DCI.

In addition to dredging, SCI is also eying joint partnership in a shipyard. It’s teaming up with Mumbai Port Trust to bid for the

proposed Rs. 5,000 crore fourth container terminal of Jawaharlal Nehru Port Trust.

All these expansion plans in allied industries have not drawn SCI away from its core business. In the last fortnight, the company has placed orders worth half a billion dollars for acquiring ships. These included large range (LR)-I size product tankers and two container ships altogether six in numbers.

In value terms, the $371 million order for LR-I tankers with STX Shipbuilding Co of South Korea recently was the largest in SCI’s history. The company is planning to place orders for two MR tankers and five anchor handling tugs by December . Together, these seven vessels will cost another $150 million. At present, SCI owns a fleet of 83 ships.