Dredging Corporation of India Limited · NSE:DREDGECORP
Dredging Corporation of India — Investor Presentation (2003)
74 slides from Dredging Corporation of India's investor presentation, 2003
Slide 1: Dredging Corporation of India Limited
Dredging Corporation of India Limited 1
Slide 2: Disclaimers
Disclaimers *Safe Harbor Provision. – This presentation includes statements which may constitute forward-looking statements. – These forward-looking statements include our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our b
Slide 3: Index
Index • Dredging Basics – Definition, Objectives, Types – Demand Drivers • Global Dredging Players • Environment & Regulatory Framework - Indian Dredging Industry • DCI Overview • Organisation, Management , Human Resources • Financial Overview • SWOT Analysis & Growth Strategy 3
Slide 4: Dredging Basics
Dredging Basics • Dredging is – Underwater excavation of various types of materials like rocks, boulders, cobbles, gravel, sand etc. • Objective – Creation of deeper water to improve navigation Contd. 4
Slide 5: Dredging Involves
Dredging Involves • Excavation • Transportation • Utilisation or disposal of dredged material 5
Slide 6: Types of Dredging
Types of Dredging • Capital Dredging – Creating depths • Maintenance Dredging – Maintaining depths • Inland Dredging – Dredging in rivers, canals, lakes etc. • Associated Activity – Land reclamation and beach nourishment 6
Slide 7: Demand Drivers
Demand Drivers • Growth in world trade • Deeper draft requirement of ports • Beach nourishment in coastal areas • Land Reclamation • Environmental aspects and regulations 7
Slide 8: Types of Dredgers
Types of Dredgers • Mechanical Dredger – Lifts material at near enough its INSITU density within a container such as grab or bucket – Example: • Grab Dredger • Backhoe Dredger • Bucket Ladder Dredger • Hydraulic Dredger – Hydraulic or suction dredger lifts material in suspension through a pipe utili
Slide 9: Types of Dredgers
Types of Dredgers • Other Dredgers • Dredgers developed for specific situations. • Example: – Side casing dredgers – Dustpan dredgers – Water injection dredgers 9
Slide 10: Global Dredging Players
Global Dredging Players 10
Slide 11: Names and Location of Global Majors
Names and Location of Global Majors S.No. Name of the Company Country Area of Operation 1 M/s Ballast Ham Dredging Netherlands International 2 M/s Royal Boskalis Netherlands International 3 M/s Van Oord Acz Netherlands International 4 M/s Dredging International Belgium International 5 M/s Jan De Nul
Slide 12: Environment & Regulatory Framework - Indian Dredging Industry
Environment & Regulatory Framework Indian Dredging Industry 12
Slide 13: Regulatory Framework – Policy
Regulatory Framework – Policy • Present guidelines for execution of maintenance and capital dredging of major ports valid up to 31.3.2004 provide the following: • All ports (except Kolkata port) at their option may call for tenders or negotiate with DCI for execution of work on nomination basis. • T
Slide 14: Policy Features
Policy Features • Nomination – Client can invite DCI for negotiations and award work on mutually agreed negotiated rate and terms & conditions without resorting to tender • First Right of Refusal (RFR) – DCI participates, qualifies technically, and if the lowest foreign bidder quotes Rs.100/- and DC
Slide 15: Policy Features
Policy Features • 10% Purchase Price Preference; accorded to a PSU • DCI participates, qualifies technically, and if the Indian private bidder quotes Rs.100, and DCI quote is up to Rs.110/- – Client will provide DCI an opportunity to match the lowest private Indian bidder’s bid, and if DCI matches,
Slide 16: Role of MOS & DGS
Role of MOS & DGS • Ministry of Shipping ( MOS ) – Owner of DCI – Policy making body for maritime sector – All major ports under administrative control of MOS – All policy matters of shipping including dredging policy for major ports are being formulated by MOS. Director General of Shipping ( DGS )
Slide 17: Peculiarities of Indian Market
Peculiarities of Indian Market • Indian market is largely maintenance dredging oriented market due to : – Location of ports / river in ports – Siltation pattern – Established monsoon in East and West Coast 17
Slide 18: Other Features
