dredging corporation of india limited (a government of india enterprise) · 2018-08-16 · dredging...
TRANSCRIPT
Draft Prospectus
February 25, 2013
DREDGING CORPORATION OF INDIA LIMITED
(A GOVERNMENT OF INDIA ENTERPRISE)
(Our Company was originally incorporated under the name of Dredging Corporation of India Private Limited on March 29, 1976 under the Companies Act, 1956, as amended, as a private limited company and was granted a
certificate of incorporation from the Registrar of Companies, Delhi and Haryana. Subsequently the word ‘private’ was deleted from the name of the Company on January11, 1977 in view of it being a government company. The
Company became a public company limited by shares with effect from March 10, 1992.). For further details, refer the section “History and Certain Corporate Matters” on page 91.
Registered Office: Core-2,1st Floor, 'Scope Minar', Plot No.2A & 2B, Laxmi Nagar Dist. Centre, Delhi-110091, India
Tel. No.: +91 011 2244 8528; Fax: +91 011 2244 8527; Website: www.dredge-india.com
Corporate Office: “Dredge House”, Port Area, Visakhapatnam- 530 035, Andhra Pradesh, India, Tel. No.: +91 0891 2523250; Fax: +91 0891 2560581
Compliance Officer and Contact Person: Mr. K. Aswini Sreekanth; Tel. No.: +91 0891 2566537/2871298; Fax: +91 0891 2529846; E-mail: [email protected]
For further details in relation to the changes in our registered and corporate office, please see section titled “History and Certain Corporate Matters” on page 91.
PROMOTER OF THE COMPANY: PRESIDENT OF INDIA ACTING THROUGH THE MINISTRY OF SHIPPING, GOVERNMENT OF INDIA
PUBLIC ISSUE BY DREDGING CORPORATION OF INDIA LIMITED, (“COMPANY” OR”DCIL” OR “ISSUER”) OF TAX-FREE BONDS OF FACE VALUE OF ` 1,000 EACH IN THE NATURE OF
SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES HAVING TAX BENEFITS UNDER SECTION 10(15)(iv)(h) OF THE INCOME TAX ACT, 1961, AS AMENDED, (“BONDS”),
AGGREGATING UP TO ` 5,000 MILLION* (THE “ISSUE”) IN THE FISCAL YEAR 2013.
THE ISSUE IS BEING MADE UNDER THE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF DEBT SECURITIES) REGULATIONS, 2008, AS
AMENDED (“SEBI DEBT REGULATIONS”) AND NOTIFICATION NO. 46/2012. F. NO. 178/60/2012-(ITA.1) DATED NOVEMBER 6, 2012 ISSUED BY THE CENTRAL BOARD OF DIRECT
TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, (“CBDT NOTIFICATION”) BY VIRTUE OF POWERS CONFERRED UPON IT BY ITEM (H) OF
SUB-CLAUSE (IV) CLAUSE (15) OF SECTION 10 OF THE INCOME TAX ACT, 1961 (43 OF 1961).
*In terms of CBDT Notification, besides the public issue, our Company may also raise Bonds through private placement route in one or more tranches during the process of the present Issue, not exceeding ` 1,250 million, i.e.
upto 25% of the allocated limit for raising funds through tax free Bonds during Fiscal Year 2013, at its discretion. Our Company shall ensure that Bonds issued through public issue route and private placement route shall
together not exceed ` 5,000 million. In case our Company raises funds through private placement during the process of the present Issue, the limit for the Issue shall get reduced by such amount raised.
GENERAL RISK Investors are advised to read the Risk Factors carefully before taking an investment decision in the Issue. For taking an investment decision, the investors must rely on their own examination of the Issuer and the Issue
including the risks involved. Specific attention of the investors is invited to the section titled Risk Factors beginning on page 11 of this Draft Prospectus. This Draft Prospectus has not been and will not be approved by
any statutory and/or any regulatory authority in India inter alia including the RBI, the SEBI, the Registrar of Companies and/or the BSE Limited.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Draft Prospectus contains all information with regard to the Issuer and the Issue, which is material in the context of the
Issue, that the information contained in this Draft Prospectus is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held
and that there are no other facts, the omission of which makes this Draft Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
CREDIT RATING
Brickwork Ratings India Private Limited (“Brickwork”) has, by its letter no. BWR/BNG/RL/2012-13/0528 dated February 19, 2013, assigned a rating of “BWR AA+ (SO) (Outlook: Stable)” to the Bonds. Instrument
with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. Credit Analysis & Research Limited (“CARE”) has, by its
letter dated February 23, 2013, assigned a rating of “CARE AA (Double A)” to the Bonds. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations.
Such instruments carry very low credit risk. These ratings are not a recommendation to buy, sell or hold securities, and investors should take their own decision. These ratings are subject to revision or withdrawal at any
time by the assigning rating agency(ies) and should be evaluated independently of any other ratings. For the rationale for these ratings, see “Annexure A – Credit Ratings”.
PUBLIC COMMENTS
This Draft Prospectus has been filed with the BSE Limited (“BSE”) (“Designated Stock Exchange”) pursuant to the provisions of the SEBI Debt Regulations. This Draft Prospectus is open for public comments. All
comments on this Draft Prospectus are to be forwarded to the attention of Mr. K. Aswini Sreekanth, Compliance Officer at the following address: Dredging Corporation of India Limited, “Dredge House”, Port Area,
Visakhapatnam - 530035; Tel. No.: +91 (891) 2566537; Fax:+91 (891) 2529846; E-mail: [email protected]. All comments must be received by the Issuer within seven Working Days of the date on which this Draft
Prospectus is filed with the Designated Stock Exchange (i.e [●], 2013) and by no later than 5 p.m. on such seventh Working Day. Comments by post, fax and email shall be accepted.
LISTING
The Bonds offered through this Draft Prospectus are proposed to be listed on the BSE. For the purposes of the Issue, BSE shall be the Designated Stock Exchange. Our Company has obtained an ‘in-principle’ approval
for the Issue from the BSE vide their letter dated [●].
LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE TRUSTEE FOR THE BONDHOLDERS
SBI Capital Markets Limited
202, Maker Tower ‘E’
Cuffe Parade
Mumbai 400 005
Maharashtra, India
Tel: +91 22 2217 8300
Fax: +91 22 2217 8332
Email: [email protected]
Investor Grievance Email:
Website: www.sbicaps.com
Contact Person: Mr. Murtuza Patrawala / Mr.
Neeladrinath Sarangi
Compliance Officer: Mr. Bhaskar Chakraborty
SEBI Registration No.: INM000003531
A. K. Capital Services Limited
30-39, Free Press House
Free Press Journal Marg
215 Nariman Point
Mumbai - 400 021
Maharashtra, India
Tel: +91 22 6754 6500
Fax: +91 22 6610 0594
Email: [email protected]
Investor Grievance Email:
Website: www.akcapindia.com
Contact Person: Mr. Lokesh Singhi / Mr. Yashesh
Thakkar
Compliance Officer: Mr. Vikas Agarwal
SEBI Registration No: INM000010411
Karvy Computershare Private Limited
Plot No. 17 to 24
Vithal Rao Nagar, Madhapur
Hyderabad- 500 081
Andhra Pradesh, India
Tel.: 040-4465 5000
Fax : 040-2343 1551
Email: [email protected]
Investor Grievance Email: [email protected]
Website: www.karisma.karvy.com
Contact Person: Mr. M Murali Krishna
Compliance Officer: Mr. P A Varghese
SEBI Registration No.: INR000000221
GDA Trusteeship Limited
“GDA House”, First Floor, Plot No.85
S.No-94 & 95
Bhusari Colony (Right), Kothrud
Pune-411 038
Maharashtra, India
Tel.: 020-2528 0081
Fax: 020-2528 0275
Email: [email protected]
Website: www.gdatc.com
Investor Grievance Email: [email protected]
Contact Person: Ms. Priyanka Sawant
Compliance Officer: Mr. Jatin Bhat
SEBI Registration No.: IND000000034
ISSUE PROGRAMME*
ISSUE OPENS ON: [●] ISSUE CLOSES ON: [●]
* The Issue shall reamin open for subscription from 10:00 AM to 5:00 PM during the Issue period indicated above, with an option for early closure (subject to the Issue being open for a minimum of 3 days) or extension
by such period from the date of opening of the Issue, as may be decided at the discretion of the duly authorised committee of Directors of our Company. For further information on the Issue programme, please refer to
“General Information – Issue Programme”page 29 of this Draft Prospectus. In the event of such early closure or extension of the Issue, our Company shall ensure that notice of the same is provided to the prospective
investors, on or before such early date of closure or the initial Closing Date, as the case may be, through advertisement/s in a leading national daily newspaper.
GDA Trusteeship Limited has by its letter dated February 21, 2013 given its consent for its appointment as Debenture Trustee to the Issue and for its name to be included in the Draft Prospectus and in all the subsequent
periodical communications sent to the holders of the Bonds issued pursuant to this Issue.
A copy of the Prospectus shall be filed with the Registrar of Companies, National Capital Territory of Delhi and Haryana in terms of section 56 and section 60 of the Companies Act along with the requisite
endorsed/certified copies of all requisite documents. For further details, please refer to the section titled “Material Contracts and Documents for Inspection” on page 177.
TABLE OF CONTENTS
SECTION I : GENERAL ................................................................................................................................................................................ i
DEFINITIONS / ABBREVIATIONS ................................................................................................................................................................ i
FORWARD LOOKING STATEMENTS ......................................................................................................................................................viii
PRESENTATION OF FINANCIAL AND OTHER INFORMATION ............................................................................................................ x
SECTION II : RISK FACTORS .................................................................................................................................................................. 11
SECTION III : INTRODUCTION .............................................................................................................................................................. 23
GENERAL INFORMATION ......................................................................................................................................................................... 23
SUMMARY OF BUSINESS, STRENGTH & STRATEGY .......................................................................................................................... 30
THE ISSUE ..................................................................................................................................................................................................... 34
SELECTED FINANCIAL INFORMATION .................................................................................................................................................. 40
CAPITAL STRUCTURE ................................................................................................................................................................................ 51
OBJECTS OF THE ISSUE ............................................................................................................................................................................. 55
STATEMENT OF TAX BENEFITS .............................................................................................................................................................. 57
SECTION IV : ABOUT THE ISSUER COMPANY AND THE INDUSTRY ......................................................................................... 63
INDUSTRY ..................................................................................................................................................................................................... 63
OUR BUSINESS ............................................................................................................................................................................................. 78
HISTORY AND CERTAIN CORPORATE MATTERS ................................................................................................................................ 91
OUR MANAGEMENT ................................................................................................................................................................................... 95
SECTION V : STOCK MARKET DATA FOR OUR DEBENTURES AND EQUITY SHARES ...................................................... 106
SECTION VI : FINANCIAL INFORMATION ....................................................................................................................................... 108
FINANCIAL STATEMENTS ...................................................................................................................................................................... 108
FINANCIAL INDEBTEDNESS ................................................................................................................................................................... 109
MATERIAL DEVELOPMENTS .................................................................................................................................................................. 110
SECTION VII : ISSUE RELATED INFORMATION ............................................................................................................................ 111
ISSUE STRUCTURE ................................................................................................................................................................................... 111
TERMS OF THE ISSUE ............................................................................................................................................................................... 117
ISSUE PROCEDURE ................................................................................................................................................................................... 133
SECTION VIII : LEGAL AND OTHER INFORMATION .................................................................................................................... 158
PENDING PROCEEDINGS AND STATUTORY DEFAULTS ................................................................................................................. 158
OTHER REGULATORY AND STATUTORY DISCLOSURES ................................................................................................................ 160
REGULATIONS AND POLICIES ............................................................................................................................................................... 165
SUMMARY OF KEY PROVISIONS OF ARTICLES OF ASSOCIATION ............................................................................................... 172
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ..................................................................................................... 177
DECLARATION .......................................................................................................................................................................................... 178
i
SECTION I : GENERAL
DEFINITIONS / ABBREVIATIONS
This Draft Prospectus uses certain definitions and abbreviations which, unless the context indicates or implies
otherwise, have the meaning as provided below. References to any statutes, legislation, act, guidelines, policies or
regulation shall be to such term as amended from time to time.
Company related terms
Term Description
AOA/Articles/Articles of
Association
Articles of Association of our Company
Auditors/Statutory
Auditors
Our company’s statutory auditors being M/s G.R. Kumar and Co., Chartered
Accountants.
Board / Board of Directors/
our Board
The Board of Directors of our Company and includes any duly constituted committee
thereof
Head Office The head office of our Company located at “Dredge House”, Port Area,
Visakhapatnam- 530 035, India
"DCIL", "Issuer", “the
Company”,“our
Company”, “we”, “us”
or”our”
Dredging Corporation of India Limited, a public limited company incorporated under
the Companies Act, having its registered office at Core-2,1st Floor, 'Scope Minar',
Plot No.2A & 2B, Laxmi Nagar Dist. Centre, Delhi-110091, India
Director(s) The director(s) on our Board
Equity Shares Equity shares of face value of ` 10/- each of our Company
MOA/Memorandum/Mem
orandum of Association
Memorandum of Association of our Company
Promoter President of India acting through the Ministry of Shipping, Government of India
Registered Office The registered office of our Company located at Core-2,1st Floor, 'Scope Minar', Plot
No.2A & 2B, Laxmi Nagar Dist. Centre, Delhi-110091, India
RoC Registrar of Companies, National Capital Territory of Delhi and Haryana
Issue related terms
Term Description
Allotted/Allotment/Allot The issue and allotment of the Bonds to successful Applicants, pursuant to this Issue.
Allotment Advice The communication sent to the Allottees conveying the details of Bonds allotted to
the Allottees in accordance with the Basis of Allotment.
Allottee A successful Applicant to whom the Bonds are Allotted pursuant to the Issue, either
in full or in part.
Applicant/ Investor A person who applies for issuance of Bonds, pursuant to the terms of Draft
Prospectus, the Prospectus and Application Form.
Application An application to subscribe to Bonds offered pursuant to the Issue by submission of
a valid Application Form and payment of the Application Amount by any of the
modes as prescribed under the Prospectus.
Application Amount The aggregate value of the Bonds applied for, as indicated in the Application Form.
Application Form The form in terms of which the Applicant shall make an offer to subscribe to the
Bonds through the Direct Online Application, ASBA or non-ASBA process, for
Bonds being offered pursuant to this Issue.
Application Supported by
Blocked Amount/ASBA/
ASBA Application
An Application (whether physical or electronic) used by an ASBA Applicant to
make an Application by authorizing the SCSB to block the Application Amount in
the specified bank account maintained with such SCSB.
ASBA Account An account maintained with a SCSB which will be blocked by such SCSB to the
extent of the Application Amount mentioned in the Application Form by an ASBA
Applicant.
ii
Term Description
ASBA Applicant Any applicant who applies for the Bonds through the ASBA Process.
Bankers to the Issue /
Escrow Collection Banks
The banks which are clearing members and registered with SEBI as bankers to the
Issue, with whom the Escrow Accounts and/or Public Issue Accounts and/or Refund
Accounts will be opened and as specified in the Prospectus.
Base Issue Size As specified in the Prospectus.
Basis of Allotment The basis on which the Bonds will be allotted to successful Applicants under the
Issue and which is described in “Terms of the Issue – Basis of Allotment” on page
120.
Bond Certificate(s) Certificate issued to the Bondholder(s) in case the Applicant has opted for physical
bonds on allotment or pursuant to rematerialisation of Bonds based on request from
the Bondholder(s).
Bondholder(s) Any person holding the Bonds and whose name appears on the beneficial owners list
provided by the Depositories (in case of bonds held in dematerialized form) or
whose name appears in the Register of Bondholders maintained by the Issuer (in
case of bonds held in physical form).
Bonds Tax Free Secured Redeemable, Non-Convertible Bonds in the nature of Debentures
of face value of ` 1,000 each, having tax benefits under section 10(15)(iv)(h) of the
Income Tax Act, 1961, as amended, proposed to be issued by Company in
accordance with the CBDT Notification and under the terms of the Prospectus.
BSE BSE Limited.
Business Days All days excluding Saturdays, Sundays or a public holiday in India or at any other
payment centre notified in terms of the Negotiable Instruments Act, 1881.
Category I Public Financial Institutions, as defined in section 4A of the Companies Act;
scheduled commercial banks, multilateral and bilateral development financial
institutions, state industrial development corporations, which are authorised to
invest in the Bonds;
Provident funds and pension funds with minimum corpus of ` 2,500 lakhs,
which are authorised to invest in the Bonds;
Insurance companies registered with the IRDA;
National Investment Fund;
Insurance funds set up and managed by the army, navy or air force of the Union
of India or set up and managed by the Department of Posts, India;
Mutual Funds; and
Alternative Investment Funds, subject to investment conditions applicable to
them under the Securities and Exchange Board of India (Alternative Investment
Funds) Regulations, 2012.
Category II Companies within the meaning of section 3 of the Companies Act and bodies
corporate registered under the applicable laws in India and authorized to invest in
Bonds including limited liability partnership(s) registered under the Limited
Liability Partnership Act, 2008 and Major Port Trusts under the Major Port Trusts
Act, 1963.
Category III The following Investors applying for an amount aggregating to above ` 10 lakhs:
Resident Indian individuals; and
Hindu Undivided Families through the Karta.
Category IV The following Investors applying for an amount aggregating up to and including `
10 lakhs:
Resident Indian individuals; and
Hindu Undivided Families through the Karta.
Collection Centres Collection Centres shall mean those branches of the Bankers to the Issue/ Escrow
Collection Banks that are authorized to collect the Application Forms as per the
Escrow Agreement to be entered into by us, Bankers to the Issue, Registrar and Lead
Managers.
Consolidated Bond
Certificate
The certificate issued by the Issuer to the Bondholder for the aggregate amount of
the Bonds that are applied in physical form or rematerialized and held by such
iii
Term Description
Bondholder.
Consortium Agreement Consortium Agreement dated [●] entered amongst the Company and the Consortium
Members for the Issue.
Consortium Members [●]
Credit Rating Agency(ies) The credit rating agency for the Issue being Brickwork and CARE.
Debenture Trust Deed Trust deed to be entered into between the Debenture Trustee and the Company.
Debenture Trustee Trustee for the Bondholders in this case being GDA Trusteeship Limited.
Debenture Trustee
Agreement
Debenture Trustee Agreement dated February 25, 2013 entered into between the
Company and the Debenture Trustee.
Debt Listing Agreement The listing agreement entered into between our Company and the relevant stock
exchanges in connection with the listing of the debt securities of our Company.
Deemed Date of Allotment Deemed Date of Allotment shall be the date on which the Board of Directors/or any
committee thereof approves the Allotment of the Bonds for each Tranche Issue or
such date as may be determined by the Board of Directors or any committee thereof
and notified to the Stock Exchanges. All benefits relating to the Bonds including
interest on Bonds (as specified for each tranche by way of Tranche Prospectus) shall
be available to the Bondholders from the Deemed Date of Allotment. The actual
allotment of Bonds may take place on a date other than the Deemed Date of
Allotment.
Demographic Details The demographic details of an Applicant, such as his address, bank account details
for printing on refund orders and occupation.
Depository(ies) National Securities Depository Limited and/or Central Depository Services (India)
Limited.
Designated Branches Such branches of the SCSBs which shall collect the ASBA Applications, a list of
which is available at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-
Intermediaries or such other website as may be prescribed by the SEBI from time to
time.
Designated Date The date on which Application Amounts are transferred from the Escrow Account to
the Public Issue Account or the Refund Account and ASBA Account to the Public
Issue Account, as applicable, following which the Board of Directors or any duly
constituted committee of the Board of Directors shall allot the Bonds to the
successful Applicants.
Designated Stock
Exchange
BSE Limited.
Draft Prospectus This draft prospectus filed by the Company with the Designated Stock Exchange and
the BSE in accordance with the provisions of SEBI Debt Regulations and shall be
open for public comments, in accordance with the SEBI Debt Regulations.
