Dredging Corp inks deal with lnland Waterways Authority worth Rs 204 crore

Dredging Corporation of India said that it has signed an agreement with lnland Waterways Authority of India (IWAI) under the Ministry of Ports, Shipping and Waterways, Government of lndia, for a project worth Rs 204.5 crore.

The project involves "Development & Maintenance of fairway width of 32 m and depth of 2 m / 2.5 m for 5 years in various National Waterways in North-Eastern Region by undertaking required dredging, bandalling, channel marking, river training etc. to ensure safe navigation of vessels"

The estimated cost of the awarded work is about Rs 204.5 crore initially for a period of 3 years.

The company said that the signing agreement of Dredging Corporation of lndia with National Waterways dredging work is another step towards expansion and diversification of Dredging Corporation of lndia into lnland Waterways - a new business vertical in addition to the existing maintenance dredging, capital dredging, land reclamation, beach nourishment, project management consultancy etc., which is aiming at a record highest ever turnover of Rs 1000 crore for this financial year 2022-23.

Separately, the company informed that India Ratings and Research has affirmed Dredging Corporation's (DCI) long-term issuer rating at 'IND BBB+'. The outlook is 'negative'.

The credit rating agency said that the 'negative' outlook reflects the DCI's stretched liquidity position with heavy reliance on creditors funding and advances from promoter ports to meet its working capital and debt repayment requirements.

India Ratings believes increased downtime, frequent repairs and maintenance and dependence on sub-contracting to execute orders on account of ageing fleet, along with the lower subcontracting margin, would strain the operating performance of the company.

Additionally, the crystallisation of contingent liabilities and/or losses on unhedged foreign currency debt could negatively impact the credit profile of the company.

The affirmation factors in the improved operating performance in FY22 and H1FY23, the ongoing support from the promoters in terms of awarding of contracts on nomination basis and the receipt of advances, strong market positions of DCI in the domestic dredging market and industry tailwinds.

DCI carries out dredging activities including capital dredging, maintenance dredging as well as beach nourishment, land reclamation for Indian ports and Navy. The consortium of four port trusts - Jawaharlal Nehru Port Trust, Deendayal, Port Trust, Paradip Port Trust and Visakhapatnam Port Trust currently holds a 73.47% shareholding in the company, with remaining being held by the public.

The company reported a net profit of Rs 28.61 crore in Q2 FY23 as against a net loss of Rs 3.98 crore recorded in Q2 FY22. Net sales jumped 58.1% to Rs 238.73 crore in Q2 FY23 over Q2 FY22.

The scrip rose 0.99% to currently trade at Rs 346.95 on the BSE.

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