Indian dredging companies face a bad patch

Oct 03, 2012, 3:55PM EST
Mostly small dredging companies suffered losses because they were too keen to take up risky contracts more than they could handle

 Dredging business is said to have passed through a bad patch in the past few months with many small players losing heavily in some of the contracts undertaken by them. Among these were mostly new comers into the field who in a hurry to make it big tried to clinch deals which they considered good opportunity to make money but ended up losing heavily. The reason being, that they failed to make a proper assessment before undertaking the contracts.

 

Unfortunately most of these small players who after taking up the task especially in some of the major and minor ports on the West coast of India saw themselves “bleeding away” as they faced more obstacles than what they were ready for. As some analysts put it ‘they lacked the expertise and experience’.

 

Most dredging companies in India began to take shape just 10 to 15 years ago. All along it were the foreign dredging companies that had a field day – and yet continue to do so even today. The small and medium players having come on the scene with little or no experience are no match against the Belgium and Holland based dredging giants.

 

“Indian companies have to put up with several hurdles,” says Hemanth Meka Rao of Meka Group. “For one, the banks don’t give loans easily. Only if the dredging company has a contract in hand do the banks agree to provide loans because this assures a source of income for paying back the loan amount. Again only if the company has the proper dredger for the job to be contracted do they agree to provide the finance (that is for capital dredging it won’t help to have a trailer suction dredger meant for maintenance dredging).”

 

Most Indian companies are not geared to offer the entire range of dredging services. With a mere two or three dredgers they are left to depend more on chartering for meeting any exigencies - which need not necessarily be a reliable option. With many companies having come on to the scene it is becoming a common feature to see several bidders turning up to bid for small contracts with often the number exceeding ten.

 

A dangerous trend has taken shape mostly amongst major ports who are now adding to the risks with the terms of agreement which put contractors to a disadvantage. Devdatta Bose, Group Vertical Head – Ports & Transportation of Tata Consulting Engineers Ltd., points out that the offshore works are notoriously vulnerable to wave, wind and tidal forces. “Contractors are expected to somehow budget for the incidence of these risks before-hand on a project basis,” he says. “At times, the employers are better placed to evaluate this risk and yet they pass these risks on to the contractors.”

 

The dredging work in Cochin port began to be considered a graveyard for many small timers. Several companies lost heavily there all because of the risks that were passed on to the contractor without their knowledge. While they dredged at fever pace, they would find that siltation was gaining on them especially when the work was carried out in two installments, one before the monsoon and the other after.  

 

Another development taking place is that private ports have been acquiring there own dredging equipment for maintaining the draft or increase the depth of their ports. Now that most having completed their objectives have taken to bidding for projects at other ports. 

 

 
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