Escrow Account(s) Accounts opened with the Escrow Collection Bank(s) into which the Members of the
Syndicate and the Trading Members, as the case may be, will deposit Application
Amounts from non-ASBA Applicants and in whose favour non-ASBA Applicants
will issue cheques or bank drafts in respect of the Application Amount while
submitting the Application Form, in terms of the Shelf Prospectus, the respective
Tranche Prospectuses and the Escrow Agreement.
Escrow Agreement Agreement to be entered into amongst the Company, the Registrar to the Issue, the
Lead Managers and the Escrow Collection Bank(s) for collection of the Application
Amounts and where applicable, refunds of the amounts collected from the
Applicants on the terms and conditions thereof.
Interest Payment Date The dates on which interest on Bonds shall fall due for payment as specified in the
Prospectus.
Issue Public Issue by our Company of Tax Free Secured Redeemable, Non-Convertible
Bonds in the nature of Debentures of face value of ` 1,000 each, having tax benefits
under section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended, up to
aggregating ` 5,000 millions to be issued at par in one or more tranches in the fiscal
year 2013, on the terms and conditions as set out in the Prospectus.
iv
Term Description
In terms of CBDT Notification, besides the public issue, our Company may also raise
Bonds through private placement route in one or more tranches during the process of the
present Issue, not exceeding ` 1,250 million, i.e. upto 25% of the allocated limit for
raising funds through Tax Free Bonds during Fiscal Year 2013, at its discretion. Our
Company shall ensure that Bonds issued through public issue route and private
placement route shall together not exceed ` 5,000 million. In case our Company raises
funds through private placement during the process of the present Issue, the Limit for the
Issue shall get reduced by such amount raised.
Issue Agreement The Agreement dated February 25, 2013, entered between the Company and the
Lead Managers.
Issue Closing Date [●].
Issue Opening Date [●].
Issue Period The period between the Issue Opening Date and the Issue Closing Date inclusive of
both days, during which prospective Applicants may submit their Application Forms
as specified in the respective Tranche Prospectus.
Lead Managers SBI Capital Markets Limited and A.K. Capital Services Limited.
Market/Trading Lot 1 (One) Bond.
Maturity Amount/
Redemption Amount
In respect of Bonds Allotted to a Bondholder, the face value of the Bonds along with
interest that may have accrued as on the Redemption Date.
Notification/ CBDT
Notification
Notification No. 46/2012. F. No. 178/60/2012-(ITA.1) dated November 6, 2012
issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of
Finance, Government of India, by virtue of powers conferred upon it by item(h) of
sub-clause (iv) clause (15) of section 10 of the Income Tax Act, 1961 (43 of 1961).
NRIs Non-Resident Indians.
OCB or Overseas
Corporate
Body
A company, partnership, society or other corporate body owned directly or indirectly
to the extent of at least 60% by NRIs including overseas trusts, in which not less
than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly and
which was in existence on October 3, 2003 and immediately before such date had
taken benefits under the general permission granted to OCBs under the FEMA.
OCBs are not permitted to invest in the Issue.
Prospectus The Prospectus dated [●] to be filed with the ROC in accordance with the Debt
Regulations containing inter alia the coupon rate for the NCDs and certain other
information.
Public Issue Account An account opened with the Banker(s) to the Issue to receive monies from the
Escrow Accounts for the Issue and the SCSBs, as the case may be, on the
Designated Date.
Record Date 15 (fifteen) days prior to the relevant Interest Payment Date or relevant Redemption
Date for Bonds issued under the relevant Tranche Prospectus. In the event the
Record Date falls on a Saturday, Sunday or a public holiday in New Delhi or any
other payment centre notified in terms of the Negotiable Instruments Act, 1881, the
succeeding Business Day shall be considered as the Record Date.
Redemption Date/ Maturity
Date
The date on which the Bonds will be redeemed as specified in the relevant Tranche
Prospectus.
Refund Account The account opened with the Refund Bank(s), from which refunds, if any, of the
whole or part of the Application Amount (excluding Application Amounts from
ASBA Applicants) shall be made.
Refund Bank Indusind Bank Limited.
Register of Bondholders The register of Bondholders maintained by the Issuer in accordance with the
provisions of the Companies Act and as more particularly detailed in “Terms of the
Issue – Rights of Bondholders” on page 126.
Registrar to the Issue or
Registrar
Karvy Computershare Private Limited.
Registrar MoU Memorandum of understating dated February 25, 2013 entered into between our
Company and the Registrar to the Issue.
v
Term Description
Resident Indian individual Individual who is a person resident in India as defined under the Foreign Exchange
Management Act, 1999.
SCSBs or Self Certified
Syndicate Banks
The banks registered with SEBI under the Securities and Exchange Board of India
(Bankers to an Issue) Regulations, 1994 offering services in relation to ASBA,
including blocking of an ASBA Account, and a list of which is available on
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901673613.html or at such
other web-link as may be prescribed by SEBI from time to time. A list of the
branches of the SCSBs where ASBA Applications submitted to the Lead Managers,
Lead Brokers, sub-brokers or the Trading Member(s) of the Stock Exchange only in
the Specified Cities, will be forwarded by such Lead Managers, Lead Brokers,
subbrokers or the Trading Members of the Stock Exchange is available at
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html or at such
other web-link as may be prescribed by SEBI from time to time
Specified Cities Centres at Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur,
Bengaluru, Hyderabad, Pune, Vadodara and Surat where the Lead Managers, Lead
Brokers, subbrokers or the Trading Members of the Stock Exchange shall accept
ASBA Applications in terms of the SEBI Circular No. CIR/CFD/DIL/1/2011 dated
April 29, 2011
Security The security created in favour of the Debenture Trustee to secure the irrevocable and
unconditional discharge and performance in full of the obligations of the Company
under the Debenture Trust Deed. For details, please see “Terms of Issue - Security”
on page 117 of this Draft Prospectus.
Series 1 Bonds ` 1,000 face value Series of Bonds having a coupon rate of [●]% p.a. for Category I,
Category II, Category III and Category IV Bondholders, due in 10 years.
Stock Exchange BSE.
Syndicate or Members of
the Syndicate
Collectively, the Lead Managers, the Consortium Members for the Issue, the sub-
consortium members, brokers and sub-brokers
Syndicate ASBA ASBA Applications through the Lead Managers, Lead Brokers, sub-brokers or the
Trading Members of the Stock Exchange only in the Specified Cities.
Trading Lot One Bond.
Trading Member Intermediaries registered as broker or a sub-broker under the SEBI (Stock Brokers
and Sub- Brokers) Regulations, 1992 and/or with the BSE and NSE under the
applicable byelaws, rules, regulations, guidelines, circulars issued by the relevant
Stock Exchanges from time to time and duly registered with the Stock Exchange(s)
for collection and electronic upload of Application Forms on the electronic
application platform provided by such Stock Exchanges.
“Transaction Registration
Slip” or “TRS”
The acknowledgement slip or document issued by any of the Members of the
Syndicate, the SCSBs, or the Trading Members as the case may be, to an Applicant
upon demand as proof of registration of his application for the Bonds.
Tripartite Agreements Agreements entered into between the Issuer, Registrar and each of the Depositories
under the terms of which the Depositories agree to act as depositories for the
securities issued by the Issuer in dematerialised form.
Working Days All days excluding Sundays or a public holiday in India or at any other payment
centre notified in terms of the Negotiable Instruments Act, 1881, except with
reference to Issue Period, Interest Payment Date and Record Date, where working
days shall mean all days, excluding Saturdays, Sundays and public holiday in India
or at any other payment centre notified in terms of the Negotiable Instruments Act,
1881.
Conventional/General Terms, Abbreviations and References to Other Business Entities
Abbreviation Full Form
Act/ Companies Act The Companies Act, 1956
AGM Annual General Meeting
vi
Abbreviation Full Form
AS Accounting Standards as issued by Institute of Chartered Accountants of India
CARE Credit Analysis and Research Limited
CBDT Central Board of Direct Taxes
CDSL Central Depository Services (India) Limited
Civil Code The Code of Civil Procedure, 1908
CSE The Calcutta Stock Exchange Limited
CSR Corporate Social Responsibility
Debt Listing Agreement The agreement for listing of debt securities on the NSE and BSE
DIN Director Identification Number
Depository(ies) CDSL and NSDL
Depositories Act Depositories Act, 1996
DP/ Depository Participant Depository Participant as defined under the Depositories Act, 1996
DPE Department of Public Enterprises
DPE Guidelines Department of Public Enterprises, Guidelines
DRR Debenture Redemption Reserve
DSE Delhi Stock Exchange Limited
DTC Direct Tax Code
FCNR Account Foreign Currency Non Resident Account
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999
FEMA 20 Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
Outside
India) Regulations, 2000
FII Foreign Institutional Investor (as defined under the SEBI (Foreign Institutional
Investors) Regulations, 1995), registered with the SEBI under applicable laws in
India
FIMMDA Fixed Income Money Market and Derivative Association of India
Financial Year/ Fiscal/ FY Period of 12 months ended March 31 of that particular year
GDP Gross Domestic Product
GoI or Government Government of India
HUF Hindu Undivided Family
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
IFSC Indian Financial System Code
Income Tax Act/IT Act Income Tax Act, 1961
India Republic of India
Indian GAAP Generally accepted accounting principles followed in India
IRDA Statutory body constituted under the Insurance Regulatory and Development
Authority Act, 1999
IT Information technology
ITAT Income Tax Appellate Tribunal
MF/ Mutual Funds Mutual Fund(s) registered under the SEBI (Mutual Fund) Regulations, 1996
MoF Ministry of Finance, GoI
MoS Ministry of Shipping, GoI
MCA Ministry of Corporate Affairs, GoI
NSE National Stock Exchange of India Limited
NSDL National Securities Depository Limited
NR Non-Resident
NECS National Electronic Clearing System
NEFT National Electronic Fund Transfer
p.a. Per annum
PAN Permanent Account Number
PAT Profit After Tax
PFI/ Public Financial Public Financial Institution, as defined under Section 4A of the Companies Act
vii
Abbreviation Full Form
Institution
PIO Person of Indian Origin
RBI Reserve Bank of India
` or Rupees or Indian
Rupees
The lawful currency of India
RTGS Real Time Gross Settlement
SEBI Securities and Exchange Board of India
SEBI Act SEBI Act, 1992
SEBI Debt Regulations SEBI (Issue and Listing of Debt Securities) Regulations, 2008
Securities Act United States Securities Act, 1933
Trusts Act Indian Trusts Act, 1882
UAN Unique Application Number
Technical & Industry Terms
Term Description
TSHD / TSD Trailer Suction Hopper Dredger
CSD Cutter Suction Dredger
MCM Million cubic meter
GST Goods and Service Tax
Notwithstanding the foregoing, terms in “Summary of the Key Provisions of Articles of Association”, “Statement of
Tax Benefits”, “Regulations and Policies” and “Financial Statements” on pages 172, 57, 165 and 108, respectively,
shall have the meanings given to such terms in these respective sections.
viii
FORWARD LOOKING STATEMENTS
Certain statements contained in this Draft Prospectus that are not statements of historical fact constitute “forward-
looking statements.” Investors can generally identify forward-looking statements by terminology such as “aim”,
“anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “objective”, “plan”, “potential”,
“project”, “pursue”, “shall”, “should”, “will”, “would”, or other words or phrases of similar import. All statements
regarding our Company’s expected financial condition and results of operations and business plans and prospects are
forward-looking statements. These forward-looking statements include statements as to our Company’ business
strategy, revenue and profitability, planned projects and other matters discussed in this Draft Prospectus that are not
historical facts. These forward-looking statements and any other projections contained in this Draft Prospectus
(whether made by our Company or any third party) are predictions and involve known and unknown risks,
uncertainties, assumptions and other factors that may cause our Company’s actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied by
such forward-looking statements or other projections. All forward-looking statements are subject to risks, uncertainties
and assumptions about our Company that could cause actual results to differ materially from those contemplated by
the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our
Company’s expectations include, among others:
General economic and business conditions in India and globally;
Our ability to successfully implement our strategy, our growth and expansion plans and technological
changes;
Changes in the value of Rupee and other currency changes;
Availability of funds and willingness of our lenders to lend;
Changes in political conditions in India;
The outcome of any legal or regulatory proceedings we are or may become a party to;
Changes in Indian and/or foreign laws and regulations, including tax, accounting, banking, securities,
insurance and other regulations; changes in competition and the pricing environment in India; and regional or
general changes in asset valuations;
Emergence of new competitors;
Performance of the Indian debt and equity markets;
Occurrence of natural calamities or natural disasters affecting the areas in which our Company has
operations; and
Other factors discussed in this Draft Prospectus, including under the section titled “Risk Factors” beginning
on page 11 of this Draft Prospectus.
All forward-looking statements are subject to risks, uncertainties and assumptions about our Company that could cause
actual results and valuations to differ materially from those contemplated by the relevant statement. Additional factors
that could cause actual results, performance or achievements to differ materially include, but are not limited to, those
discussed under the sections titled “Industry” and “Our Business” on pages 63 and 78 of this Draft Prospectus
respectively. The forward-looking statements contained in this Draft Prospectus are based on the beliefs of
management, as well as the assumptions made by and information currently available to management. Although our
Company believes that the expectations reflected in such forward-looking statements are reasonable at this time, it
cannot assure investors that such expectations will prove to be correct or will hold good at all times. Given these
uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. If any of these
risks and uncertainties materialise or if any of our Company’s underlying assumptions prove to be incorrect, our
Company’s actual results of operations or financial condition could differ materially from that described herein as
ix
anticipated, believed, estimated or expected. All subsequent forward-looking statements attributable to our Company
are expressly qualified in their entirety by reference to these cautionary statements. Neither our Company, our
Directors and Officers nor any of their respective affiliates have any obligation to update or otherwise revise any
statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even
if the underlying assumptions do not come to fruition.
x
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
General
In this Draft Prospectus, unless the context otherwise indicates or implies, references to “you,” “offeree,” “purchaser,”
“subscriber,” “recipient,” “investors” and “potential investor” are to the prospective investors in this Offering,
references to our “Company”, the “Company” or the “Issuer” are to Dredging Corporation of India Limited.
In this Draft Prospectus, references to “Rs.”, “`” and “Rupees” are to the legal currency of India and “US $” is to the
legal currency of the United States America and references to ‘Euro’ and ‘€’ are to the legal currency of the European
Union. All references herein to the “India” are to the Republic of India and its territories and possessions and all
references to “U.S.” or the “United States” are to the United States of America and its territories and possessions and
the “Government”, the “Central Government” or the “State Government” are to the Government of India, central or
state, as applicable.
Except where stated otherwise in this Draft Prospectus, all figures have been expressed in ‘Millions’. All references to
‘million/Million/Mn’ refer to one million, which is equivalent to ‘ten lakhs’ or ‘ten lacs’, the word ‘Lakhs/Lacs/Lac’
means ‘one hundred thousand’ and ‘Crore’ means ‘ten million’ and ‘billion/bn./Billions’ means ‘one hundred crores’.
Unless otherwise stated, references in this Draft Prospectus to a particular year are to the calendar year ended on
December 31 and to a particular “fiscal” or “fiscal year” are to the fiscal year ended on March 31.
Unless otherwise stated all figures pertaining to the financial information in connection with our Company are on an
unconsolidated basis.
Presentation of Financial Information
Our Company publishes its audited financial statements in Rupees. Our Company’s audited financial statements are
prepared in accordance with Indian GAAP and the Companies Act.
Summary Financial Information of our Company is included in this Draft Prospectus. The examination reports on the
Summary Financial Information of our Company, as issued by our Company’s Statutory Auditors, M/s G.R. Kumar
and Co., Chartered Accountants, is included in this Draft Prospectus in the section titled “Financial Information”
beginning on page 108 of this Draft Prospectus.
Any discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding
off.
Unless stated otherwise, macroeconomic and industry data used throughout this Draft Prospectus has been obtained
from publications prepared by providers of industry information, government sources and multilateral institutions.
Such publications generally state that the information contained therein has been obtained from sources believed to be
reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although
the Issuer believes that industry data used in this Draft Prospectus is reliable, it has not been independently verified.
Exchange Rates
The exchange rates of the US$ and € as at December 31, 2012, September 30, 3012, March 31, 2012, 2011, 2010,
2009 and 2008 are provided below:
Currency Exchange
Rate into ` as
at December
31, 2012
Exchange
Rate into ` as
at September
30, 2012
Exchange
Rate into ` as
at March 31,
2012
Exchange
Rate into ` as
at March 31,
2011
Exchange Rate
into ` as at
March 31,
2010
Exchange
Rate into ` as
at March 31,
2009
Exchange
Rate into ` as
at March 31,
2008
1 US$ 54.78 52.70 51.16 44.65 45.14 50.95 39.97
1 € 72.26 68.15 68.34 63.24 60.56 67.48 63.09
Source: RBI Reference Rates
11
SECTION II : RISK FACTORS
RISK FACTORS
Prospective investors should carefully consider the risks and uncertainties described below, in addition to
the other information contained in this Draft Prospectus before making any investment decision relating
to the Bonds. If any of the following risks or other risks that are not currently known or are now deemed
immaterial, actually occur, our business, financial condition and result of operation could suffer, the
trading price of the Bonds could decline and you may lose your all or part of your interest and / or
redemption amounts. Unless otherwise stated in the relevant risk factors set forth below, we are not in a
position to specify or quantify the financial or other implications of any of the risks mentioned herein. The
ordering of the risk factors is intended to facilitate ease of reading and reference and does not in any
manner indicate the importance of one risk factor over another.
This Draft Prospectus contains forward looking statements that involve risk and uncertainties. Our
Company’s actual results could differ materially from those anticipated in these forward looking
statements as a result of several factors, including the considerations described below and elsewhere in
this Draft Prospectus.
Investors are advised to read the following risk factors carefully before making an investment in the
Bonds offered in this Issue. You must rely on your own examination of our Company and this Issue,
including the risks and uncertainties involved.
Unless otherwise indicated, all financial and statistical data relating to the dredging industry in the
following discussion are derived from the MoS, the GoI, the GoI’s Twelfth Five-Year Plan, and our
internal operating data,. These data have been reclassified in certain respects for purposes of
presentation.
RISK RELATING TO OUR BUSINESS AND INDUSTRY
1. We are defendants in some legal proceedings and claims arising from tax and contract disputes
that, if determined against us, could have a material adverse impact on our results of operations
and financial condition.
We are defendants in some legal proceedings incidental to our business and operations. We are also
subject to claims against us arising from sales tax, customs, income tax, contract disputes, labor
disputes and other disputed demands.
We have initiated arbitration proceedings against Sethusamumdram Corporation Limited (“SCL”), a
Special Purpose Vehicle which was incorporated on December 06, 2004 for developing the
Sethusamudram Channel Project (“Project”). The GOI, Tuticorin Port Trust, Ennore Port Ltd.,
Visakhapatnam Port Trust, Chennai Port Trust, the Company, Shipping Corportation of India Ltd.,
and Paradip Port Trust are shareholders in SCL. As on date, our investment in the equity share
capital of SCL is ` 300 million. The Company was entrusted on nomination basis to execute the
dredging works at Adam’s Bridge and Palk Strait. The rates for the work were fixed by GoI and the
contract with SCL contains a provision that DCI may approach GoI for revision of rates, if the rates
are unremunerative. Subsequently as per the order of the Supreme Court, the dredging work at
Adam’s Bridge was suspended from September 9, 2007 and at Palk Strait was suspended from July
16, 2009. Our management does not consider any diminution in the value of the investment and the
same has been carried at cost. As DCI was incurring losses in executing the project, DCI requested
GOI for revision of rates. DCI also claims that SCL has not paid some of the dues which are payable
as per the contract or as per the directions from MoS. We have vide our Letter No. DCI/ Legal/
SSCP/ Arbitration/ 2012 dated June 06, 2012 requested MoS, GoI, to appoint a sole Arbitrator under
Clause 22 of the contract with SCL for realization of a claim of ` 4,264.10 Million payable by SCL.
The MoS is seized of the matter.
12
In the event any new developments arise, such as a change in Indian law or a ruling against us by
appellate courts or tribunals, we may need to create provisions in our financial statements, which
could increase our expenses and our current liabilities. Furthermore, if a claim is determined against
us and we are required to pay all or a portion of the disputed amount, it could have a material
adverse affect on our results of operations.