Other Features • Indian dredging industry has no support service in the form of: – Training centers for dredging operations – Dredger building yards • Dredger repair facilities available are limited in number and quality • No indigenous facilities for spares, requires import; Longer lead times • Cli
Slide 19: Seasonality of Business; West Coast and East Coast
Seasonality of Business; Characteristics of West Coast and East Coast West Coast East Coast • Flat sea bed slopes (1:100 to 1:500) • Steep sea bed slopes (1:30 to 1:100) • Wide continental shelf (about 250 km) • Narrow continental shelf (about 20 km) • Tidal range: 1 to 6 m • Tidal range : 1 to 2.5
Slide 20: Seasonality of Business
Seasonality of Business Maintenance dredging Season Port Through out the year KOPT, Kandla JNPT, Mumbai Post-monsoon (Oct to Dec) New Mangalore Kochi (May to Nov) During monsoon and after monsoon Paradip (May to Sept and Dec and Jan) After monsoon (Dec. to Jan) Visakhapatnam port Capital dredging: T
Slide 21: Changing Market Dynamics
Changing Market Dynamics • Client profile of dredging companies undergoing change because of increasing private sector participation in port development • Changing payment pattern from daily rate to quantity measures being adopted by some clients (ports) warrant more efficient operations by dredging
Slide 22: DCI Overview
DCI Overview • Evolution of business • Business mix (Capital and Maintenance dredging) • Experience – International – Capital dredging • Pricing policy (Practice & Procedure) • Cost competitiveness • General industry competitiveness (equipment required & DCI fleet) • R&D 22
Slide 23: Evolution of Business
Evolution of Business • Ministry of Shipping created and operated dredging pool in 1960’s to meet the dredging requirements of major ports – SCI operated MOS dredgers on agency basis from 1968 to 1976 – DCI was incorporated on 29th March 1976 with paid up capital of Rs. 28 crores – DCI started its c
Slide 24: Current Business Mix (2002-2003)
Current Business Mix (2002-2003) • DCI is predominantly into maintenance dredging • DCI has 87% share in the maintenance dredging market • DCI’s share in capital dredging is limited • 40% of the volume is from a single customer i.e.. Kolkata /Haldia Port 24
Slide 25: Capital Dredging Experience
Capital Dredging Experience • Market size for capital dredging in India is limited • Resource and ancillary equipment requirement requirement in capital dredging is high • Since port development programmes are not continuous, particularly in India, and soil strata varies from port to port, equipment
Slide 26: International Experience
International Experience Value of the S.No. Name & Place of Project Year Description of Work Contract 1 Yanbu Al-Bahr, Saudi Arabia Management of Yanbu 1.1 Port Management 1977 construction of port in red $ 10.00 million sea 1.2 Stevedoring Contract 1981-1983 Stevedoring services 2 Taichung Qty dred
Slide 27: Pricing Policy (Guiding / Deciding Principles)
Pricing Policy (Guiding / Deciding Principles) • Pricing policy in DCI is formulated considering the following: • Fixed and variable costs of equipment identified for deployment • Marginal costs/standing costs depending on the equipment, utilisation and its idleness in case of non-availability of th
Slide 28: Pricing Policy (Guiding / Deciding Principles)
Pricing Policy (Guiding / Deciding Principles) • The unit of measurement normally are: • INSITU; Where parameters effecting quantity to be dredged are fully available • Hopper volume measurement; Where the siltation pattern is not so established and density of dredged materials varies • Day rate; In
Slide 29: Pricing Procedure
Pricing Procedure • Most of the existing contracts are on nomination basis. Before initiating negotiations, DCI obtains project details. • Based on the past performance in similar projects, production estimates and dredging days are arrived at. • Total cost of the project is arrived at on considerin
Slide 30: Cost Competitiveness
Cost Competitiveness • Presently, most of the work in maintenance dredging is being awarded on nomination basis to DCI. • However, during negotiations, DCI is offering most competitive price. In fact, some of these ports do ascertain the competitive rate before negotiation and finalising the rates w
Slide 31: General Industry Competitive Dynamics
