Mercator in talks for acquisition of Dredging Corporation of India
Mercator Ltd (earlier known as Mercator Lines Ltd), which operates shipping, dredging, coal and oil and gas businesses, has shown preliminary interest in acquiring state-owned Dredging Corp. of India (DCIL), two people aware of the development said.
“The government has been talking about selling off its entire stake in DCIL as part of its divestment plans for this financial year. Mercator is one of the players that has shown interest in the asset and is having preliminary discussions with the relevant government agencies,” said one of the two people, both of whom declined to be identified.
The government owns 74.47% in DCIL.
“At the current market price, the sale of DCIL could fetch the exchequer around Rs1,400 crore. The government is soon expected to appoint an investment bank to begin the sale process,” said the first person cited above.
Spokespersons for Mercator could not be immediately reached for comment. “There is no decision on the divestment yet. As and when there is any development, we will inform,” said D.S. Malik, a spokesman for the finance ministry.
The sale of DCIL is part of the central government’s aggressive divestment plans to raise around Rs72,500 crore this fiscal year. The government has already put in motion several initial public offerings such as those of insurance companies General Insurance Corp. of India and New India Assurance Ltd, as well as various offers for sale.
Besides DCIL, the government has proposed to sell 100% of its holdings in four unlisted companies—Kamarajar Port, HLL Lifecare, Indian Medicines and Pharmaceutical Corp. Ltd and Karnataka Antibiotics and Pharmaceuticals Ltd, the Press Trust of India reported on 18 June.
Mercator’s interest in DCIL stems from the restructuring exercise that the group has been undertaking over a couple of years and which has put shipping and dredging as core businesses for the group going ahead, said the second of the two people cited earlier.
“Mercator has identified shipping and dredging as its core businesses. They are looking to grow aggressively in the Indian dredging business through various means including rapid organic growth through fleet expansion and also potential acquisitions. They could tie up with large foreign players or private equity firms to create appropriate strategic and financial partnerships for pursuing their targets in the dredging business,” this person said.
As part of its restructuring drive, Mercator sold its dry bulk shipping business to Singapore’s Bellerophon Holdings Pte Ltd, MIB Investments Pvt. Ltd and Wroclaw Holdings Ltd in 2016.
This year, the firm completed the sale of its mobile offshore production unit to Oriental Resources for around $76 million. The asset sales were targeted mostly towards reducing the overall debt of the group.
“The company has been able to reduce its consolidated debt from Rs2,632 crore as on 31 March 2016 to Rs1,839 crore as on 31 March 2017 and intends to reduce it further in the ongoing fiscal,” said the second person cited earlier.
The Indian dredging market has a limited number of local players, including DCIL, Mercator, Adani Ports and SEZ and Dharti Dredging.
DCIL is the largest dredging company in India and the only public sector enterprise in the sector. Large foreign dredging companies—Van Oord, Jan De Nul, Royal Boskalis and Dredging International—are also active in India.
The dredging business generated a revenue of Rs270.8 crore for Mercator in 2016-17.
Swaraj Singh Dhanjal contributed to this story.