All of the proceedings are pending at different levels of adjudication before various courts, tribunals,
inquiry officers, appellate tribunals, arbitrators. For more information regarding litigation involving
our Company or our Directors, see section titled “Pending Proceedings and Statutory Defaults”
beginning on page 158 of this Draft Prospectus.
2. Our performance is linked to the performance of the Indian economy and the dredging industry
in India.
Demand for dredging can be adversely affected by factors such as a decline in growth in world trade
and Indian and global macroeconomic performance. We are dependent on the Indian dredging
market, as our total dredging volume in the last few years is from the Indian dredging market. We
have therefore been subject to increasing competitive pricing pressure. Although at present the
dredging needs in the country are more than our capacity however, there is a possibility that in future,
because of any excess capacity in the industry, the pressure on competitive pricing may built up in
the event of continued economic downturn, which may have a material adverse impact on our results
of operations, as well as the value and price of the Bonds.
3. We are substantially dependent on maintenance dredging which comprised more than 75% of our
dredging volumes in the period from fiscal 2009-10 to fiscal 2011-12.
Due to the increased market demand at Major Ports for maintenance dredging services and our
constraints, the GoI has increasingly liberalized the Indian dredging market in an effort to meet these
increasing dredging requirements and promote greater competition in the dredging market. As a
result of these factors, we estimate that our market share for maintenance dredging at Major Ports
was approximately 66% in fiscal 2012.
At present, we are the leading maintenance dredging company in India, which contributed more than
75% of our overall dredging volumes in the period from fiscal 2010 to fiscal 2012. We anticipate
that maintenance dredging will continue to account for a substantial portion of income.
Consequently, our future success will, to a large extent, depend on continued demand for our
maintenance dredging services, our ability to enhance and develop our maintenance dredging
services to meet the evolving needs of our customers, and our ability to increase our maintenance
dredging volumes and market share. A change in customer preferences, technological change or
other factors could reduce demand for our maintenance dredging services, which could lead to a
material adverse effect on our business and results of operations.
4. About 55% of our income from operations is from the dredging work at Kolkata Port.
About 55% of our income from operations is derived from our dredging operations at Kolkata Port
where, pursuant to the MoS’s nomination process, we are the sole external maintenance dredging
company servicing the port. Kolkata Port’s dredging operations are substantially funded by the GoI.
The current nomination process at Kolkata Port will continue until fiscal 2014. A future change in
this dredging policy for Kolkata Port, including by opening the port’s dredging requirements to
competitive bidding, may lead to a change in the deployment of our resources which may have a
bearing on our financial results.
5. The age, capacity and other limitations of our fleet of dredgers and our limited auxiliary
equipment may impact our ability to compete against international dredging companies in the
Indian dredging market if we are unable to upgrade and expand our fleet.
The average age of our fleet is 25 years which we believe is older than the international industry
averages for such dredgers. We believe the average useful life of dredgers like ours is 20 to 25 years,
13
which can be extended pursuant to a proper maintenance program. Our largest trailer suction hopper
dredgers, used primarily in maintenance dredging, have a hopper capacity of 7,400 cubic meters,
compared to up to 17000 cubic meters used by a private player very recently. Large dredgers can
minimize the travel time per unit volume dredged and provide significant economies to the dredging
operations. In addition to age and size advantages, certain of our international dredging company
competitors also employ more advanced technology on their dredgers. The versatility of these
foreign fleets in terms of size and technology may limit our ability to compete in the future for
Indian maintenance dredging contracts. In addition, as we have focused our fleet of trailer suction
hopper dredgers primarily on the maintenance dredging market, international dredging companies
with larger fleets of cutter suction dredgers have been able to gain market share in the Indian capital
dredging market.
From 2002 to 2009 we did not acquire any new dredgers and made only limited improvements in
onboard dredger technology. With the introduction of increased competition in the Indian dredging
industry, today we continuously assess the need to upgrade and expand our dredging fleet to take
advantage of improving technology and to address the changing needs of the dredging market., viz.
orders have been placed for three 5500 Cu.M hopper capacity ‘state-of the art ‘technology dredgers,
the first of which has been added to the fleet and the remaining two dredgers are expected to be
added to the fleet in Fiscal 2014. Dredger acquisitions require significant capital investment which
we intend to finance by a combination of internal resources and commercial borrowings, which may
not be available to us on favorable terms, if at all. If we are unable to upgrade and expand our fleet,
or on account of a certain level of obsolescence of some of our vessels, we may be unable to
compete successfully with international dredging companies in the Indian and international dredging
markets. Fuel requirement along with maintenance and repairs and refurbishment of our dredgers, so
as to increase their economic life involves huge expenditure. Consequently, this may impact our
ability to compete strongly against international dredging companies in the Indian dredging market,
and accordingly limit our growth prospects.
6. Our business is subject to other operating risks such as environmental hazards, shortage of
skilled manpower, foreign competition and risks inherent as well as ancillary to our operations
The business of dredging is generally subject to a number of risks and hazards, including
environmental hazards, industrial accidents, encountering unusual underwater obstructions or
objects or unexpected geological formations, collisions with fixed objects, disruption of
transportation services and flooding, and forces of nature which may play havoc with the smooth
functioning of operations, viz. open sea turbulence, under water obstructions in the operating areas
undisclosed by our clients at the time tendering which may lead to delays in execution of projects.
These risks could result in damage to, or destruction of, dredgers, transportation vessels, other
buildings, personal injury, environmental damage, performance delays, monetary losses and possible
legal liability, which may have a material adverse effect on our operations. We perceive the
following threats as regards our operations viz. (i) Increasing foreign competition; (ii) Increasing
competition from Indian dredging companies, (iii) Frequent and expensive repairs to dredgers due to
ageing; (iv) Inadequate dredging capacity; (v) Non-availability of experienced and trained technical
persons/ floating personnel which is mainly because of the unattractive pay packages in the public
sector, as compared to the private sector.
7. Although we insure against the risk of damage to our equipment, employees and third parties, we
cannot be sure that actual liabilities will not exceed our insurance coverage.
We maintain insurance to cover risks of loss or damage to our equipment, injury to our employees
and damage or injury to third parties, subject to policy limitations and deductibles for which we are
self-insured. We make estimates and assumptions that affect the reported amount of liability and the
disclosure of contingent liabilities. As claims develop, it is possible that the ultimate results of these
claims may differ from our estimates. We cannot assure you that the Rupee amount of our liabilities
will not materially exceed the insurance policy limits.In addition, premiums and deductibles for
liability insurance could increase to the point that the insurance becomes prohibitively expensive, or
unavailable. The failure to obtain adequate insurance could affect our ability to bid for, or execute,
significant projects, or obtain adequate bonding or financing.
14
8. We have limited experience in international dredging and are subject to risks related to our
international operations.
We did not have income from international dredging operations for the last four fiscals. Although
we currently have only limited experience and presence in the international dredging market, we
intend to increase our international operations as a key component of our growth strategy.
International operations subject us to risks customarily associated with foreign operations, including:
Currency fluctuations;
Import and export license requirements;
Changes in tariffs and taxes;
Restrictions on repatriating foreign profits back to India;
Unfamiliarity with foreign laws and regulations;
Difficulties in staffing and managing international operations; and
Political, cultural and economic uncertainties.
We have limited international dredging experience. International dredging operations. We expect
to continue to face competition in foreign dredging markets, which may limit our ability to enter
those markets. We compete primarily in terms of price, availability of suitable equipment, expertise,
experience, season and volume of work, fleet mobilization and site conditions. If we are unable to
compete effectively based on these factors, competition may reduce our market share in the
maintenance and capital dredging segments of the Indian dredging market as well as our overall
market share in the future. We expect competitive pressure on our business to continue. We may
face a decline in our profits or a reduction in dredging volumes in the future due to intense
competition.
9. Environmental matters could force us to incur significant capital and operational costs.
Our operations and facilities are subject to various environmental laws and regulations, relating to
dredging operations, the disposal of dredged material, wetlands, storm and waste water discharges
and air emissions. We are also subject to laws designed to protect certain marine species and
habitats. Compliance with these statutes and regulations can delay appropriation with respect to, and
performance of, particular projects and increase related expenses. Based on our experience, we
believe that the future cost of compliance with existing environmental laws and regulations (and
liability for known environmental conditions) will be within our estimates. However, we cannot
predict:
What environmental legislation or regulations will be enacted in the future;
How existing or future laws or regulations will be enforced, administered or interpreted; or
The amount of future expenditures which may be required to comply with these
environmental or health and safety laws or regulations or to respond to future cleanup
matters or other environmental claims.
10. We operate in a competitive environment which may result in increased competitive pressure on
our business.
Since the opening of the Indian dredging industry to foreign competition by the GoI in fiscal 1993, a
number of international and domestic dredging companies have entered the Indian dredging market.
As a result, the Indian dredging market has become more competitive. While continuing to offer
capital dredging services in the Indian market, we are primarily focused on maintenance dredging
which is price-sensitive and constituted more than 80% of dredging volumes in the Indian Major
Port dredging market in fiscal 2012. We estimate that our market share for maintenance dredging at
Major Ports fluctuated from approximately 58% in fiscal 2008to approximately 67% in fiscal 2012.
In the Indian dredging market, we compete primarily with Indian and international dredging
companies, viz. Jaisu Shipping Company Private Limited, Kandla, Mercator Lines Limited,
15
Mumbai, Dharti Dredging and Construction Limited, Hyderabad, Meka Dredging Corporation,
Mumbai, Sical Logistics Limited, Mumbai, Infra Dredge Services Private Limited, Mumbai, Van
Oord India Private Limited, Mumbai, Van Oord Dredging & Marine Contactors BV, Netherlands,
Boscalis Dredging India Private Limited, Mumbai, Royal Boskalis Westminister NV, Netherlands,
Jan De Nul Dredging India Private Limited, New Delhi, Jan De Nul NV, Belgium, Dredging
International India Private Limited, New Delhi, Dredging International NV, Belgium, International
Seaport Dredging Limited, Chennai, Hyundai Engineering and Construction Company Limited,
South Korea, Chellaram Shipping (Hong Kong) Limited, Hong Kong and Inaikiara (I) Dredging
Private Limited, Mumbai.
In the future, we may also face competition from other domestic and international dredging
companies that enter the Indian market, including international dredging companies that have been
successful in foreign markets but are yet to enter the Indian dredging market. Some of the
international dredging companies that have entered the Indian market in recent years have
significantly greater resources than us, which may enhance their ability to compete with us.
11. Our failure to anticipate, or adapt our business to, customer requirements and the introduction of
new dredging techniques in the dredging industry may adversely affect our business and our
leadership position.
Evolving industry standards, changing customer requirements, technological changes and new
dredging techniques characterize the dredging industry. Our success depends on our ability to keep
pace with these changes. We may not be successful in addressing these developments on a timely
basis or if we address these developments, our operations may not be successful in the market place.
In addition, techniques developed by others may make our operations less competitive.
12. Our ability to reduce our repairs and maintenance costs is an essential part of our business
strategy and we cannot assure you that our cost reduction measures will be successful.
Reducing our repairs and maintenance costs is essential to our business strategy in a competitive
market environment. We have reduced costs through measures including implementing new
information technology systems, which we expect will improve our material management processes.
We expect these measures will allow us greater flexibility in reducing the prices of our dredging
services in an increasingly competitive market environment. Our measures to reduce our repair and
maintenance costs may not yield the expected results, and may adversely affect our dredging
volumes or profit margins.
13. Increases in the cost of fuels and lubricants may have a material adverse impact on our results of
operations.
In fiscal 2012, our expenses on fuels and lubricants formed 33% of our total expenditure. We enter
into contracts with suppliers of these materials in order to fix our raw material costs over a defined
period. As certain of our dredging contracts do not contain an escalation clause for fuel price
increases, if prices of fuels and lubricants rise, our results of operations will be adversely affected.
14. The GoI is a significant shareholder in our Company and has the ability to exercise significant
control over us and its interests may conflict with your interests as a bondholder.
The GoI owns 78.56% of our outstanding Equity Shares and is our controlling shareholder. As a
result, the GoI has the ability to exercise significant control over most matters requiring approval by
shareholders, including the election and removal of directors and other significant corporate
transactions. Additionally, our Articles provide that so long as the GoI holds a majority of our paid-
up equity share capital, it shall have the right to appoint our Chairman and Managing Director and
our directors. Under our Articles, the Chairman has a casting vote. The GoI could, by exercising its
powers of control, delay or defer a change in control of our Company or a change in our Company’s
capital structure, delay or defer a merger, consolidation, takeover or other business combinations
involving our Company, or discourage a potential acquirer from making a tender offer or otherwise
16
attempting to obtain control of our Company, which may result in affecting your interests as a
bondholder or the price and value of the Bonds.
15. We are dependent on a limited number of suppliers for the supply of critical spare parts used in
our operations and 93% of our spare parts consumed are imported which may result in additional
expenses and affect the smooth- functioning of our operations.
We depend on original equipment manufacturers (“OEM”) for the supply of spare parts for our
operations. As a result, the failure by a supplier to adhere to our delivery schedules could disrupt
our operations. A supplier on whom we are dependent may raise its prices or a dispute may arise
between us and the supplier. As we are dependent on a sole supplier for a particular spare part, we
may find it difficult to replace a supplier on a timely basis and at a reasonable cost, which may
adversely affect our business and results of operations.
16. Our employees are represented by trade unions and any labor unrest could adversely affect our
operations and profitability.
As on December 31, 2012, we had 867 employees, of which 338 were on the shore side consisting
of 181 executives and 157 non-executives. The non executives are represented by trade unions and
executives are represented by associations. 529 employees are on the floating side represented by
respective Maritime Unions. The inability to successfully renegotiate new contracts, any future
strikes, employee slowdowns or similar actions by one or more unions could have a material adverse
effect on our ability to operate our business.
17. Our contingent liability could adversely affect our financial condition.
Details of our contingent liabilities as per Indian Accounting Standards are set out below. As on
March 31, 2012, our contingent liabilities not provided for were as follows:
Serial
No.
Contingent Liabilities (` In million)
1. Letters of Credit 5.54
2. Claims made against the Company not
acknowledged as debts
530.01
3. Estimated amount of contracts remaining to be
executed on capital account and not provided for
10,737.71
4. Income Tax Demands received but disputed by the
Company
157,71
To the extent that any of these contingent liabilities become actual liabilities, they will adversely
affect our results of operations and financial condition in the future.
RISKS RELATING TO THE INDIAN ECONOMY
We are an Indian company and all of our assets and customers are located in India. Consequently, our
financial performance will be influenced by political, social and economic developments in India and in
particular by the policies of the Government.
18. Financial instability in other countries may cause increased volatility in Indian financial markets.
The Indian market and the Indian economy are influenced by global economic and market
conditions. Financial turmoil in Asia and elsewhere in the world in recent years has affected the
Indian economy. Although economic conditions are different in each country, investors’ reactions to
developments in one country can have adverse effects on the securities of companies in other
countries, including India. A loss of investor confidence in the financial systems of other markets
may cause increased volatility in Indian financial markets and, indirectly, in the Indian economy in
17
general. The global credit and equity markets have recently experienced substantial dislocations,
liquidity disruptions and market corrections. In particular, sub-prime mortgage loans in the United
States have experienced increased rates of delinquency, foreclosure and loss. Since September 2008,
liquidity and credit concerns and volatility in the global credit and financial markets increased
significantly with the bankruptcy or acquisition of, and government assistance extended to, several
major U.S. and European financial institutions. These and other related events have had a significant
impact on the global credit and financial markets as a whole, including reduced liquidity, greater
volatility, widening of credit spreads and a lack of price transparency in the United States and global
credit and financial markets. In response to such developments, legislators and financial regulators
in the United States and other jurisdictions, including India, have implemented a number of policy
measures designed to add stability to the financial markets. However, the overall impact of these and
other legislative and regulatory efforts on the global financial markets is uncertain, and they may not
have the intended stabilising effects. In the event that the current difficult conditions in the global
credit markets continue or if there are any significant financial disruption, this could have an adverse
effect on the Company’s business, our future financial performance and the price of the Bonds.
19. Our operations may be adversely affected by weather conditions and natural disasters and our
business our future financial performance and the price of the Bonds may be adversely impacted.
The operation of dredging and other vessels on the oceans and other waterways is subject to various
risks, including catastrophic marine disaster, adverse weather and sea conditions, capsizing,
grounding, mechanical failure, collision, other natural disasters and navigation errors. These risks
could endanger the safety of our personnel, vessels, and other property, as well as the environment.
If any of these events were to occur, we could be held liable for resulting damages. In addition, the
affected vessels could be removed from service and would not be available to generate income.
India, Bangladesh, Pakistan, Indonesia, Japan and other Asian countries have experienced natural
calamities such as earthquakes, floods, droughts and a tsunami in recent years. Some of these
countries have also experienced pandemics, including the outbreak of avian flu. These economies
could be affected by the extent and severity of such natural disasters and pandemics which could, in
turn affect the financial services sector of which our Company is a part. India has experienced
natural calamities such as earthquakes, floods, drought and a tsunami in recent years, including the
tsunami that struck the southern coast of India and other Asian countries in December 2004, the
severe flooding in Mumbai in July 2005 and the earthquake that struck India and other Asian
countries in October 2005. Prolonged spells of abnormal rainfall, draught and other natural
calamities could have an adverse impact on the economy, which could in turn adversely affect our
business and our future financial performance the price of our Bonds.
20. We are subject to risks arising from exchange rate fluctuations.
We import a substantial amount of our spare parts and stores. Since the cost of these materials is
primarily denominated in Euro, any adverse fluctuations with respect to the exchange rate of the
Euro for Indian Rupees is likely to affect our input costs. We continue to bear this risk despite the
increasing use of locally manufactured spare parts and stores in our operations over time. We have
taken ECA covered financing facility for Euro 116,756,000 from BNP, Paribas for the two Trailer
Suction Hopper Dredgers – DR.XIX and Dr XX .The repayment is for a ten year period payable in
20 equal half yearly installments commencing from May 2013 for DR XIX and six months after
delivery of vessel – DR XX. We are exposed to exchange rate fluctuation for the said financing
arrangement. In addition, we are subject to exchange rate fluctuations in relation to our international
operations. We do not enter into foreign exchange forward and derivative contracts to hedge these
risks, and we may be exposed to losses due to fluctuations in foreign exchange rates.
21. Terrorist attacks and other acts of violence or war involving India, the United States, and other
countries could adversely affect the financial markets, result in loss of customer confidence, and
adversely affect our business, results of operations and financial condition.
Terrorist attacks, and other acts of violence or war, particularly those involving India, the United
States, the United Kingdom, Singapore and the European Union or other countries, may adversely
18
affect Indian and global financial markets. India has from time to time experienced and continues to
experience, social and civil unrest, terrorist attacks and hostilities with neighbouring countries. Also,
some of India’s neighbouring countries have experienced or are currently experiencing internal
unrest. This, in turn, could have a material adverse effect on the Indian economy. These acts may
also result in a loss of business confidence and have other consequences that could adversely affect
our business, results of operations and financial condition and in turn may adversely affect our
operations and profitability and the market for the Bonds.
More generally, any of these events could adversely affect fuel prices, cause consumer spending to
decrease, cause increased volatility in the financial markets and have an adverse impact on the
economies of India and other countries, including economic recession.
22. Investors may have difficulty enforcing foreign judgments in India against the Company or our
management.
We are a public limited company incorporated under the laws of India. All of the Company’s
Directors and executive officers are residents of India and all the assets of the Company and such
persons are located in India. As a result, it may not be possible for investors to effect service of
process on the Company or such persons in jurisdictions outside of India, or to enforce against them
judgments obtained in courts outside of India. In addition, India is not a party to any international
treaty in relation to the recognition or enforcement of foreign judgments. Recognition and
enforcement of foreign judgments is provided for under section 13 and section 44A of the Code of
Civil Procedure, 1908 of India (“Civil Code”). Section 44A of the Civil Code provides that where a
foreign judgment has been rendered by a superior court in any country or territory outside India
which the Indian Government has by notification declared to be a reciprocating territory, it may be
enforced in India by proceedings in execution as if the judgment had been rendered by the relevant
court in India. However, section 44A of the Civil Code is applicable only to monetary decrees not
being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in
respect of a fine or other penalty and is not applicable to arbitration awards, even if such awards are
enforceable as a decree or judgment.