General Industry Competitive Dynamics • Competitive advantage / disadvantage of DCI vis-à-vis other foreign players / private Indian players in India:- • Maintenance dredging: – DCI has advantage at:- • Availability of suitable equipment • Expertise and experience • Mobilisation advantage • Client c
Slide 32: General Industry Competitive Dynamics (cont’d)
General Industry Competitive Dynamics ( cont’d…) • Capital dredging: DCI has advantage at:- • Mobilisation advantage • Client credentials • DCI has disadvantage at:- • Lack of suitable equipment • Project management skills 32
Slide 33: Equipment Required in India
Equipment Required in India • Maintenance Dredging: – 50% of the market requires TSHDs with preferably maximum draft of 6 meters – 40% of market requires TSHDs with fully loaded draft of 8 meters – Balance market mostly comprising of minor ports requires shallow draft vessels of 3 meters and below –
Slide 34: Equipment Required in India
Equipment Required in India • Capital dredging: – For dredging of rocks, specially designed heavy duty CSDs would be required – For other soils, general purpose CSDs would be required – In addition auxiliary equipments like winch pontoons, anchor pontoons etc., Would be required for execution of cap
Slide 35: DCI - Fleet Profile
DCI - Fleet Profile Maximum Total Installed Year of Dredging Depth Horse Power in Cutter Suction Dredgers Construction (Meters) KW Dredge VII 1976 22.00 8,500 Dredge Acquarius (1) 25.00 17,300 1977 Total installed horse power 25,800 SOURCE: Company 35
Slide 36: DCI - Fleet Profile
DCI - Fleet Profile Maximum Hopper Dredging capacity Trailing Suction Hopper Year of Depth (Cubic Dredgers Construction (Meters) Meters) Dredge V 1974 22.00 3,450 Dredge VI 1975 22.00 3,770 Dredge VIII 1977 25.00 6,500 Dredge IX 1984 25.00 4,500 Dredge XI 1986 25.00 4,500 Dredge XII 1990 20.00 4,500
Slide 37: R&D
R&D • Dredging industry being technology oriented, R&D plays a major role. • Recently DCI created a separate department to look after R&D activities. • DCI is augmenting its R&D activities and inducting specialists from other organisations to keep up R&D requirements. 37
Slide 38: Organisation, Management, HR
Organisation, Management, HR 38
Slide 39: Present Organisation Structure
Present Organisation Structure Chairman & Managing Director Director (O &T) Director (Fin) GM(Ops) GM(Tech) JGM (P&A) JGM (Fin) CS DGM (MS) CVO Vacant Vacant JGM (Ops)(1) DGM (Ops)(4) DGM (Mktg)(1) DGM (Tech)(5) DGM (P&A)(1) JGM (Fin)(1) 39
Slide 40: Manpower Position as on 31.10.2003
Manpower Position as on 31.10.2003 A. Shore Establishment: Executives 155 Non-executives 257 Shore total 412 B. Floating Establishment: Officers 190 Petty Officers 79 Crew 295 MPWS 22 Floating Total 586 Total Manpower (412+586) 998 40
Slide 41: Human Resource & Personnel Related
Human Resource & Personnel Related • Corporation consisting of two establishments; Floating and Shore • Floating Establishment – Consisting of Officers, Petty Officers, Crew and MPWS – They work on dredgers and other floating crafts of DCI on shift basis – Their service conditions including wages an
Slide 42: Human Resource & Personnel Related
Human Resource & Personnel Related • Floating Establishment (contd.): – Manning on all dredgers is maintained as per safe manning, under ILO, IMO provisions of Merchant Shipping Act 1958 and D.G. Shipping guidelines received from time to time – To face global competition, DCI proposes to reduce man
Slide 43: Human Resource & Personnel Related
Human Resource & Personnel Related • Floating Establishment – The wages and allowances of fleet personnel are revised every two years. The next revision for Officers & POS is due from 01-04-2002 – The wage revision for crew is due from 01-04-2000 which is pending with INSA due to rivalry of unions a
Slide 44: Human Resource & Personnel Related
Human Resource & Personnel Related • Shore Establishment – Shore establishment consists of Executives and Non-Executives – Shore personnel working both at head office and project offices render shore support to the fleet operations 44
Slide 45: Human Resource & Personnel Related
Human Resource & Personnel Related • Shore establishment – The wage revision in respect of shore officers was implemented as per the Government of India (DPE) instructions – In respect of non-executive employees, the wage agreement was implemented as per the settlement signed with the recognised uni