The United States has not been declared by the Indian Government to be a reciprocating territory for
the purposes of section 44A of the Civil Code. However, the United Kingdom has been declared by
the Indian Government to be a reciprocating territory and the High Courts in England as the relevant
superior courts. Accordingly, a judgment of a court in the United States may be enforced only by a
fresh suit upon the judgment and not by proceedings in execution whereas, a judgment of a superior
court in the United Kingdom may be enforceable by proceedings in execution, and a judgment not
of a superior court, by a fresh suit resulting in judgment or order. A judgment of a court in a
jurisdiction which is not a reciprocating territory may be enforced only by a new suit upon the
judgment and not by proceedings in execution. Section 13 of the Civil Code provides that a foreign
judgment shall be conclusive as to any matter thereby directly adjudicated upon except: (i) where it
has not been pronounced by a court of competent jurisdiction; (ii) where it has not been given on the
merits of the case; (iii) where it appears on the face of the proceedings to be founded on an incorrect
view of international law or a refusal to recognise the law of India in cases where such law is
applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural
justice; (v) where it has been obtained by fraud; or (vi) where it sustains a claim founded on a breach
of any law in force in India. The suit must be brought in India within three years from the date of the
judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely
that a court in India would award damages on the same basis as a foreign court if an action is
brought in India.
Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if it viewed the
amount of damages awarded as excessive or inconsistent with Indian practice and it is uncertain
whether an Indian court would enforce foreign judgments that would contravene or violate Indian
law. A party seeking to enforce a foreign judgment in India is required to obtain approval from the
RBI under the Foreign Exchange Management Act, 1999 to execute such a judgment to repatriate
outside India any amount recovered pursuant to execution. Any judgment in a foreign currency
would be converted into Indian Rupees on the date of the judgment and not on the date of the
19
payment. The Company cannot predict whether a suit brought in an Indian court will be disposed of
in a timely manner or be subject to considerable delays.
23. Our growth depends on the sustained growth of the Indian economy. An economic slowdown in
India and abroad could have a direct impact on our operations and profitability.
Macroeconomic factors that affect the Indian economy and the global economic scenario have an
impact on our business. The quantum of our disbursements is driven by the growth in demand for
vehicles, capital by small and medium enterprises and loans by individuals. Any slow down in the
Indian economy may have a direct impact on our disbursements and a slowdown in the economy as
a whole can increase the level of defaults thereby adversely impacting our Company’s profitability,
the quality of its portfolio and growth plans, and our ability to implement our strategy.
24. Political instability or changes in the government could delay further liberalization of the Indian
economy and adversely affect economic conditions in India generally, which could impact our
business.
We are incorporated in India, derive our revenues from operations in India and all our assets are
located in India. Consequently, our performance may be affected by interest rates, government
policies, taxation, social and ethnic instability and other political and economic developments
affecting India. The Government has traditionally exercised and continues to exercise significant
influence over many aspects of the Indian economy. Our business may be affected by changes in the
Government's policies, including taxation. Since 1991, successive Indian governments have pursued
policies of economic liberalization, including significantly relaxing restrictions on the private sector.
However, there can be no assurance that such policies will be continued and any significant change
in the Government's policies in the future could affect our business and economic conditions in India
in general.
In addition, any political instability in India or geo-political instability affecting India will adversely
affect the Indian economy in general, which could affect our business. Although, the current
government has announced policies and taken initiatives that support the economic liberalization
policies, the rate of economic liberalization could change, and specific laws and policies affecting
banking and finance companies, foreign investment and other matters affecting investment in our
securities could change as well. Any major change in government policies might affect the growth
of Indian economy and thereby negatively impact our growth prospects.
25. Any downgrading of India's sovereign rating by an international rating agency (ies) may affect
our business and our liquidity to a great extent.
Any adverse revision to India's credit rating for domestic and international debt by international
rating agencies may adversely impact our ability to raise additional finances at favourable interest
rates and other commercial terms. This could have an adverse effect on our growth, financial
performance and our operations.
26. There may be less company information available in Indian securities markets than in securities
market in other more developed countries.
There is a difference between the level of regulation, disclosure and monitoring of the Indian
securities market and the activities of investors, brokers and other participants and that of markets in
the United States and other more developed economies. SEBI is responsible for ensuring and
improving disclosure and other regulatory standards for the Indian securities markets. SEBI has
issued regulations and guidelines on disclosure requirements and other matters. There may,
however, be less publicly available information about Indian companies than is regularly made
available by public companies in more developed economies. As a result investors may have access
to less information about the business, results of operations and financial conditions of the
Company, and those of the competitors that are listed on the BSE Limited and the National Stock
Exchange of India Limited and other stock exchanges in India on an on-going basis than an investor
may find in the case of companies subject to reporting requirements of other more developed
20
countries. There is a lower level of regulation and monitoring of the Indian securities market and the
activities of investors, brokers and other participants than in certain organisations for economic
cooperation and development (OECD) countries. SEBI received statutory powers in 1992 to assist it
in carrying out our responsibilities for improving disclosure and other regulatory standards for the
Indian securities market. Subsequently, SEBI has prescribed certain regulations and guidelines in
relation to disclosure requirements and other matters relevant to the Indian securities markets.
However, there may still be less publicly available information about Indian companies than is
regularly made available by public companies in certain OECD countries.
27. The proposed new taxation system could adversely affect our business and the price of the Bonds.
The Government proposes to introduce two major reforms in Indian tax laws, namely the Goods and
Services Tax and the Direct Taxes Code, both of which were proposed to be effective from 1 April,
2012, and now stand deferred. The Goods and Services Tax would replace the indirect taxes on
goods and services such as central excise duty, service tax, customs duty, central sales tax, surcharge
and cess currently being collected by the central and state governments. The Government has tabled
a Direct Taxes Code Bill in the Parliament but is yet to be passed. The proposed DTC aims to reduce
distortions in tax structure, introduce moderate levels of taxation and expand the tax base. It appears
to consolidate and amend laws relating to all direct taxes such as income tax, dividend distribution
tax, fringe benefit tax and wealth tax and to facilitate voluntary compliance. Since the taxation
system is likely to be overhauled, the long-term effects thereof could adversely affect our business,
financial condition and results of operations and the price of the Bonds.
Risks Relating to the Bonds or this Issue
28. Changes in interest rates may affect the price of our Bonds.
All securities where a fixed rate of interest is offered, such as our Bonds are subject to price risk.
The price of such securities will vary inversely with changes in prevailing interest rates, i.e. when
interest rates rise, prices of fixed income securities fall and when interest rates drop, the prices
increase. The extent of fall or rise in the prices is a function of the existing coupon, days to maturity
and the increase or decrease in the level of prevailing interest rates. Increased rates of interest, which
frequently accompany inflation and/or a growing economy, are likely to have a negative effect on
the price of our Bonds.
You may not be able to recover, on a timely basis or at all, the full value of the outstanding amounts
and/or the interest accrued thereon in connection with the Bonds.
Our ability to pay interest accrued on the Bonds and/or the principal amount outstanding from time
to time in connection therewith would be subject to various factors interalia including our financial
condition, profitability and the general economic conditions in India and in the global financial
markets. We cannot assure you that we would be able to repay the principal amount outstanding
from time to time on the Bonds and/or the interest accrued thereon in a timely manner or at all.
Although our Company will create appropriate security in favour of the Debenture Trustee for the
Bondholders on the assets adequate to ensure at least 100% asset cover for the Bonds, which shall be
free from any encumbrances, the realizable value of the assets charged as security, when liquidated,
may be lower than the outstanding principal and/or interest accrued thereon in connection with the
Bonds. A failure or delay to recover the expected value from a sale or disposition of the assets
charged as security in connection with the Bonds could expose you to a potential loss.
29. There has been no prior public market for the Bonds and the same may not develop in future,
therefore the price of the Bonds may be volatile.
The Bonds have no established trading market. There can be no assurance that an active public
market for the Bonds will develop or be sustained. The liquidity and market prices of the Bonds can
be expected to vary with changes in market and economic conditions, our financial condition and
prospects and other factors that generally influence market price of Bonds. Accordingly, the Bonds,
may trade at a discount to the price at which the Bonds are being issued.
21
30. The Bonds are classified as ‘tax free bonds’ eligible for tax benefits under Section 10(15)(iv)(h) of
the Income Tax Act, 1961 up to an amount of interest on such bonds.
The bonds are classified as ‘tax free bonds’ issued in terms of section 10(15)(iv)(h)of the Income
Tax Act, 1961, as amended, and the Notification No. 46/2012. F. No. 178/60/2012-(ITA.1) dated
November 6, 2012 issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of
Finance, Government of India. In accordance with the said section, the amount of interest on such
bonds shall be entitled to exemption under the provisions of income tax act. Therefore only the
amount of interest on bonds is exempt and not the actual amount of investment.
31. Any downgrading in credit rating of our Bonds may affect the value of Bonds and thus our ability
to raise further debts.
The Bonds proposed to be issued under this Issue have been rated ‘BWR AA+ SO ( BWR Double A
plus Structured Obligation) by Brickwork for an amount of upto ` 5,000 million vide its letter dated
February 19, 2013 and “CARE AA (Double AA)’ by CARE for an amount of upto ` 5,000 million
vide its letter dated February 23, 2013. The rating of the Bonds by Brickwork indicates high degree
of safety regarding timely servicing of financial obligations and carrying very low credit risk. The
rating of the Bonds by CARE indicates high degree of safety regarding timely servicing of financial
obligations and carrying very low credit risk. The ratings provided by Brickwork and CARE may be
suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated
independently of any other rating. These ratings are not a recommendation to buy, sell or hold
securities and investors should take their own decisions. Any revision or downgrading in the credit
rating may lower the trading price of the Bonds and may also affect our ability to raise further debt
For rationale of the above ratings, please see “Annexure A – Credit Ratings”.
.
32. There is no guarantee that the Bonds issued pursuant to this Issue will be listed on BSE in a
timely manner, or at all.
In accordance with Indian law and practice, permissions for listing and trading of the Bonds issued
pursuant to this Issue will not be granted until after the Bonds have been issued and allotted.
Approval for listing and trading will require all relevant documents authorising the issuing of Bonds
to be submitted. There could be a failure or delay in listing the Bonds on the BSE.
33. There may be a delay in making refunds to applicants.
We cannot assure that the monies refundable to applicants, on account of (a) withdrawal of the
applications, or (b) withdrawal of the Issue, or (c) failure to obtain the final approval from the
exchanges for listing of Bonds, or (d) non- allotment due to technical rejections or over
subscriptions, will be refunded to the applicants in a timely manner.
34. Payments made on the Bonds will be subordinate to certain tax and other liabilities as laid down
by law.
The Bonds will be subordinate to certain liabilities preferred by law such as to claims of the
Government on account of taxes, and certain liabilities incurred in the ordinary course of our
transactions. In particular, in the event of bankruptcy, liquidation or winding-up, our assets will be
available to pay obligations on the Bonds only after all of the liabilities that rank senior to these
Bonds have been paid. In the event of bankruptcy, liquidation or winding-up, there may not be
sufficient assets remaining, after paying the aforesaid senior ranking claims, to pay amounts due on
the Bonds. Further, there is no restriction on the amount of debt securities that we may issue that
may rank above the Bonds. The issue of any such debt securities may reduce the amount recoverable
by investors in the Bonds on our bankruptcy, winding-up or liquidation.
PROMINENT NOTES
1. This is a public issue of Bonds by our Company aggregating to not more than ` 5,000 million.
22
2. For details on the interest of the Directors in our Company and the Issue, please refer to the sections
titled “Our Management” and “Capital Structure” beginning on pages 95 and 51 of this Draft
Prospectus, respectively.
3. Our Company has entered into certain related party transactions, within the meaning of AS 18 as
notified by the Companies (Accounting Standards) Rules, 2006, as disclosed in the section titled
“Financial Information” beginning on page 108 of this Draft Prospectus.
4. Any clarification or information relating to the Issue shall be made available by the Lead Managers
and our Company to the investors at large and no selective or additional information would be
available for a section of investors in any manner whatsoever.
5. Investors may contact the Registrar to the Issue, Compliance Officer and the Lead Managers for any
complaints pertaining to the Issue. In case of any specific queries on allotment/refund, Investor may
contact Registrar to the Issue.
6. The Equity Shares of our Company are listed on the Stock Exchanges. For details in connection with
equity share capital, please see section titled “Capital Structure” on page 51 of this Draft
Prospectus.
7. In the event of oversubscription to the Issue, allocation of Bonds will be as per the "Basis of
Allotment" beginning on page 120 of this Draft Prospectus.
8. As of March 31, 2012 we had certain contingent liabilities not provided for. For further information,
please see “Provisions, Contingent Liabilities and Contingent Assets” under section titled “Financial
Statements” on page F-55 of this Draft Prospectus.
For further information relating to certain significant legal proceedings that we are involved in,
please refer to the section titled “Pending Proceedings and Statutory Defaults” beginning on page
158 of this Draft Prospectus.
23
SECTION III : INTRODUCTION
GENERAL INFORMATION
Dredging Corporation of India Limited
Our Company was incorporated under the name of Dredging Corporation of India Limited on March 29,
1976 under the Companies Act, as amended, as a private limited company and was granted a certificate of
incorporation from the Registrar of Companies, Delhi and Haryana. Subsequently the word ‘private’ was
deleted from the name of the Company on January11, 1977 in view of it being a government company. The
Company became a public company limited by shares with effect from March 10, 1992. For further
information see “History and Certain Corporate Matters” on page 91 of this Draft Prospectus.
Registered Office:
Core - 2, First Floor, ‘Scope Minar’
Plot No.2A&2B, Laxminagar
District Center
Delhi-110091, India
Tel: +91 011 2244 8528
Fax: +91 011 2244 8527
Website: www.dredge-india.com
Corporate Office:
“Dredge House”, Port Area
Visakhapatnam- 530 035, India
Tel: +91 0891 2523250
Fax: +91 0891 2560581
For details in connection with changes in our Registered Office, please see section titled “History and
Certain Corporate Matters” on page 91 of this Draft Prospectus.
Registration:
Details Registration/Identification Number
Registration Number 8129 of 1975-76
Corporate Identification Number L29222DL1976GOI008129
Address of the Registrar of Companies
The Registrar of Companies
National Capital Territory of Delhi and Haryana
4th Floor, IFCI Tower, 61, Nehru Place
New Delhi 110 019, India
Tel: +91 11 26235704
Fax: +91 11 26235702
Company Secretary, Compliance Officer and General Manager (Finance):
The details of the person appointed to act as Compliance Officer for the purposes of this Issue, Company
Secretary and General Manager (Finance) are as set out below:
24
Company Secretary and Compliance Officer
Mr. K. Aswini Sreekanth
“Dredge House”, Port Area, Visakhapatnam- 530
035, India
Tel.: +91 0891 2566537/2871298
Fax: +91 0891 2529846
Email: [email protected]
General Manager (Finance)
Mr. P.P. Govindachari
“Dredge House”, Port Area, Visakhapatnam- 530
035, India
Tel.: +91 0891 2871205
Fax: +91 0891 2720273
Email: [email protected] Investors may contact the compliance officer or the Registrar to the Issue in case of any pre-Issue or post-Issue
related problems such as non-receipt of Allotment Advice, Bond certificates, credit of allotted bonds in the
respective beneficiary account or refund orders etc.
All grievances relating to the issue may be addressed to the Registrar to the Issue, giving full details such as
name, Application Form number, address of the Applicant, number of Bonds applied for, amount paid on
Application, Depository Participant and the Collection Centres of the members of the Syndicate where the
application was submitted.
All grievances related to ASBA process where the application is submitted to a member of the Syndicate
should be addressed to the Registrar to the Issue with a copy to the relevant member of the Syndicate and the
relevant SCSB.
All grievances relating to the asba process may be addressed to the Registrar to the Issue with a copy to the
relevant SCSB, giving full details such as name, address of Applicant, Application Form number, number of
Bonds applied for, amount blocked on Application and the Designated Branch or the Collection Centre of the
SCSB where the Application Form was submitted by the ASBA Applicant.
All grievances arising out of Applications made through the online stock exchanges mechanism or through
trading members may be addressed directly to the respective Stock Exchanges.
Lead Managers:
SBI Capital Markets Limited
202, Maker Tower ‘E’
Cuffe Parade
Mumbai 400 005
Maharashtra, India
Tel: +91 22 22178300
Fax: +91 22 22178332
Email: [email protected]
Investor Grievance Email: [email protected]
Website: www.sbicaps.com
Contact Person: Mr. Murtuza Patrawala / Mr. Neeladrinath Sarangi
Compliance Officer: Mr. Bhaskar Chakraborty
SEBI Registration No.: INM000003531
A. K. Capital Services Limited
30-39, Free Press House,
Free Press Journal Marg,
215 Nariman Point,
Mumbai - 400 021
Tel: +91 22 6754 6500
Fax: +91 22 6610 0594
Email: [email protected]
Investor Grievance Email: [email protected]
Website: www.akcapindia.com
Contact Person: Mr. Lokesh Singhi / Mr. Yashesh Thakkar
Compliance Officer: Mr. Vikas Agarwal
SEBI Registration No: INM000010411
25
Debenture Trustee:
GDA Trusteeship Limited
“GDA House”, First Floor, Plot No.85
S.No-94 & 95
Bhusari Colony (Right), Kothrud
Pune-411 038
Maharashtra, India
Tel.: 020-2528 0081
Fax: 020-2528 0275
Email: [email protected]
Website: www.gdatc.com
Investor Grievance Email: [email protected]
Contact Person: Ms. Priyanka Sawant
Compliance Officer: Mr. Jatin Bhat
SEBI Registration No.: IND000000034
GDA Trusteeship Limited has by its letter dated February 21, 2013 given its consent for its appointment as
Debenture Trustee to the Issue and for its name to be included in this Draft Prospectus and in all the
subsequent periodical communications sent to the holders of the Debentures issued pursuant to this Issue.
Registrar:
Karvy Computershare Private Limited
Plot No. 17 to 24
Vittal Rao Nagar, Madhapur
Hyderabad- 500081
Tel: 040-44655000
Fax: 040-23431551
Email: [email protected]
Website: http:\\karisma.karvy.com
Investor Grievance Email: [email protected]
Contact Person: Mr. M Muralikrishna
Compliance Officer: Mr. P A Varghese
SEBI Registration No.: INR000000221
Statutory Auditors of our Company:
M/s G.R. Kumar and Co., Chartered Accountants
Flat No. 9, Merry Life Apartments
Doctors colony, Peda waltair
Visakhapatnam - 500 017
Tel: +91 891 2755223 / 2793300
Fax: +91 891 2762009 / 2793362
Firm Registration Number: 004941S
Credit Rating Agency:
Brickwork Ratings India Private Limited
III Floor, Raj Alkaa Park
29/3 & 32/2 Kalena Agrahara
Banerghatta Road
Bangalore - 560076
Tel: 080 4040 9940
Fax: 080 4040 9941
Email: [email protected]
Contact Person: Anitha G
Website: www.brickworkratings.com
26
SEBI Registration Number: IN/CRA/005/98
Credit Analysis & Research Limited
401, Ashoka Scintilla
Himayatnagar, Hyderabad – 500 029
Tel: + 91 40 40102030
Fax: + 91 40 4002 0131
Email: [email protected]
Contact Person: Vidhyasagar L
Website: www.careratings.com
SEBI Registration Number: IN/CRA/004/1999
Legal Advisor to the Issue:
J Sagar Associates
Vakils House,
18, Sprott Road
Ballard Estate
Mumbai- 400 001
Tel: +91 22 4341 8500
Fax: +91 22 6656 1515
Consortium Members
[●]
Bankers to the Issue:
ICICI Bank Limited
Capital Market Division
30, Rajabahadur Mansion
Mumbai Samachar Marg
Fort, Mumbai- 400 001
Maharashtra, India
Tel: 022 6631 0322
Fax: 022 6631 0350 / 2261 1138
Email: [email protected]
Website: www.icicibank.com
Contact Person: Mr. Anil Gadoo
SEBI Registration No.: INBI00000004*
Axis Bank
47-10-24/25, Sai Trade Centre
2nd
Lane, Dwarakanagar
Visakhapatnam – 530 016
Tel: 0891 2562199 / 8142203691
Fax: 0891 2723723
Email: [email protected]
Website: www.axisbank.com
Contact Person: Mr. Pavan Kumar
SEBI Registration No.: INBI00000017
HDFC Bank Limited
FIG – OPS Department, Lodha
I Think Techno Campus, O 3 Level
Next to Kanjurmarg Railway Station
Kanjurmarg (east)
Mumbai – 400 042
Maharashtra, India
Tel: 022 3075 2928
Fax: 022 2579 9801
Email: [email protected]
Website: www.hdfcbank.com
Contact Person: Mr. Deepak Rane
State Bank of India*
Capital Market Branch
Videocon Heritage (Killick House)
Ground Floor, Charanjit Rai Marg
Mumbai 400 001
Maharashtra, India
Tel.: +91 (22) 2209 4932 / 4927
Fax: +91 (22) 2209 4921 / 4922
Email: [email protected] /
Website: www.statebankofindia.com
Contact Person: Mr. Anil Sawant
27
SEBI Registration No.: INBI00000063** SEBI Registration No. INBI000000038***
Indusind Bank Limited
Cash Management Services, Buliding 10
Ground Floor, Solitaire Corporate Park
Guru Hargovindji Marg, Andheri (east)
Mumbai – 400093
Maharashtra, India
Tel: 022 6772 3942
Fax: 022 6623 8021
Email: [email protected]
Website: www.indusind.com
Contact Person: Mr. Suresh Esaki / Mr. Harpal
Singh
SEBI Registration No.: INBI00000002
*The SEBI registration of ICICI Bank Limited as a Banker to the Issue expired on October 31, 2012. ICICI Bank Limited has
applied for renewal of its registration certificate on July 13, 2012 prior to the expiry of its registration. The approval of SEBI in this
regard is awaited. **The SEBI registration of HDFC Bank Limited as a Banker to the Issue expired on January 31, 2013. HDFC Bank Limited has
applied for renewal of its registration certificate on October 30, 2012 prior to the expiry of its registration. The approval of SEBI in
this regard is awaited. ***The SEBI registration of State Bank of India as a Banker to the Issue expired on November 30, 2012. State Bank of India has
applied for renewal of its registration certificate on October 13, 2012 prior to the expiry of its registration. The approval of SEBI in
this regard is awaited.
Refund Bank
Indusind Bank Limited
Cash Management Services, Buliding 10
Ground Floor, Solitaire Corporate Park
Guru Hargovindji Marg, Andheri (east)
Mumbai – 400093
Maharashtra, India
Tel: 022 6772 3942
Fax: 022 6623 8021
Email: [email protected]
Website: www.indusind.com
Contact Person: Mr. Suresh Esaki / Mr. Harpal Singh
SEBI Registration No.: INBI00000002
Bankers to our Company:
BNP PARIBAS
37, Place du Marche Saint Honore – 75031
Paris Cedex 01 France
Tel: +33 (0) 1 42 98 66 25 / +33 (0) 1 43 16 81 51
Fax: +33 (0) 1 42 98 13 15 / +33 (0) 1 43 16 81 84
Email: [email protected] /
Website: www.bnpparibas.co.in
Contact Person: Ms. Claudia Belli / Mr. Fabrice Pruvost
Syndicate Bank
Pawan Complex,
Daba Gardens Main Branch
Visakhapatnam - 530017 Andhra Pradesh, India
Tel: 0891 2506353
Fax: 0891 2246906
Email: [email protected]
Website: www.syndicatebank.in
Contact Person: Mr. A. N. B. Reddy
Punjab National Bank
Ground Floor, LIC Building
Visakhapatnam – 530 004
Andhra Pradesh, India
Tel: 0891 2752001
Fax: 0891 2561920
Email: [email protected]
Indian Overseas Bank
Door No. 28-1-1/2, Jagadamba Centre
Dabagardens, Prakasharaopeta
Visakhapatnam – 530 020
Andhra Pradesh, India
Tel: 0891 2505919 / 2501061
Fax: 0891 2752686
28
Website: www.pnbindia.in
Contact Person: Mr. B.P. Mahapatra
Email: [email protected]
Website: www.iob.in
Contact Person: Mr. P. Balaram Patro
Expert Opinion
Except the letters dated February 19, 2013 issued by Brickwork and January 7, 2013 and February 23,
2013 issued by CARE, in respect of the credit rating of the Issue, and the audit report dated February 21,
2013 and statement of tax benefits dated February 21, 2013 issued by G. R. Kumar & Co., Statutory
Auditors of our Company, our Company has not obtained any expert opinions.
Self Certified Syndicate Banks
The list of Designated Branches that have been notified by SEBI to act as SCSBs for the ASBA process is
provided on http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901673613.html. For more
information on the Designated Branches collecting ASBA Applications, see the above mentioned web-
link.
Syndicate SCSB Branches
In relation to ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or the
Trading Members of the Stock Exchange only in the Specified Cities (Mumbai, Chennai, Kolkata, Delhi,
Ahmedabad, Rajkot, Jaipur, Bengaluru, Hyderabad, Pune, Vadodara and Surat), the list of branches of the
SCSBs at the Specified Cities named by the respective SCSBs to receive deposits of ASBA Applications
from such Lead Managers, Lead Brokers, sub-brokers or the Trading Members of the Stock Exchange is
provided on http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html. For more
information on such branches collecting ASBA Applications from Lead Managers, Lead Brokers, sub-
brokers or the Trading Members of the Stock Exchange only in the Specified Cities, see the above
mentioned web-link.
Impersonation
As a matter of abundant precaution, attention of the investors is specifically drawn to the provisions of
sub-section (1) of section 68A of the Act, relating to punishment for fictitious applications.
Minimum Subscription
In terms of the SEBI Debt Regulations, an issuer undertaking a public issue of debt securities may
disclose the minimum amount of subscription that it proposes to raise through the issue in the offer
document. The Company has decided not to stipulate any minimum subscription for this Issue.
Credit Rating and Rationale
Brickwork has, by its letter no. BWR/BNG/RL/2012-13/0528 dated February 19, 2013, assigned a rating
of “BWR AA+ (SO) (Outlook: Stable)” to the Bonds. Instrument with this rating are considered to have
high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low
credit risk. CARE has, by its letter dated February 23, 2013, assigned a rating of “CARE AA (Double A)”
to the Bonds. Instruments with this rating are considered to have high degree of safety regarding timely
servicing of financial obligations. Such instruments carry very low credit risk. These ratings are not a
recommendation to buy, sell or hold securities, and investors should take their own decision. These
ratings are subject to revision or withdrawal at any time by the assigning rating agency(ies) and should be
evaluated independently of any other ratings. For the rationale for these ratings, see “Annexure A –
Credit Ratings”.
29
Underwriting
This Issue is not underwritten.
Issue Programme
ISSUE PROGRAMME
ISSUE OPENS ON [●]
ISSUE CLOSES ON [●]
Applications Forms for the Issue will be accepted only between 10 a.m. and 5.00 p.m. (Indian Standard
Time) during the Issue Period as mentioned above, (i) by the Lead Managers, Lead Brokers, sub-brokers
or the Trading Members of the Stock Exchange, as the case maybe, at the centers mentioned in
Application Form through the non-ASBA mode or, (ii) in case of ASBA Applications, (a) directly by the
Designated Branches of the SCSBs or (b) by the centers of the Lead Managers, Lead Brokers, sub-
brokers or the Trading Members of the Stock Exchange, as the case maybe, only at the Selected Cities,
except that on the Issue Closing Date, Application Forms will be accepted only between 10 a.m. and 3.00
p.m. (Indian Standard Time) and uploaded until 4.00 p.m, which may be extended up to such time as
deemed fit by the Stock Exchange. Applicants may also make their Applications through Direct Online
Applications using the Online Payment Facility offered through the Stock Exchange during the above
mentioned Issue Period.
Due to limitation of time available for uploading the Applications on the Issue Closing Date, Applicants
are advised to submit their Application Forms one day prior to the Issue Closing Date and, no later than
3.00 p.m (Indian Standard Time) on the Issue Closing Date. Applicants are cautioned that in the event a
large number of Applications are received on the Issue Closing Date, there may be some Applications
which are not uploaded due to lack of sufficient time to upload. Such Applications that cannot be
uploaded will not be considered for allocation under the Issue. Application Forms will only be accepted
on Working Days.
On the Issue Closing Date, extension of time may be granted by the Stock Exchange after taking into
account the total number of Applications received up to the closure of timings for acceptance of
Application Forms as stated herein and reported by the Lead Managers to the Stock Exchange within half
an hour of such closure.
The Issue may close on such earlier date or extended date as may be decided at the discretion of the duly
authorised committee of Directors of our Company subject to necessary approvals. In the event of such
early closure or extension of the Issue, our Company shall ensure that notice of the same is provided to
the prospective investors, on or before such early date of closure or the initial Closing Date, as the case
may be, through advertisement/s in a leading national daily newspaper.
30
SUMMARY OF BUSINESS, STRENGTH & STRATEGY
In this section any reference to “we”, “us” or “our” refers to Dredging Corporation of India Limited.
Unless stated otherwise, the financial data in this section is as per our unconsolidated financial
information prepared as per the requirements of the SEBI Debt Regulations and the Companies Act set
forth elsewhere in this Draft Prospectus.
The following information should be read together with the more detailed financial and other information
included in this Draft Prospectus, including the information contained in the chapter titled “Risk
Factors” beginning on page 11 of this Draft Prospectus.
OVERVIEW
We are the premier dredging company in India, as measured by dredging capacity in terms of Hopper
Capacity/ Quantity dredged. We were established in 1976 as a Public Sector Undertaking (“PSU”) under
the administrative control of the Ministry of Shipping (“MoS”) to provide integrated dredging services to
India’s Major Ports, Non-Major Ports, Shipyards and Indian Navy in the form of maintenance dredging,
capital dredging, reclamation, hydrographic surveys and beach nourishment. We are a Mini Ratna
Category I PSU since November 1999.
India is a major maritime nation by virtue of its long coast line of around 7517 kilometers on the western
and eastern shelves of the mainland and also along the islands, bejewelled with 13 Major Ports under the
administrative control of the MoS and 176 Non-Major Ports under the administrative control of the
Government of India (“GoI”) and State Governments and the private ports, strategically located on the
world’s shipping routes, its long tradition of seafaring with a large pool of trained maritime personnel and
its dynamic and rapidly globalizing economy with a vast potential to expand its participation in trade and
development. A few such ports are natural harbours with sufficient water depth to handle vessels plying
cargo to and from them. Most of the other ports require capital dredging to expand vessel size handling
capability and maintenance dredging for maintenance of their existing/expanded capability to berth
vessels of different shapes and sizes.
Source: Maritime Agenda 2010 to 2020 issued by the MoS, GoI, dated January 2011.
The Indian dredging market consists primarily of maintenance dredging and capital dredging in addition
to a limited amount of inland dredging, beach nourishment and reclamation dredging, and we are a very
prominent player on account of our expertise in this highly technical and skilled sphere of business.
We have a leading presence in the Indian maintenance dredging market, and we also carry out limited
capital dredging. We own and operate 15 dredgers. The capacity of the dredgers as on March 31, 2012 is
as under:-
A. TRAILER SUCTION HOPPER DREDGERS:
Name of the Vessel Year
Built
Hopper
Capacity
(in Cu.M)
Annual
capacity
(Hopper
solids)
(M.Cu.M)
DCI DREDGE –V 1974 3450 4.00
DCI DREDGE –VI 1975 3770 4.00
DCI DREDGE –VIII 1977 6500 9.00
DCI DREDGE –IX 1984 4500 6.50
DCI DREDGE –XI 1986 4500 6.50
DCI DREDGE –XII 1990 4500 6.50
DCI DREDGE –XIV 1991 4500 6.50
DCI DREDGE –XV 1999 7400 10.20
DCI DREDGE –XVI 2000 7400 10.20
DCI DREDGE –XVII 2001 7400 10.20
31
DCI DREDGE-XIX 2012 5500 7.94
TOTAL (A) 81.54
B. CUTTER SUCTION AND BACK-HOE DREDGERS
DCI DREDGE –VII 1976 1.25
DCI AQUARIUS 1977 5.00
DCI DREDGE-XVIII 2009 5.00
DCI BACKHOE 2011 0.60
TOTAL (B) 11.85
GRAND TOTAL
(A+B) 93.39
Capital dredging is done to either create new channels, basins and berths or to deepen the existing
infrastructure of the ports. Maintenance dredging is carried out to maintain the depth at the existing
infrastructure. During the 11th five year plan, a total quantity of 675.25 MCM and 429.99 MCM had been
planned for capital and maintenance dredging respectively for all the ports in the country. This quantity
includes the dredging to be done for fishing harbours also besides the major and non major ports. Against
this targeted plan, only 278.93 MCM and 291.63 CM had been achieved under the capital and
maintenance dredging respectively. This constitutes 41.31% and 67.82% against the targeted quantity. Of
this the share of the Major Ports for capital and maintenance dredging is 95.36 Mln.Cum and 261.83
Mln.Cum respectively. We have estimated that our share of the maintenance dredging for the year Fiscal
year 2008 was 57.6% which increased to 66.5% for Fiscal 2012. Our share in capital dredging for the
Fiscal Year 2008 is 84.0% and for the Fiscal Year 2012 is 52.03%. This decrease was mainly because of
the stoppage of capital dredging work at the Sethusamudram Ship Channel Project, which was sanctioned
on June 1, 2005. Measurement of annual dredging volumes differs between the Major Ports and between
our operating data and those of the individual Major Ports as a result of different quantitative measures of
dredging and methods of recording data.
We have estimated our market shares in the Indian Major Port maintenance and capital dredging markets,
as well as the overall Major Port dredging market, based on the Report of the Working Group for Port
Sector for the Twelfth Five Year Plan 2012-17 prepared by the Planning Commission and our internal
operating data. Our customers include major ports, the Indian Navy and Shipyards. In fiscal 2012,
approximately 55% of our income from operations was earned from our maintenance dredging contract
with Kolkata Port (Haldia). Other key customers for Fiscal 2012 include Ennore Port, Cochin Port,
Cochin Navy, Mormugao Port, Visakhapatnam Port, New Mangalore Port, Karwar and Paradip Port.
Our operating revenue for the fiscal years ended March 31, 2010, 2011 and 2012 was ` 6,730.35 million,
` 5,071.42 and ` 4,916.58 million, respectively.
Our Competitive Strengths
We believe that we are well -positioned to maintain and enhance our leadership position in the Indian
dredging market, on account of our competitive strengths, which include the following:
Premier and the only PSU dredging company in India
We are a premier and the only PSU dredging company in India. We are also the preferred dredging
company for Major Ports and the Indian Navy. We have been in this business since 1976 and have been
catering to the dredging requirements of the major ports/ Indian Navy since then. Owing to the long
association with the Major Ports, our Company is the most preferred company for dredging requirements
of most of the Major Ports and the India Navy.
Flexible portfolio of dredging assets
Our Company operates a diverse dredging fleet which is the largest in India in terms of capacity. The
size, versatility and technical capabilities of our fleet improves its competitiveness as it generally permits
our Company to select the appropriate equipment for a particular maintenance dredging job. To maintain
32
the value and effectiveness of fleet, the Company emphasizes preventive maintenance so as to reduce the
downtime, increase profitability, enhance the vessel life.
Strong relationships with Customers
Our Company caters to the dredging requirements of the Major Ports and the Indian Navy right from its
inception in 1976 and has a better understanding of the dredging requirements of the Indian Ports. Our
Company is the leader in maintenance dredging in India through its combination of usage of advanced
equipment and experience. Our Company believes that its size as the largest dredging company in India
and its extensive experience significantly enhanced its ability to profitably bid for and complete the
contracts awarded to it.
Experienced management team
Our Company’s senior managers have vast experience in the dredging and maritime industries. Our
Company believes that this experience provides the Company with a significant advantage over its
competitors. The Company’s floating personnel who manage the dredgers and the management team who
give the support services are well trained professionals having vast experience in the dredging and
maritime industries
Our Strategies
We intend to increase income from operations and strengthen our domestic and international competitive
position by expanding our operations in both our traditional and new dredging services and adopting a
pro-active marketing strategy for our domestic and foreign operations. We aim to achieve our mission by
pursuing the following business strategies:
Enhancement of market share in maintenance dredging and more participation in capital dredging in
India
With the proposed addition of the two new dredgers by June 2013 and January 2014 respectively of
higher capacity, our Company expects to maintain its domestic leadership position in maintenance
dredging by becoming more customer-focused and tailoring marketing initiatives that differentiate
between specific groups of customers. In particular, it is consolidating its relationships with the Major
Ports and developing marketing efforts aimed at non-Major Ports and new private port developers in
India. Also at present company is undertaking Capital dredging assignment at Ennore Port and Kandla
Port. We plan to undertake more such assignments subject to the availability of the fleet.
Making forays in foreign dredging market
Apart from consolidation in the Indian dredging market, we have plans to make forays in the foreign
dredging market. We are undertaking international dredging assignment at Kanakesanturai harbour, Sri
Lanka under the aegis of Ministry of External Affairs, GOI as per a bilateral arrangement with the
Government of Sri Lanka.
Enhancement of the fleet capability
In continuation of the efforts to sustain the existing capacity for which orders were placed for three
dredgers meant as replacement of existing aged dredgers, our Company plans to procure two higher
hopper capacity 9000 cubic meters trailer suction hopper dredgers in the twelfth plan. Our Company also
plans to refurbish the existing aged dredgers during the current plan period so as to increase their
effectiveness and enhance their economic life.
Reducing operational costs
Our Company proposes to reduce its operational costs by refurbishing the existing aged dredgers. Further,
in addition to its capacity utilization initiatives discussed above, our Company also intends to reduce
operational costs by focusing on fuel efficiency in ship operations and ship procurement and further
33
streamlining the spare parts procurement systems. Our Company also proposes to have tie-ups with ship
repair yards for continued maintenance of our vessels for a period of time so as to make available the
dredgers for a guaranteed minimum number of days every year.
Strategic alliances through long term contracts with major ports
Our Company proposes to have strategic alliances with major ports on similar terms with the Kolkata Port
at present. This will ensure assured business for the Company and enable the Company to plan in advance
regarding the deployment of the vessels.
Optimize capacity utilization
Our Company intends to continue to optimize its capacity utilization by continuous project monitoring
and review, reducing equipment downtime through preventive maintenance and working with repair
yards to accelerate dry dock repair periods, and increasing computerization, including introducing online
connectivity between dredgers, projects and the head office. Our Company also intends to continue to
invest in quality pre-dredging surveys and equipment and continue to invest in repairs and maintenance.
Through a renewed focus on training, our Company intends to introduce specific project planning and
management initiatives to educate its staff to identify and develop new market opportunities. Our
Company believes in the introduction of best practices in procurement, costing and working capital
management, along with the introduction of tailored human resources practices, participatory
management and new technologies, which will create new competencies in its organization and add value
for its dredging customers.
34
THE ISSUE
As per the terms of the CBDT Notification, the aggregate volume of the issue of Bonds (having benefits
under Section 10(15)(iv)(h) of the Income Tax Act) by the Company during the Fiscal 2013 shall not
exceed ` 5,000 million.
Hence, the Company shall issue the Bonds upto an aggregate amount of ` [●] millions through this Issue
during the Fiscal 2013 out of the total permissible amount of ` 5,000 millions, as approved by its Board
through its resolution dated November 10, 2012.
The following is a summary of the Issue. This summary should be read in conjunction with and is
qualified in its entirety by more detailed information in the section titled “Issue Structure” and “Terms of
the Issue” beginning on page 111 and 117 of this Draft Prospectus, respectively.