Slide 46: Voluntary Retirement Scheme (Implemented Earlier)
Voluntary Retirement Scheme (Implemented Earlier) • Shore establishment: – The VR scheme was introduced by DCI during Aug.2000 – 119 employees, comprising 80 executives and 39 non-executive were relieved under VR scheme – Reduction in manpower achieved was 22.6% of the strength as on 31-07-2000 46
Slide 47: Voluntary Retirement Scheme (Under Implementation)
Voluntary Retirement Scheme (Under Implementation) • Shore establishment – The corporation once again introduced VR scheme recently on October 23, 2003. This scheme is open up to January 22, 2004 – Present VR scheme is applicable to employees who have: • More than 5 years residual service as on date
Slide 48: Financial Overview For The Years
Financial Overview For The Years 2000-01, 2001-02 & 2002-03 48
Slide 49: Profit & Loss Account
Profit & Loss Account S.No Particulars 2000-01 2001-02 2002-03 Rs. Lakhs. 1 Income from: 2 Operations: 38435 48896 49280 3 Others 1850 1257 2672 4 Total income (2+3) 40285 50153 51952 5 Expenditure on 6 Operations: 7 Pay and benefits to operational staff 3281 3526 4023 8 Repairs & Maintenance 3697 3
Slide 50: Profit and Loss Account
Profit and Loss Account S.No Particulars 2000-01 2001-02 2002-03 14 Admn. Expenses 3331 1743 2091 Rs. Lakhs. 15 Interest 514 1303 701 16 Depreciation 1414 4168 5023 17 Provisions 690 6785 2970 18 Total expenditure(13+14+15+16+17) 25878 36051 36623 19 Profit before extraordinary items (4 - 18) 14407
Slide 51: Profit and Loss Account up to 30-09-03
Profit and Loss Account up to 30-09-03 2003-04 S.No Particulars In Rs Lakhs. (up to sep’03) 1 Income from: 2 Operations: 23916 3 Others 1806 4 Total income (2+3) 25722 5 Expenditure on 6 Operations: 7 Pay and benefits to operational staff 2128 8 Repairs & Maintenance 4004 9 Spares & stores 2678 10 F
Slide 52: Profit and Loss Account up to 30-09-03
Profit and Loss Account up to 30-09-03 2003-04 S.No Particulars (up to sep’03) In Rs Lakhs. 14 Admn. Expenses 1027 15 Interest 185 16 Depreciation 2513 17 Provisions 156 18 Total expenditure(13+14+15+16+17) 19131 19 Profit before extraordinary items (4 -18) 6591 20 Extraordinary items 0 21 Prior per
Slide 53: Balance Sheet
Balance Sheet S.No Particulars 2000-01 2001-02 2002-03 In Rs Lakhs. A Sources of funds 1 Share capital 2800 2800 2800 2 Reserves & surplus 40858 48913 62987 3 Net worth (1+2) 43658 51713 65787 4 Loan funds 5 Secured loans 0 6776 0 6 Unsecured loans 22694 13915 11983 7 Deferred tax liability 0 1454 3
Slide 54: Balance Sheet
Balance Sheet In Rs Lakhs. S.No Particulars 2000-01 2001-02 2002-03 B Application of funds 1 Fixed assets 2 Gross block 61071 80570 83184 3 Less:depreciation 29283 33128 38041 4 Net block ( 2 – 3) 31788 47442 45143 5 Capital work in progress 13991 740 1311 6 Investments 49 0 0 Balance sheet applicat
Slide 55: Balance Sheet
Balance Sheet S.No Particulars 2000-01 2001-02 2002-03 7 Current assets In Rs Lakhs. 8 Inventories 873 1009 615 9 Sundry debtors 13323 11859 12927 10 Cash & bank balances 8818 18626 23287 11 Other current assets 3824 3932 5187 12 Loans and advances 6788 5372 9343 13 TOTAL CURRENT ASSETS (8 to 12) 33
Slide 56: Cash Flow Statement
Cash Flow Statement Ending Ending Ending In Rs Lakhs. S.No Particulars 31.03.01 31.03.02 31.03.03 A Cash flow from operating activities: 1 Profit before Tax 15722 16461 18893 2 Less/add: profit/loss on sale of assets 0 -14 -14 3 Less: extraordinary items -3 0 57 15719 16446 18936 4 Adjustment for: 5
Slide 57: Cash Flow Statement
Cash Flow Statement S.No Particulars Ending Ending 31.03.02 Ending 31.03.01 31.03.03 In Rs Lakhs. 9 Increase (-) / decrease (+) in inventory 120 -137 394 10 Increase (-) /decrease (+) in sundry debtors -6813 1464 -1068 11 Increase (-) /decrease (+) in other current assets -1288 274 -550 12 Increase
Slide 58: Cash Flow Statement
Cash Flow Statement Ending Ending Ending In Rs Lakhs S.No Particulars 31.03.01 31.03.02 31.03.03 B Cash flow from investing activities 1 Purchase of fixed assets -22547 -6127 -668 2 Proceeds from sale of equipments 1 20 31 3 Interest received 2170 766 1265 4 Investments 0 49 0 5 Net cash from invest
Slide 59: Cash Flow Statement
Cash Flow Statement S.No Particulars Ending Ending Ending 31.03.01 31.03.02 31.03.03 In Rs Lakhs C Cash flow from financing activities: 1 Proceeds from long term borrowings 13523 1200 0 2 Payment of long term borrowings -2437 -3753 -11352 3 Dividend paid -1400 -1400 -2100 4 Corporate dividend tax -2