COMMON TERMS FOR THE BONDS
Issuer Dredging Corporation of India Limited
Issue of Bonds Public issue of tax-free bonds of face value of ` 1,000 each in the nature of
secured, redeemable, non-convertible debentures having tax benefits under section
10(15)(iv)(h) of the income tax act, 1961, as amended, aggregating up to ` 5,000
million* in the fiscal year 2013.
The Issue is being made under the provisions of SEBI Debt Regulations and
CBDT Notification by virtue of powers conferred upon it by item (h) of sub-
clause (iv) clause (15) of section 10 of the income tax act, 1961 (43 of 1961).
*In terms of CBDT Notification, besides the public issue, our Company may also
raise Bonds through private placement route in one or more tranches during the
process of the present Issue, not exceeding ` 1,250 million, i.e. upto 25% of the
allocated limit for raising funds through tax free Bonds during Fiscal Year 2013, at
its discretion. Our Company shall ensure that Bonds issued through public issue
route and private placement route shall together not exceed ` 5,000 million. In case
our Company raises funds through private placement during the process of the
present Issue, the limit for the Issue shall get reduced by such amount raised.
Face Value (`) ` 1,000
Issue Price (`) ` 1,000
Nature of Bonds Secured
Mode of Issue Public issue
Pay-in Date Application Date. Full amount with the Application Form, except ASBA
Applications. See “Issue Procedure – Payment Instructions” on page 148.
Who can apply Category I
(“Qualified
Institutional
Buyers”)
(“QIBs”)*
Category II
(“Domestic
Corporates”)*
Category III
(“High Networth
Individuals”)
(“HNIs”)
Category
IV(“Retail
Individual
Investors”)
(“RIIs”)
Public
financial
institutions
specified in
Section 4A of
the Companies
Act,
Scheduled
commercial
banks,
Mutual funds
registered with
Companies
within the
meaning of
section 3 of the
Companies Act
and bodies
corporate
registered under
the applicable
laws in India and
authorized to
invest in Bonds
The following
investors
applying for
an amount
aggregating to
more than ` 10 lakhs in
the Issue
Resident
Individual
Investors
Hindu
The following
investors
applying for
an amount
aggregating
up to and
including ` 10
lakhs in the
Issue
Resident
Individual
Investors
35
COMMON TERMS FOR THE BONDS
SEBI,
Multilateral
and bilateral
development
financial
institutions,
State industrial
development
corporations,
Insurance
companies
registered with
the Insurance
Regulatory and
Development
Authority,
Provident
funds with a
minimum
corpus of ` 250 million,
Pension funds
with a
minimum
corpus of ` 250 million,
The National
Investment
Fund set up by
resolution F.
No. 2/3/2005-
DD-II dated
November 23,
2005 of the
GoI, published
in the Gazette
of India,
Insurance
funds set up
and managed
by the army,
navy, or air
force of the
Union of India
and
Insurance
funds set up
and managed
by the
Department of
Posts, India.
including limited
liability
partnership(s)
registered under
the Limited
Liability
Partnership Act,
2008 and Major
Port Trusts under
the Major Port
Trusts Act, 1963
Undivided
Families
applying
through the
Karta
Hindu
Undivided
Families
through the
Karta
Credit Ratings Brickwork has, by its letter no. BWR/BNG/RL/2012-13/0528 dated February 19,
2013, assigned a rating of “BWR AA+ (SO) (Outlook: Stable)” to the Bonds.
Instrument with this rating are considered to have high degree of safety regarding
timely servicing of financial obligations. Such instruments carry very low credit
risk. CARE has, by its letter dated February 23, 2013, assigned a rating of
36
COMMON TERMS FOR THE BONDS
“CARE AA (Double A)” to the Bonds. Instruments with this rating are
considered to have high degree of safety regarding timely servicing of financial
obligations. Such instruments carry very low credit risk. These ratings are not a
recommendation to buy, sell or hold securities, and investors should take their
own decision. These ratings are subject to revision or withdrawal at any time by
the assigning rating agency(ies) and should be evaluated independently of any
other ratings. For the rationale for these ratings. For details, see “Annexure A -
Credit Ratings”.
Security For details in connection with security created in favour of Debenture Trustee,
please see “Security – Terms of Issue” on page 129 of this Draft Prospectus.
Security Cover One time of the total outstanding Bonds
Nature of
Indebtedness and
Ranking/ Seniority
The claims of the Bondholders shall be superior to the claims of any unsecured
creditors of the Company and subject to applicable statutory and/or regulatory
requirements, rank pari passu inter se to the claims of other creditors of the
Company having the same security.
Put/Call Option There is no put/call option for the Bonds
Listing BSE. For more information, see “Terms of the Issue – Listing” on page 129.
Debenture Trustee GDA Trusteeship Limited
Depositories Central Depository Services (India) Limited (“CDSL”) and National Securities
Depository Limited (“NSDL”)
Registrar Karvy Computershare Private Limited
Modes of
Payment/Settlement
Mode
1. Direct Credit;
2. National Electronic Clearing System (“NECS”);
3. Real Time Gross Settlement (“RTGS”);
4. National Electronic Fund Transfer (“NEFT”); and
5. Registered/Speed Post
For more information, see “Terms of the Issue – Manner & Modes of Payment”
on page 124.
Issuance In dematerialised form and physical form, at the option of the Applicant**
Trading In dematerialised form only**
Market Lot / Trading
Lot
One Bond
Deemed Date of
Allotment
The Deemed Date of Allotment will be the date on which the Board of Directors
is deemed to have approved the Allotment of Bonds for the Issue or any such
date as may be determined by the Board of Directors. All benefits under the
Bonds including payment of coupon rate will accrue to the Bondholders from the
Deemed Date of Allotment. Actual Allotment may occur on a date other than the
Deemed Date of Allotment.
Record Date The record date for payment of interest on the Bonds or the Maturity Amount
will be 15 days prior to the date on which such amount is due and payable.
Lead Managers SBI Capital Markets Limited and A.K. Capital Services Limited.
Objects of the Issue
and Utilisation of
Proceeds
See “Objects of the Issue” on page 55.
Working Day
Convention/ Day
Count
A Working Day shall mean all days excluding Sundays or a public holiday in
India or at any other payment centre notified in terms of the Negotiable
Instruments Act, 1881, except with reference to Issue Period, Coupon Payment
Date and Record Date, where working days shall mean all days, excluding
Saturdays, Sundays and public holiday in India or at any other payment centre
notified in terms of the Negotiable Instruments Act, 1881
Day Count Convention
Actual/actual, i.e., coupon rate will be computed on a 365 days-a-year basis on
the principal outstanding on the Bonds. Where the coupon period (start date to
37
COMMON TERMS FOR THE BONDS
end date) includes February 29, coupon rate will be computed on 366 days-a-
year basis, on the principal outstanding on the Bonds.
Effect of holidays on payments
If the date of payment of coupon rate or principal or redemption or any date
specified does not fall on a Working Day, the succeeding Working Day will be
considered as the effective date. Coupon rate and principal or other amounts, if
any, will be paid on the succeeding Working Day. In case the date of payment of
coupon rate falls on a holiday, the payment will be made on the next Working
Day, without any interest for the period overdue. In case the date of redemption
falls on a holiday, the payment will be made on the next Working Day along with
interest for the period overdue.
Transaction
Documents
Documents/undertakings/agreements entered into or to be entered into by the
Company with Lead Managers and/or other intermediaries for the purpose of
this Issue, including but not limited to the following: -
Debenture Trustee Agreement Trust Agreement dated February 25,
2013 between the Debenture Trustee
and the Company on or before the
Designated Date
Escrow Agreement Agreement to be entered into by the
Company, the Registrar to the Issue,
the Lead Managers and the Escrow
Collection Bank(s) for collection of
the Application Amounts and where
applicable, refunds of amounts
collected from Applicants on the
terms and conditions thereof
Issue Agreement The agreement entered into on
February 25, 2013, between the
Company and the Lead Managers
Consortium Agreement Consortium Agreement dated [●]
between the Company and the
Consortium Members for the Issue
Registrar MoU Memorandum of Understanding dated
February 25, 2013 entered into
between the Company and the
Registrar to the Issue, in relation to
the responsibilities and obligations of
the Registrar to the Issue pertaining to
the Issue
Tripartite Agreements Tripartite agreement dated [●]
between the Company, CDSL and the
Registrar to the Issue and the tripartite
agreement dated [●] between the
Company, NDSL and the Registrar to
the Issue
Issue Opening Date [●]
Issue Closing Date [●]
The Issue shall open for subscription from 10 a.m. to 5 p.m. during the period
indicated above with an option for early closure (subject to the Issue being open
for a minimum of three Working Days), as may be decided by the Board of
Directors in accordance with applicable law. In the event of early closure, the
Company shall ensure that public notice of such early closure is published on or
before such early date of closure, through advertisement(s) in a leading national
daily newspaper.
38
COMMON TERMS FOR THE BONDS
Default Interest Rate The interest rate as detailed in the Debenture Trust Deed, at which the Company
will pay penalty / liquidated damages in case of event of default.
Redemption
Premium/Discount
Not applicable
Interest on
Application Money
See “Terms of the Issue-Interest on Application and Refund Money” on page
122.
Option to retain
oversubscription
Option to retain oversubscription upto ` [●] million such that the aggregate
amount is ` [●] million.
Step up/step down
Coupon Rate
Additional coupon rate of [●]% to be paid to original Allottees under Category
IV Portion. In case the Bonds held by the original Allottees under Category IV
Portion are sold/transferred (except in case of transfer of Bonds to legal heirs in
the event of death of the original Allottee), the coupon rate shall stand revised to
the coupon rate applicable for Allottees falling under Category I, II and III
Portions.
Conditions
precedent/subsequent
to disbursement
Other than the conditions specified in the SEBI Debt Regulations, there are no
conditions precedent/subsequent to disbursement. See “Terms of the Issue -
Utilisation of Issue Proceeds” on page 129.
Event of Default See “Terms of the Issue” on page 117.
Roles and
Responsibilities of
Debenture Trustee
See “Terms of the Issue- Debenture Trustee” on page 128.
Discount at which
Bond is issued and
the effective yield as
a result of such
discount
Not applicable
Governing Law Laws of the Republic of India
Jurisdiction The courts of New Delhi will have exclusive jurisdiction for the purposes of the
Issue. *With respect to the provisions of Section 372A(3) of Companies Act, it may be noted that the RBI has through its circular (Circular
No. DBOD.No.Ret.BC. 77/12.01.001/2012-13) dated January 29, 2013 revised the Bank Rate from 9.00% to 8.75% w.e.f. January 29, 2013. Coupon rate on the Bonds shall be determined in pursuant of the Notification. Although the coupon rate offered on Bonds
maybe lower than the prevailing bank rate, it may be noted that since these are tax-free bonds, the gross/pre-tax yield to the
investors may be higher, depending upon the applicable tax rates. Companies other than banking companies, insurance companies and other companies as mentioned in Section 372A(3) of the Companies Act may however seek independent opinion from their legal
counsels about the eligibility to make an application for the Bonds.
**In terms of Regulation 4(2)(d) of the Debt Regulations, the Company will make public issue of the Bonds in the dematerialised form. However, in terms of Section 8 (1) of the Depositories Act, the Company, at the request of the Investors who wish to hold the
Bonds in physical form will fulfil such request. However, trading in Bonds shall be compulsorily in dematerialized form.
SPECIFIC TERMS FOR BONDS
Tenor 10 (ten) years
Minimum Application 5 Bonds and in multiples of one Bond thereafter. The Bonds are being
issued at par and the full amount of the face value per Bond is payable
on application.
In multiples of One Bond
Maturity / Redemption
Date
[●] years from the Deemed Date of Allotment
Redemption Amount (` /
Bond)
Repayment of the Face Value plus any interest that may have accrued
at the Redemption Date
Coupon Type Fixed Coupon Rate
Coupon Payment Date The date, which is the day falling one year from the Deemed Date of
Allotment, in case of the first coupon payment and the same date
every year, until the Redemption Date for subsequent interest
payments.
Coupon Reset Process Not applicable
Frequency of Coupon Annual
39
Payment
Coupon Rate (%) p.a. for
Category I, II, III and IV
[●] %
Additional Coupon Rate
(%) for Category IV*
[●] %
Aggregate Coupon Rate
(%) for Category IV
[●] %
Annualized Yield (%) for
Category I, II and III
[●] %
Annualized Yield (%) for
Category IV*
[●] %
*In case the Bonds held by the original Allottees under Category IV Portion are sold/transferred (except in case of transfer of
Bonds to legal heirs in the event of death of the original Allottee), the coupon rate shall stand revised to the coupon rate applicable for Allottees falling under Category I, II and III Portions.
40
SELECTED FINANCIAL INFORMATION
The following tables present an extract of the Summary Financial Information of our Company. The
Summary Financial Information of our Company should be read in conjunction with the examination
reports thereon issued by our Statutory Auditors and statement of significant accounting policies and
notes to accounts on the Summary Financial Information of our Company contained in the section titled
“Financial Information” beginning on page 108 of this Draft Prospectus.
SUMMARY STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED
DREDGING CORPORATION OF INDIA LIMITED
REFORMATTED STATEMENT OF ASSETS AND LIABILITIES
( Rs. In
Million)
Particulars
Note As at
No. 31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
I. EQUITY AND
LIABILITIES
1 SHAREHOLDERS'
FUNDS
(a) Share Capital A 280.00 280.00 280.00 280.00 280.00
(b) Reserves and
Surplus B 13537.30 13405.49 13010.34 12407.76 12107.85
SUB-TOTAL (1) 13817.30 13685.49 13290.34 12687.76 12387.85
2 NON-CURRENT
LIABILITIES
(a) Long-Term
Borrowings C 2599.53 0.00 0.00 55.10 165.31
(b) Other Long-
Term Liabilities D 12.00 15.63 0.00 0.00 0.00
(c) Long-Term
Provisions E 51.64 57.68 4.01 4.01 4.01
SUB-TOTAL (2) 2663.17 73.31 4.01 59.12 169.32
3 CURRENT
LIABILITIES
(a) Short-Term
Borrowings F 9.47 12.01 41.51 102.12 97.07
(b) Trade Payables G 308.01 846.62 1156.31 1274.99 833.33
(c) Other Current
Liabilities H 1988.02 1832.97 1823.56 2032.64 1654.74
(d) Short-Term
Provisions E 52.13 14.64 174.79 236.26 314.08
SUB-TOTAL (3) 2357.63 2706.24 3196.18 3646.02 2899.22
TOTAL (1+2+3) 18838.11 16465.04 16490.53 16392.89 15456.39
II. ASSETS
1 NON-CURRENT
ASSETS
(a) Fixed Assets I
(i) Tangible
Assets 5332.06 4872.71 2844.62 3122.65 3317.00
41
(ii) Capital
Work-in-progress 484.13 2.01 2691.33 2384.99 2355.15
(b) Non-Current
Investments J 300.00 300.00 300.00 300.00 245.00
(c) Long-Term
Loans & Advances K 4677.05 1830.83 0.00 0.00 0.00
SUB-TOTAL (1) 10793.25 7005.56 5835.95 5807.63 5917.16
2 CURRENT
ASSETS
(a) Inventories L 976.62 918.67 894.51 817.88 295.60
(b) Trade
Receivables M 3893.05 3823.84 4233.72 3147.68 3081.93
(c) Cash & Bank
Balances N 783.16 2352.74 2433.44 3318.44 2734.09
(d) Short-Term
Loans & Advances O 136.02 622.53 851.57 785.49 565.15
(e) Other Current
Assets P 2256.02 1741.70 2241.35 2515.76 2862.45
SUB-TOTAL (2) 8044.86 9459.48 10654.58 10585.25 9539.23
TOTAL (1+2) 18838.11 16465.04 16490.53 16392.89 15456.39
42
SUMMARY STATEMENT OF PROFIT AND LOSS AS RESTATED
DREDGING CORPORATION OF INDIA LIMITED
REFORMATTED STATEMENT OF PROFIT AND LOSS
( Rs. In Million)
Particulars
Note Year Ended
No. 31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
I Revenue from
Operations Q 4916.58 5071.42 6730.35 7906.68 7248.62
II Other Income R 129.25 155.83 209.11 415.55 466.03
III Total Revenue
(I+II) 5045.83 5227.25 6939.46 8322.23 7714.65
IV Expenses
Employee
benefits expenses S 928.63 667.31 728.73 828.41 783.43
Finance costs 0.00 0.00 1.03 -17.18 13.00
Depreciation
and amortization
expense 879.52 703.21 660.20 526.81 417.34
Repairs and
Maintenance (
Vessels) 639.17 234.54 678.58 944.82 615.77
Fuel and
Lubricants 1605.30 1994.83 1721.72 2027.52 2023.50
Spares &
stores 437.24 416.06 640.18 350.86 549.92
Insurance 110.07 108.67 49.56 39.54 58.81
Other
expenses T 243.43 230.34 1350.90 2830.64 1694.18
Allowance for
Provisions U 20.27 423.60 335.85 170.60 50.98
Total Expenses
(IV) 4863.62 4778.55 6166.75 7702.03 6206.92
V
Profit before prior
period
items,exceptional
and extraordinary
items and tax (III-
IV)
182.21 448.70 772.71 620.20 1507.73
VI Prior period items 6.60 0.00 -3.87 1.32 0.00
VII
Profit before
exceptional and
extraordinary items
and tax (V-VI)
175.61 448.70 776.58 618.88 1507.73
VIII Exceptional items 0.00 0.00 0.00 0.00 0.00
IX
Profit before
extraordinary items
and tax (VII-VIII)
175.61 448.70 776.58 618.88 1507.73
X Extraordinary Items 0.00 0.00 0.00 0.00 0.00
XI Profit before tax
(IX-X) 175.61 448.70 776.58 618.88 1507.73
XII Tax Expense : V
Current Year 43.80 53.55 76.04 155.17 170.07
43
Earlier Years 0.00 0.00 0.00 0.00 -210.52
XIII Profit (Loss) for
the period(XI-XII) 131.81 395.15 700.54 463.72 1548.19
XIV Earnings per equity
share: (In Rs. ) W
Basic 4.71 14.11 25.02 16.56 55.29
Diluted 4.71 14.11 25.02 16.56 55.29
44
SUMMARY STATEMENT OF CASH FLOW AS RESTATED
DREDGING CORPORATION OF INDIA LIMITED
REFORMATTED STATEMENT OF CASH FLOWS
( In
Million)
PARTICULA
RS
PERIOD ENDED YEAR ENDED
31.12.20
12
30.09.20
12
31.03.20
12
31.03.20
11
31.03.20
10
31.03.20
09 31.03.2008
A
Cash Flow
from
Operating
Activities :
Net Profit
before Tax 106.80 64.90 175.60 448.70 776.60 618.88 1507.73
Adjustme
nts for:
Profit /
Loss on Sale of
Fixed Assets
0.00 0.00 0.20 -0.60 0.05 0.05 0.03
Depreciati
on 631.50 440.00 880.30 703.20 660.20 526.81 417.34
Imapirme
nt loss 0.00 0.00 0.00 0.00 0.30 -1.75 0.00
Interest
Expenses 1.30 0.00 0.00 0.00 1.03 -17.18 13.00
Interest
Income -26.50 -16.00 -128.90 -124.70 -211.24 -313.50 -355.92
Operating
profit before
Changes in
Operating
Assets &
Liabilities:
713.10 488.90 927.20 1026.60 1226.94 813.31 1582.18
Increase /
Decrease :
[See note-2
below]
Inventory -38.20 -2.40 -58.00 -24.10 -76.63 -522.28 -69.70
Trade
Receivables -314.70 -627.30 -69.30 652.60 -967.68 -123.57 -668.72
Other
Current Assets -205.30 69.10 7.30 376.90 295.29 575.91 -1135.07
Trade
Payables -266.30 66.80 80.10 -1089.70 -513.77 734.70 470.56
Cash
generated
from
-111.40 -4.90 887.30 942.30 -35.84 1478.08 179.25
45
Operations
Adjustme
nts for:
Interest
paid -1.30 0.00 0.00 0.00 -1.36 16.44 -13.79
Income
Tax paid -54.00 -29.50 -164.50 79.70 -230.50 -429.36 669.85
Net Cash
Flow from
Operating
Activities ( A )
-166.70 -34.40 722.80 1022.00 -267.71 1065.16 835.31
B
Cash Flow
from Investing
Activities
Purchase
of Fixed Assets -3679.70 -2510.00 -5080.70 -1154.70 -688.90 -360.59 -1687.88
Proceeds
from sale of
Fixed Assets
0.00 0.00 0.00 0.00 0.01 0.01 0.04
Interest
received 59.50 49.00 188.80 150.00 290.50 290.65 377.86
Investmen
ts 0.00 0.00 0.00 0.00 0.00 -55.00 -100.00
Net Cash
Flow from
Investing
Activities ( B )
-3620.20 -2461.00 -4891.90 -1004.70 -398.39 -124.93 -1409.98
C
Cash Flow
from
Financing
Activities
Proceeds
from Long
term
Borrowings
3276.10 1965.40 2599.60 0.00 0.00 0.00 0.00
Payment
of long term
Borrowings
0.00 0.00 0.00 0.00 -55.10 -110.21 -136.30
Payment
of Dividend 0.00 0.00 0.00 -84.00 -140.00 -210.00 -462.00
Payment
of Dividend
Tax
0.00 0.00 0.00 -14.00 -23.80 -35.70 -78.50
Net Cash
flow from
Financing
Activities ( C )
3276.10 1965.40 2599.60 -98.00 -218.90 -355.91 -676.80
46
Net
Increase/Decr
ease in Cash
& Cash
Equivalents
( A ) + ( B )
+ ( C )
-510.80 -530.00 -1569.50 -80.70 -885.00 584.33 -1251.47
Cash & Cash
Equivalents as
at the
beginning of
the year
783.20 783.20 2352.70 2433.40 3318.40 2734.07 3985.54
Cash & Cash
Equivalents as
at the end of
the year
272.40 253.20 783.20 2352.70 2433.40 3318.40 2734.09
Net
Increase/Decre
ase in Cash &
Cash
Equivalents
-510.80 -530.00 -1569.50 -80.70 -885.00 584.33 -1251.47
Note:
1. Previous period figures have been rearranged and regrouped wherever necessary.
2. Increase or decrease in Inventory, Trade Receivables, Other Current Assets and Trade
Payables includes non-current assets / liabilities portion also.
47
SUMMARY FINANCIAL STATEMENT OF PROFIT AND LOSS FOR NINE MONTHS
PERIOD ENDED DECEMBER 31, 2012
DREDGING CORPORATION OF INDIA LIMITED
Rs. In million
PART 1
STATEMENT OF UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND NINE
MONTHS ENDED 31.12.2012
Particulars
Quarter ended Nine Months ended Year ended
31-12-
2012
30-09-
2012 31-12-2011
31-12-
2012
31-12-
2011 31-03-2012
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
1 Income from
Operations
Net Income from Core
Drdging Operations 1677.99 1461.02 777.07 4418.01 3052.77 4682.73
Other Operating
Income 47.69 -5.22 79.13 56.17 159.49 233.84
Total Income from
Operations 1 725.68 1455.80 856.20 4474.18 3212.26 4916.57
2 Expenses
Employee benefits
expense 212.35 201.22 251.19 614.74 746.42 928.63
Depreciation and
amortization expense 191.50 219.04 219.42 631.50 644.95 879.52
Repairs and
Maintenance ( Vessels) 52.49 292.81 163.38 516.83 318.60 639.16
Fuel and Lubricants 590.60 458.93 395.39 1527.59 1190.50 1605.30
Spares & stores 199.21 76.15 18.12 474.37 225.36 437.24
Finance costs 1.31 - - 1.31 - -
Other expenses 446.13 88.33 104.76 627.45 325.89 380.36
Total expenses 1693.59 1336.48 1152.26 4393.79 3451.72 4870.21
3
Profit /Loss from
Operations before
other income and
exceptional items (1-
2)
32.09 119.32 -296.06 80.39 -239.46 46.36
4 Other Income 9.76 9.66 12.92 26.47 122.56 129.25
5
Profit /Loss from
ordinary activities
before tax and
exceptional items (3 +
4)
41.85 128.98 -283.14 106.86 -116.90 175.61
6 Exceptional Items - - - - - -
7
Profit(+)/ Loss(-) from
Ordinary Activities
before tax (5-6)
41.85 128.98 -283.14 106.86 -116.90 175.61
8 Tax Expense 6.00 2.67 3.00 11.47 41.00 43.80
9
Net Profit/ Loss from
Ordinary Activities
after tax (7-8)
35.85 126.31 -286.14 95.39 -157.90 131.81
10
Extraordinary
Items(net of tax
expense)
- - - - - -
11 Net Profit/ Loss for the 35.85 126.31 -286.14 95.39 -157.90 131.81
48
period (9-10)
12 Share of profit/loss of
associates - - - - - -
13 Minority interest - - - - - -
14
Net profit/ loss after
taxes, minority interest
and share of profit
/loss of associates
35.85 126.31 -286.14 95.39 -157.90 131.81
15
Paid-up equity share
capital
(Face Value of the
share: ( each 10 )
280.00 280.00 280.00 280.00 280.00 280.00
16
Reserves excluding
Revaluation Reserves
as per Balance sheet of
Previous Accounting
Year
- - - - - 13537.30
17.i Earnings per Share (
before extraordinary
items)
(of ` 10 each ) Not to
be annualised
Basic 1.28 4.51 -10.21 3.40 -5.64 4.71
Diluted 1.28 4.51 -10.21 3.40 -5.64 4.71
17.ii Earnings per Share (
after extraordinary
items)
(of ` 10 each ) Not to
be annualised
Basic 1.28 4.51 -10.21 3.40 -5.64 4.71
Diluted 1.28 4.51 -10.21 3.40 -5.64 4.71
49
SUMMARY FINANCIAL STATEMENT OF ASSETS AND LIABILITIES FOR NINE MONTHS
PERIOD ENDED DECEMBER 31, 2012
( In Million)
Consolidated Statement of Assets and Liabilities
Particulars
As at As at As at
31-12-2012
(Unaudited)
31-12-2011
(Unaudited)
31-03-2012
(Audited)
I. EQUITY AND LIABILITIES
1 SHAREHOLDERS' FUNDS
Share capital 280.00 280.00 280.00
Reserves and surplus 13632.65 13247.59 13537.30
SUB-TOTAL (1) 13912.65 13527.59 13817.30
2 NON-CURRENT LIABILITIES
Long-term borrowings 5875.58 524.06 2599.53
Deferred tax liabilities (Net) - - -
Other Long term liabilities 13.63 11.81 12.00
Long-term provisions 51.64 - 51.64
SUB-TOTAL (2) 5940.85 535.87 2663.17
3 CURRENT LIABILITIES
Short-term borrowings 10.80 10.09 9.47
Trade payables 509.43 590.02 308.01
Other current liabilities 3473.45 2084.30 1988.03
Short-term provisions - - 52.13
SUB-TOTAL (3) 3993.67 2684.41 2357.64
TOTAL (1+2+3) 23847.17 16747.87 18838.11
II. ASSETS
1 NON-CURRENT ASSETS
Fixed assets 13541.49 8227.82 5816.19
Non-current investments 300.00 300.00 300.00
Deferred tax assets (net) - - -
Long-term loans and advances 1901.52 120.38 4 677.05
Other non-current assets - - -
SUB-TOTAL (1) 15743.01 8648.20 10 793.24
2 CURRENT ASSETS
Current investments - - -
50
Inventories 1014.84 988.83 976.62
Trade receivables 4576.19 4816.17 3893.05
Cash and cash equivalents 188.56 789.79 783.16
Short-term loans and advances 600.29 559.81 136.02
Other current assets 1724.29 945.06 2256.02
SUB-TOTAL (2) 8104.16 8099.66 8044.87
TOTAL (1+2) 23847.17 16747.87 18838.11
51
CAPITAL STRUCTURE
Details of share capital
The share capital of our Company as at date of this Draft Prospectus is set forth below:
Share Capital ( in millions)
AUTHORISED SHARE CAPITAL
30,000,000 Equity Shares of ` 10/- each 300.00
TOTAL 300.00
ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL
28,000,000 Equity Shares of ` 10/- each 280.00
SECURITIES PREMIUM ACCOUNT NIL
TOTAL 280.00
Changes in the authorised capital of our Company as on the date of this Draft Prospectus:
Pursuant to resolution dated March 10, 1992 passed by the shareholders at an extra-ordinary general
meeting of our Company, the authorised share capital of our Company was altered from 300,000 equity
shares of ` 1,000/- each into 30,000,000 Equity shares aggregating to ` 300,000,000.
At the AGM held on September 29, 1999, an increase in the authorized share capital of our Company was
approved by the shareholders of our Company subject to the approval of the President of India, resulting in
the authorized share capital of our Company increasing from ` 300,000,000 divided into 30,000,000 Equity
Shares to ` 600,000,000 divided into 60,000,000 Equity Shares. Approval from President of India is still
awaited. The increase in authorized share capital will take effect only after receipt of approval from
President of India.
Equity Share capital history of our Company
Date of the
board meeting
approving
allotment
Number of equity
shares
Face value
(`)
Issue price of
Equity Shares
(`)
Premium at
which issued
(`)
Consideration
Cumulative
paid-up
capital (`)
April 1,1976 14 1,000 14,000 Nil Subscription
to the MoA
and AoA
14,000
March 26,
1977
198,386 1,000 198,386,000 Nil Consideration
other than
cash*
198,400,000
March 31,
1978
81,600 1,000 81,600,000 Nil Consideration
other than
cash**
280,000,000
Total 280,000# 280,000,000
*Allotment of equity shares to the President of India pursuant to transfer of assets from the dredger pool
by the Ministry of Shipping and Transport to our Company.
**Allotment of equity shares to the President of India pursuant to transfer of assets by the Ministry of
Shipping and Transport to our Company.
#Pursuant to shareholders resolution dated March 10, 1992, the issued, subscribed and paid up capitalof
our Company was re-classified by converting 280,000 equity shares of face value of ` 1000 each to
28,000,000 Equity Shares.
Shareholding Pattern of our Company as on December 31, 2012:
52
Category of
Shareholder
Number
of
shareholders
Total number
of Equity Shares
Number of
shares held in
dematerialized
form
Total shareholding as a %
of total number of Equity
Shares
Shares pledged or
otherwise encumbered
% of shares
(A+B)
% of shares
(A+B+C)
Number of
shares
As a % of
total number
of equity
shares
(A) Shareholding of
Promoter and
Promoter Group
(1) Indian
Individuals/Hindu
Undivided Family
0 0 0 0.00 0.00 0 0.00
Central
Government/State
Government(s)
1 2,19,97,700 2,19,97,700 78.56 78.56 0 0.00
Bodies Corporate* 0 0 0 0 0 0 0.00
Financial
Institutions/Banks
0 0 0 0.00 0.00 0 0.00
Any Other 0 0 0 0.00 0.00 0 0.00
Sub-Total (A) (1) 1 2,19,97,700 2,19,97,700 78.56 78.56 0 0.00
(2) Foreign
Individuals (Non-
Resident
Individuals/Foreign Individuals)
0 0 0 0.00 0.00 0 0.00
Bodies Corporate 0 0 0 0.00 0.00 0 0.00
Institutions/FII 0 0 0 0.00 0.00 0 0.00
Any Other 0 0 0 0.00 0.00 0 0.00
Sub-Total (A) (2) 0 0 0 0.00 0.00 0 0.00
Total Shareholding of
Promoter and
Promoter Group (A) =
(A)(1)+(A)(2)
1 2,19,97,700 2,19,97,700 78.56 78.56 0 0.00
(B) Public
Shareholding
(1) Institutions
Mutual Funds/ UTI 0 0 0 0.00 0.00 0 0.00
Financial Institutions /
Banks
9 10,42,016 10,42,016 3.72 3.72 0 0.00
Central Government/State
Government(s)
0 0 0 0.00 0.00 0 0.00
Venture Capital Fund 0 0 0 0.00 0.00 0 0.00
Insurance Companies 3 14,57,791 14,57,791 5.21 5.21 0 0.00
Foreign Institutional Investors
15 628,394 628,394 2.24 2.24 0 0.00
Foreign Venture Capital
Investor
0 0 0 0.00 0.00 0 0.00
Any other 0 0 0 0.00 0.00 0 0.00
Sub-Total (B)(1) 27 31,28,201 31,28,201 11.17 11.17 0 0.00
Non-institutions
Bodies Corporate 699 4,58,285 4,58,185 1.64 1.64 0 0.00
Individuals
Individual shareholders holding nominal share
capital up to ` 0.1
million
50,588 21,97,367 21,92,367 7.85 7.85 0 0.00
Individual shareholders
holding nominal share
capital in excess of ` 0.1
million
8 1,55,946 1,55,946 0.56 0.56 0 0.00
Any other (specify)
Non Resident Indians 358 39,023 39,023 0.14 0.14 0 0.00
Trust 8 14,114 14,114 0.05 0.05 0 0.00
Clearing Members 66 9,364 9,364 0.03 0.03 0 0.00
Overseas Corporate
Bodies
0 0 0 0.00 0.00 0 0.00
Sub-Total (B) (2) 51,727 28,74,099 28,68,999 10.26 10.26 0 0.00
Total Public 51,754 60,02,300 59,97,200 21.44 21.44 0 0.00
53
Category of
Shareholder
Number
of
shareholders
Total number
of Equity Shares
Number of
shares held in
dematerialized
form
Total shareholding as a %
of total number of Equity
Shares
Shares pledged or
otherwise encumbered
% of shares
(A+B)
% of shares
(A+B+C)
Number of
shares
As a % of
total number
of equity
shares
Shareholding (B) =
(B)(1)+(B)(2)
Total (A) + (B) 51,755 2,80,00,000 2,79,94,900 100.00 100.00 0 0.00
(C) Shares held by
Custodians and against
which Depository
Receipts have been
issued
0 0 0 0.00 0.00 0 0.00
Promoter and Promoter Group
0 0 0 0.00 0.00 0 0.00
Public 0 0 0 0.00 0.00 0 0.00
Total C=C1+C2 0 0 0 0.00 0.00 0 0.00
Grand Total
(A)+(B)+(C) 51,755 2,80,00,000 2,79,94,900 100.00 100.00 0 0.00
List of top ten holders of Equity Shares of our Company as on December 31, 2012:
Sr. No. Name of
shareholder
Total Number of Equity Shares held Percentage
Holding (%)
1. President of India 21,997,700 78.56
2. Life Insurance
Corporation of
India 837,456 2.99
3. Lic of India Market
Plus 1 Growth Fund 553,564 1.98
4. General Insurance
Corporation of
India 473,073 1.69
5. Lic of India Profit
Plus Growth Fund 405,465 1.45
6. Warburg Value
Fund 350,000 1.25
7. National Insurance
Company Limited 147,262 0.53
8. Deutsche Securities
Mauritius Limited 100,323 0.36
9. Dimensional
Emerging Markets
Value Fund 66,613 0.24
10. Sumit Credit
Company Private
Limited 33,065 0.19
Total 24,964,521 89.00
There are no holders of debentures of our Company as on date of filing this Draft Prospectus.
No Equity Shares of the Company are pledged or otherwise encumbered by our Promoter.
Our Company has not undertaken any acquisition or amalgamation in the last one year prior to filing of
this Draft Prospectus.
Our Company has not undergone any reorganisation or reconstruction in the last one year prior to filing of
this Draft Prospectus.
54
There are no buy-backs, stand by and similar arrangements for purchase of securities by the Promoter,
Directors and Lead Managers.
There are no bridge loans taken by our Company.
There are no outstanding financial instrument(s) or right entitling anyone to receive Equity Shares.
Debt-equity ratio
The debt-equity ratio prior to this Issue is based on a total outstanding debt of ` 5,875.58 million and
shareholders’funds amounting to ` 13,912.65 million as on December 31, 2012. The debt equity ratio
post the Issue, (assuming subscription of Bonds aggregating to ` 5,000 million) would be 0.78 times, is
based on a total outstanding debt and shareholders funds of our Company as on December 31, 2012.
(` in millions)
Particulars# Prior to the Issue (as on
December 31, 2012)
Post the Issue*
Total Debt 5,875.58 10,875.58
Share capital 280 280 Reserves and Surplus 13,632.65 13,632.65
Total Shareholders Fund 13,912.65 13,912.65 Debt Equity Ratio (Number of
times)
0.42 0.78
* The debt-equity ratio post the Issue is indicative and is on account of assumed inflow of ` 5,000
million from the Issue. The above table does not include any changes subsequent to December 31, 2012,
except as stated above.
^ For further details, please refer to the Financial Information on page 108 of this Draft Prospectus.
For details on the total outstanding debt of our Company, please refer to the section titled “Financial
Indebtedness” beginning on page 109 of this Draft Prospectus.
55
OBJECTS OF THE ISSUE
Issue Proceeds
Our Company shall issue Bonds upto an aggregate amount of ` [●] lakhs, on or prior to April 1, 2013 pursuant
to CBDT’s Notification, which authorized our Company to issue Bonds having benefits under Section
10(15)(iv)(h) of the Income Tax Act during the Fiscal 2013 and which shall not exceed ` 50,000 lakhs.
Utilisation of Issue Proceeds
The funds raised through this Issue will be utilized for augmenting the long-term resources of our
Company for financing the capital expenditure plan of our Company for carrying out its business
activities.
Interim use of Proceeds
The Board, in accordance with policies formulated from time to time and subject to the guidelines issued
by GoI, will have flexibility in deploying the proceeds of the Issue. Pending utilisation of the Issue
proceeds for the purposes described above, the Company intends to temporarily invest funds in high
quality interest bearing liquid instruments including money SEBI regulated public sector mutual funds,
deposits with banks or temporarily deploy the funds in investment grade interest bearing securities or
inter-corporate loans as may be approved by the Board. Such investment would be in accordance with the
investment policies approved by the Board of Directors from time to time.
Monitoring of Utilization of Funds
In terms of the SEBI Debt Regulations, there is no requirement for appointment of a monitoring agency in
relation to the use of proceeds of the Issue. The Board shall monitor the utilisation of the proceeds of the
Issue. The Company will disclose in our financial information for the relevant fiscal commencing from
Fiscal 2013, the utilization of the proceeds of the Issue under a separate head along with any details in
relation to all such proceeds of the Issue that have not been utilized thereby also indicating investments, if
any, of such unutilized proceeds of the Issue.
For more information, see “Terms of the Issue - Utilisation of Issue Proceeds” and “Issue Procedure -
Monitoring & Reporting of Utilisation of Issue Proceeds” on pages 129 and 130.
Issue Expenses*
The following are the estimated Issue expenses, proposed to be met from the Issue proceeds:
Particulars Amount (` in million) Percentage of net
proceeds (Issue
proceeds less Issue
expenses) of the Issue
(in %)
Percentage of total
expenses of the Issue
(in %)
Fees payable to Intermediaries
To the advisors [●] [●] [●] To the Registrar to the
Issue [●] [●] [●]
To the Debenture
Trustee [●] [●] [●]
To the SCSBs [●] [●] [●] Printing & Stationary [●] [●] [●] For advertising and
marketing [●] [●] [●]
Lead Managers Fees,
Brokerage and Selling
Commission*
[●] [●] [●]
56
Other Miscellaneous
Expenses [●] [●] [●]
Total [●] [●] [●] *As per theCBDT Notification, the Issue expenses will not exceed 0.5% of the Issue size and Brokerage and Selling Commission shall be limited to the following ceilings, Category I – 0.05%, Category II – 0.1%, Category III – 0.15% and Category IV – 0.75%.