Slide 60: Important Data & Ratios
Important Data & Ratios S. No Particulars 2000-01 2001-02 2002-03 1 Turnover 40285 50153 51952 In Rs Lakhs 2 Expenditure before Dep, int and Admn. 19305 26479 25244 3 Operating profit (1-2) 20980 23675 26708 4 Operating margin (3/1) 52% 47% 51% 5 Gross margin (profit before Dep, int and tax) 17650 2
Slide 61: Important Data & Ratios
Important Data & Ratios S. No Particulars 2000-01 2001-02 2002-03 13 Reserves & surplus 40858 48913 62987 In Rs Lakhs 14 Net worth (12+13) 43658 51713 65787 15 Loan funds 22694 20691 11983 16 Current assets 33626 40799 51360 17 Current liabilities 13102 15123 16164 18 Current ratio (16/17) 2.57 2.70
Slide 62: Customer-Wise Revenue Contribution (2002-03)
Customer-Wise Revenue Contribution ( 2002-03) (Major Customers) 62
Slide 63: SWOT Analysis & Growth Strategy
SWOT Analysis & Growth Strategy 63
Slide 64: SWOT Analysis
SWOT Analysis Strengths Weaknesses • 7th largest dredging company in the world • Being a PSU , elaborate decision making with 80 mn cu. m dredging capacity process to withstand vigilance scrutiny • Mini Ratna – category 1- PSU • As against the increasing global trend towards • Dominates maintenance
Slide 65: SWOT Analysis
SWOT Analysis Strengths Weaknesses • High technical competence, trained • Lack of full fledged marketing set-up manpower, good quality top management because of full capacity utilization in the past resulting from reserved market share • High manning levels. 65
Slide 66: SWOT Analysis
SWOT Analysis Opportunities Threats • Maintenance dredging is a perennial • Regulatory changes may erode requirement for ports and India with its long dominant market share coastline, resulting in good business potential • Preferential treatment in case of • Growth opportunities in capital dredging
Slide 67: Growth Strategy
Growth Strategy • Maintenance Dredging – DCI’S endeavor would be: • To maintain market share in maintenance dredging as DCI would capitalize on its know how of the Indian ports in terms of soil, weather etc. • DCI is also in the process of appointing marketing agents abroad, identification of allian
Slide 68: Growth Strategy – Contd..
Growth Strategy – Contd.. • Maintenance Dredging - Business Environment in Addressable Markets – Considering the regulations in international market and availability of free market for foreign players, DCI can address the market in the following countries:- Singapore - Malaysia Indonesia - Sri Lanka
Slide 69: Growth Strategy – Contd..
Growth Strategy – Contd.. • Maintenance dredging-Business Environment in Addressable Markets – Not many restrictions for DCI to address its business in the identified markets like Singapore, Malaysia, Middle East. – Further DCI would have mobilisation advantage in these markets since these markets a
Slide 70: Growth Strategy – Contd..
Growth Strategy – Contd.. • Capital Dredging - Efforts to Enhance its Market Share by: – Forming JVs/ SPVs with Foreign Dredging Companies – By Acquisition of Additional Equipment • DCI proposing to acquire one number 5000 cum. Hopper capacity TSHDs and one number 2000 cum. Solids per hour pumping c
Slide 71: Growth Strategy – Contd..
Growth Strategy – Contd.. • Undertaking Reclamation and Beach Nourishment works as required by clients,with existing dredgers • Re-enter in-land dredging since DCI had planned inland dredging basing on the volume of work to be generated due to inter-linking of rivers and other measures initiated by
Slide 72: Growth Strategy – Contd..
Growth Strategy – Contd.. • Working with Private Ports – Developing Relationships with upcoming Private Port Developers in the Country – To tie up with major civil construction companies to cater to their turn key requirements. – To equip suitable equipments for meeting maintenance and capital dredg
Slide 73: Other Initiatives
Other Initiatives • Optimizing Capacity Utilization • Continuous Project Monitoring and Review Mechanism • Reduction in equipment down time through preventive maintenance • Improvement in systems for expediting procurement of spares • Introduction of on-line connectivity between Dredgers, Projects a
Slide 74: Thank You
Thank You 74
Dredging Corporation of India — Investor Presentation (2003) on 6ix