Undertaking with respect to Issue proceeds
Our Board of Directors certifies that:
all monies received out of the Issue shall be credited/transferred to a separate bank account other
than the bank account referred to in sub-section (3) of Section 73 of the Act;
details of all monies utilised out of the Issue referred above shall be disclosed under an
appropriate separate head in our balance sheet indicating the purpose for which such monies
have been utilised along with details, if any, in relation to all such proceeds of the Issue that
have not been utilized;
details of all unutilised monies out of the Issue, if any, shall be disclosed under an appropriate
head in our balance sheet indicating the form in which such unutilised monies have been
invested;
we shall utilize the Issue proceeds only upon creation of security as stated in this Draft
Prospectus in the section titled “Issue Structure” beginning on page 111 of this Draft Prospectus;
and
In compliance with Regulation 4(5) of the SEBI Debt Regulations the Issue proceeds shall
not be utilised for providing loan or acquisition of shares of any person who is part of the
same group or who is under the same management.
57
STATEMENT OF TAX BENEFITS
Under the current tax laws, the following possible tax benefits, inter alia, will be available to the Bond
Holder. This is not a complete analysis or listing of all potential tax consequences of the subscription,
ownership and disposal of the Bond, under the current tax laws presently in force in India. The benefits
are given as per the prevailing tax laws and may vary from time to time in accordance with amendments
to the law or enactments thereto. The Bond Holder is advised to consider in his own case the tax
implications in respect of subscription to the Bond after consulting his tax advisor as alternate views are
possible. Interpretation of provisions where under the contents of this statement of tax benefit is
formulated may be considered differently by income tax authority, government, tribunals or court. We
are not liable to the Bond Holder in any manner for placing reliance upon the contents of this statement
of tax benefits.
A. INCOME TAX
1. Interest from Bond do not form part of Total Income.
a) In exercise of power conferred by item (h) of sub clause (iv) of clause (15) of Section 10 of
the Income Tax Act, 1961 (43 of 1961) the Central Government vide Notification No.
46/2012/F.No.178/60/2012 – (ITA.1) dated November 6, 2012 authorizes Dredging
Corporation o f I n d i a to issue through a Public Issue, during the Financial year 2012-13,
tax free, secured, redeemable, non-convertible bonds of ` 1000 each for the aggregate amount
not exceeding ` 500 crores subject to the following conditions namely –
Eligible investors:
The following shall be eligible to subscribe to the bonds:
a. Retail Individual Investors (RII);
b. Qualified Institutional Investors (QIBs);
c. Corporates;
d. High Net worth Individuals (HNIs).
PAN No:
It shall be mandatory for the subscribers of such bonds to furnish their permanent account
number to the Issuer.
Registration:
The tax benefits under the aforesaid Section 10 shall be admissible only if the holder of such
bonds registers his or her or it’s name and the holding with the issuer.
Tenure:
The tenure of the bonds shall be 10 years or 15 years.
Minimum issue through Public:
At least 75% of aggregate amount of bonds issued by the issuer shall be raised through
public issue. 40% of such public issue shall be earmarked for retail investors.
Ceiling On Coupon Rate:
There shall be a ceiling on the coupon rates based on the reference Government security
(G-sec) rate. The ceiling coupon rate for AA rated issuers shall be the reference G-sec rate
less 50 basis points in case of Retail Individual Investor (RII); and reference G-sec less 100
basis points in case of other investor segments, like Qualified Institutional Buyers (QIBs),
Corporate and High Net Worth Individuals (HNIs). In case the rating of the issuer entity is
58
above AA, a reduction of 15 basis points shall be made in the ceiling rate, as compared to the
ceiling rate for AA rated entities mentioned above. These ceiling rates shall apply for
annual payment of interest and in case the schedule of interest payments is altered to semi-
annual, the interest rates shall be reduced by 15 basis points.
Restriction on Transfer:
The higher rate of interest, applicable to retail investors, shall not be available in case the bonds
are transferred, except in case of transfer to legal heir in the event of death of the original
investor.
Restriction on Issue Expenses:
In the case of private placement, the total issue expense shall not exceed 0.2% of the issue size
and in case of public issue total issue expense shall not exceed 0.5% of the issue size. The
issue expense would include all expenses relating to the issue like brokerage,
advertisement, printing, registration etc.
Brokerage:
In cases of different categories, brokerage shall be limited to the following ceilings:-
a. QIB 0.05%
b. Corporates – 0.1%
c. HNI 0.15%
d. RII 0.75%
b) Section 10(15)(iv)(h) to be read with Section 14A(1) provides that in computing the total
income of a previous year of any person, interest payable by any public sector company in
respect of such bonds or debentures and subject to such conditions, including the condition
that the holder of such bonds or debentures registers his name and the holding with
that company, as the Central Government may, by notification in the Official Gazette,
specify in this behalf shall not be included;
Further, as per Section 14A(1), no deduction shall be allowed in respect of expenditure
incurred by the assessee in relation to said interest, being exempt.
Accordingly, pursuant to the aforesaid notification, interest from bond will be exempt from
income tax. Since the interest Income on these bonds is exempt; no Tax Deduction at Source is
required.
c) Under Section 195 of the Income Tax Act 1961 (I.T.Act), Income Tax shall be deducted
from sum payable to Non-Residents on long term capital gain and short term capital gain
arising on sale and purchase of bonds at the rate specified in the Finance Act of the
relevant year or the rate or rates of the income tax specified in an agreement entered into
by the Central Government under Section 90, or an agreement notified by the Central
Government under Section 90A, as the case may be.
d) The income by way of short term capital gains or long term capital gains (not covered under
Section 10(38) of the Act) realized by Foreign Financial Institutions on sale of security in the
Company would be taxed at the following rates as per Section 115AD of the Act.
Short term capital gains - 30% (plus applicable surcharge and education cess)
Long term capital gains - 10% without cost of indexation (plus applicable surcharge
and education cess)
As per Section 90(2) of the Act, the provision of the Act would not prevail over the provision
of the tax treaty applicable to the non-resident to the extent such tax treaty provisions are more
beneficial to the non resident. Thus, a non resident can opt to be governed by the beneficial
59
provisions of an application tax treaty.
e) However under Section 196D, No deduction of tax shall be made from income arising by way
of capital gain to Foreign Institutional Investors.
f) The bonds issued to NRIs shall be subject to the provisions of Notification No. FEMA 4/2000-
RB dated 3rd May, 2000 and Notification No. FEMA 20/2000-RB dated 3rd May, 2000, issued
under clause (b) of sub-section (3) of Section 6 and Section 47 of the Foreign Exchange
Management Act, 1999, as amended from time to time.
Explanation (meaning of the terms mentioned above):
a. Reference G – Sec Rate:
It would be the average of the base yield of G-Sec for equivalent maturity reported by Fixed
Income Money Market and Derivative Association of India (FIMMDA) on a daily basis
(working day) prevailing for two weeks ending on the Friday immediately preceding the
filing of the final prospectus with the Exchange or Registrar of Companies (ROC) in case of
public issue and the issue opening date in case of private placement.
b. Qualified Institutional Buyers (QIB):
It shall have the same meaning as assigned to them in the Securities and Exchange Board of
India (Disclosure and Investor Protection) Guidelines, 2000.
c. Retail Individual Investors (RII):
It means those individual investors, Hindu Undivided Family (through Karta), and Non
Resident Indians (NRIs), on repatriation as well as non repatriation basis, applying for up to
Rs. 10 lakhs in each issue ; and individual investors investing more than ` 1 million shall be
classified as High Net Worth Individuals.
d. Credit Rating:
It shall mean the credit rating, as assigned by a credit rating agency which is approved by the
Securities and Exchange Board of India as well as the Reserve Bank of India and where an
entity has been rated differently, by more than one rating agency, the lower of the two ratings
shall be considered.
e. Public Sector Company:
As per Section 2(36A) of the Act Public Sector Company means any corporation established by
or under any Central, State or Provincial Act or a Government company as defined in Section
617 of the Companies Act, 1956 (1 of 1956).
2. CAPITAL GAIN
a) Under Section 2 (29A) of the I.T. Act, read with Section 2 (42A) of the I.T. Act, a listed
Bond is treated as a long term capital asset if the same is held for more than 12 months
immediately preceding the date of its transfer.
Under Section 112 of the I.T. Act, capital gains arising on the transfer of long term capital
assets being listed securities are subject to tax at the rate of 20% of capital gains calculated
after reducing indexed cost of acquisition or 10% of capital gains without indexation of
the cost of acquisition. The capital gains will be computed by deducting expenditure
incurred in connection with such transfer and cost of acquisition/indexed cost of acquisition of
the bonds from the sale consideration.
60
However as per third proviso to Section 48 of Income tax act, 1961 benefits of indexation
of cost of acquisition under second proviso of Section 48 of Income tax Act, 1961 is not
available in case of bonds and debenture, except capital indexed bonds. Thus, long term
capital gain tax can be considered 10% on listed bonds without indexation.
Securities Transaction Tax (“STT”) is a tax being levied on all transactions in specified
securities done on the stock exchanges at rates prescribed by the Central Government from
time to time. STT is not applicable on transactions in the Bonds.
In case of an individual or HUF, being a resident, where the total income as reduced by the
long term capital gains is below the maximum amount not chargeable to tax i.e. ` 2,00,000
resident individual, ` 250,000 in case of resident senior citizens of 60 or more years of age
(on any day of the previous year) and ` 500,000 in case of resident super senior citizens of
80 years or more of age (on any day of the previous year), the long term capital gains shall
be reduced by the amount by which the total income as so reduced falls short of the
maximum amount which is not chargeable to income-tax and the tax on the balance of such
long-term capital gains shall be computed at the rate of 10% in accordance with and the
proviso to sub-section (1) of Section 112 of the I.T. Act read with CBDT Circular 721 dated
September 13,1995.
A 2% education cess and 1% secondary and higher education cess on the total income tax
(including surcharge for corporate only) is payable by all categories of tax payers.
b) Short-term capital gains on the transfer of listed bonds, where bonds are held for a period
of not more than 12 months would be taxed at the normal rates of tax in accordance
with and subject to the provision of the I.T. Act.
The provisions related to minimum amount not chargeable to tax, surcharge and education
cess described at Para 3 above would also apply to such short-term capital gains.
c) Under Section 54 EC of the I.T. Act and subject to the conditions and to the extent
specified therein, long term capital gains arising to the bondholders on transfer of their
bonds in the company shall not be chargeable to tax to the extent such capital gains are
invested in certain notified bonds within six months from the date of transfer. If only part of
the capital gain is so invested, the exemption shall be proportionately reduced. However, if the
said notified bonds are transferred or converted into money within a period of three years
from their date of acquisition, the amount of capital gains exempted earlier would become
chargeable to tax as long term capital gains in the year in which the bonds are transferred
or converted into money. Where the benefit of Section 54 EC of the I.T. Act has been
availed of on investments in the notified bonds, a deduction from the income with
reference to such cost shall not be allowed under Section 80 C of the I.T. Act.
The investment made in the notified bonds by an assessee in any financial year cannot
exceed Rs. 5 million.
d) As per the provisions of Section 54F of the Income Tax Act, 1961 and subject to
conditions specified therein, any long-term capital gains (not being residential house) arising
to Bond Holder who is an individual or Hindu Undivided Family, are exempt from capital
gains tax if the entire net sales considerations is utilized, within a period of one year before,
or two years after the date of transfer, in purchase of a new residential house, or for
construction of residential house within three years from the date of transfer. If part of such
net sales consideration is invested within the prescribed period in a residential house, then
such gains would be chargeable to tax on a proportionate basis.
Provided that the said Bond Holder should not own more than one residential house at the
time of such transfer. If the residential house in which the investment has been made is
transferred within a period of three years from the date of its purchase or construction, the
amount of capital gains tax exempted earlier would become chargeable to tax as long term
61
capital gains in the year in which such residential house is transferred. Similarly, if the
Bondholder purchases within a period of two years or constructs within a period of three
years after the date of transfer of capital asset, another residential house (other than the new
residential house referred above), then the original exemption will be taxed as capital gains in
the year in which the additional residential house is acquired
3. Bonds held as Stock in Trade
In case the Bonds are held as stock in trade, the income on transfer of bonds would be taxed as
business income or loss in accordance with and subject to the provisions of the I.T. Act.
4. Taxation on gift
As per Section 56(2)(vii) of the I.T. Act, in case where individual or Hindu undivided
Family receives bond from any person on or after 1st October, 2009
A. without any consideration, aggregate fair market value of which exceeds
fifty thousand rupees, then the whole of the aggregate fair market value
of such bonds/debentures or;
B. for a consideration which is less than the aggregate fair market value of the Bond
by an amount exceeding fifty thousand rupees, then the aggregate fair market
value of such property as exceeds such consideration;
shall be taxable as the income of the recipient.
Provided further that this clause shall not apply to any sum of money or any
property received—
a) from any relative; or
b) on the occasion of the marriage individual; or
c) under a will or by way of inheritance; or
d) in contemplation of death of the payer or donor, as the case may be; or
e) from any local authority as defined in the Explanation to clause (20)
of Section 10; or
f) from any fund or foundation or university or other educational institution
or hospital or other medical institution or any trust or institution referred
to in clause (23C) of Section 10; or
g) from any trust or institution registered under Section 12AA.
B.
WEALT
H TAX
Wealth-tax is not levied on investment in bond under Section 2(ea) of the Wealth-tax Act,
1957.
C. PROPOSALS MADE IN DIRECT TAX CODE
The Hon’ble Finance Minister has presented the Direct Tax Code Bill, 2010 (“DTC Bill”)
on August 30, 2010. The DTC Bill is likely to be presented before the Indian Parliament in
future. Accordingly, it is currently unclear what effect the Direct Tax Code would have on the
investors.
For G R Kumar& Co.
Chartered Accountants
[Firm Regn No. 004941S]
62
(G R Kumar)
Partner
M. No. 052367
Place: Visakhapatnam
Date: 20.02.2013
63
SECTION IV : ABOUT THE ISSUER COMPANY AND THE INDUSTRY
INDUSTRY
Statistical and market data on both the Indian and international dredging industries are extremely
limited. This is partly a result of the limited number of market participants, as well as the fact that
dredging companies and customer ports are generally government-owned or privately-held. Unless
otherwise indicated, all financial and statistical data relating to the dredging industry in the following
discussion are derived from the MoS, the GoI, the GoI’s Twelfth Five-Year Plan, and our internal
operating data. These data have been reclassified in certain respects for purposes of presentation. For
more information, see “Certain Conventions; Use of Market Data” and “Risk Factors - Statistical and
market data on both the Indian and international dredging markets are extremely limited”. For more
information, see “Our Business”.
THE DREDGING INDUSTRY
Dredging is the process of excavating or removing soil or rock from below water using dredgers. The
operation of dredging involves two main stages. The material to be removed must first be disturbed and
loosened, before then being lifted to the water surface. Following lifting, every cubic meter of material
dredged has to be relocated or disposed of and accordingly, a suitable disposal site has to be identified.
The main objective of dredging is the creation of deeper and/or wider waterways to improve navigation of
ships. Dredging is sometimes a subsidiary activity to the main civil construction work in developing new
ports and harbors and is often subcontracted to a specialist dredging contractor. Capital dredging is a one-
off operation, which is carried out for the first time when creating new harbors, ports or berths.
Maintenance dredging is dredging which is recurrent in nature. Dredging is also carried out for other
purposes, including laying pipelines on the seabed, for nourishing or replenishing beaches, to improve the
environment, to produce material for construction and to replace material below water. In general,
contractors in the dredging industry are also involved in land reclamation, the underwater removal of soil
and rock in civil engineering projects, oil and gas exploration in delta areas, and other offshore mining
activities.
The overall dredging market is a composition of various types of activities focused on capital and
maintenance dredging, including:
Capital dredging (creating depths). Capital dredging projects are primarily port creation and
expansion projects, which also involve the deepening and/or widening of channels to allow access by
larger and deeper draught ships and also the provision of land fill for building additional port
facilities, thereby enhancing port capability.
Maintenance dredging (maintaining depths). Maintenance dredging consists of the restoration of
designed depths of waterways and harbors by removing silt, sand and other accumulated sediments.
Due to natural sedimentation, active channels generally require periodic maintenance dredging, thus
creating a continuous source of dredging work that typically must be carried out if the navigability of
the channels is to be maintained.
Inland dredging. Inland dredging consists of dredging in rivers, canals, lakes and other inland bodies
of water. It is used to create or maintain depths in inland waterways for inland transportation, for
flood control, to increase capacity of silted ponds and also to remove polluted sediments.
Dredging for land reclamation, beach nourishment and shore protection. Reclamation dredging
involves capital dredging and is the raising of land levels and creation of land. Beach nourishment
dredging generally involves moving sand from the seabed to shoreline locations when erosion has
progressed to a stage that threatens substantial shoreline assets or affects tourism.
Source: The Handbook Dredging (A dredging reference manual ) published by Applied Dredging
Consultancy , The Hague Netherlands, 1989 in association with Ministry of Foreign Affairs, Kingdom of
Netherlands and then the Ministry of Surface Transport, Republic of India.
64
Our dredging activities are primarily focused on maintenance dredging and, to a lesser extent, capital
dredging. We undertake dredging for most of the Major Ports in India.
STATISTICAL AND MARKET DATA FOR THE INDIAN AND INTERNATIONAL
DREDGING INDUSTRIES
The availability of up-to-date and precise data both for the international dredging industry and in
particular for the Indian dredging industry is more limited than is the case for other industries. This is
partly a result of the limited number of market participants, as well as the fact that dredging companies
and customer ports are generally government-owned or privately held.
Such data as are available may not be up-to-date. For example, the GoI’s Twelfth Five-Year Plan was
published in fiscal 2012, and so contains only projected figures for all periods subsequent to fiscal 2012.
In addition, measurement of annual dredging volumes differs between the Major Ports in India and
between our operating data and those of the individual Major Ports. This is a result of different
quantitative measures of dredging and methods of recording data between the Major Ports and between
our Company and the individual Major Ports. As a result, we have estimated our market shares in the
Indian Major Port maintenance and capital dredging markets, as well as the overall Major Port dredging
market, based on the GoI’s Twelfth Five-Year Plan for fiscal 2012.
Based on the above we estimate that we undertook approximately 41million cubic meters of the total 65
million cubic meters of dredging at Major Ports in India in fiscal 2012, resulting in a market share for all
dredging at Major Ports of approximately 64%.
Due to the increased market demand at Major Ports for maintenance dredging services and our
constraints, the GoI has increasingly liberalized the Indian dredging market in an effort to meet these
increasing dredging requirements and promote greater competition in the dredging market. As a result of
these factors, we estimate that our market share for maintenance dredging at Major Ports was
approximately 66% in fiscal 2012.
At present, we are the leading maintenance dredging company in India, which contributed more than 75%
of our overall dredging volumes in the period from fiscal 2010 to fiscal 2012. We anticipate that
maintenance dredging will continue to account for a substantial portion of income. Consequently, our
future success will, to a large extent, depend on continued demand for our maintenance dredging services,
our ability to enhance and develop our maintenance dredging services to meet the evolving needs of our
customers, and our ability to increase our maintenance dredging volumes and market share. As reported
in “Indian Infrastructure” published in September, 2011, we are a dominant local player.
For our total dredging volumes and capacity utilization figures provided in this Draft Prospectus, we have
used our internal operating data that we report to the MoS. We generally report higher dredging volumes
as compared to the annual reports of the Major Ports as a result of our recording actual volumes dredged
(including slurry), as per industry practice, based on hopper volume measurement. Major Ports and other
dredging customers generally record dredging volumes on an in situ basis, where the volume is derived
from the change in the depth of the dredging area. Based on our hopper volume measurement, we
undertook approximately only 278.93 MCM and 291.63 MCM under the capital and maintenance
dredging respectively million cubic meters of dredging in India for fiscal 2012.
Source: Report of the Working Group for Port Sector for the Twelfth Five Year Plan (2012-2017) dated
October, 2011 by the Ministry of Shipping, Government of India
Hopper Volume Measurement as Compared to In Situ Measurement
The material to be dredged at the bottom of the sea is relatively compact and dense when compared to its
state after having been dredged and placed in a hopper. The degree of bulking depends upon the nature
and composition of the dredged material and type of dredger used to excavate the soil. Thus, the volume
of wet soil as measured in the hopper is always higher than the volume occupied by it on the seabed. In
65
addition, often during the process of dredging, siltation continues to occur and this results in the in situ
quantity arrived at by hydrographic survey being less than the quantity of spoil transported to the
dumping ground. As a result, the quantity in the hopper is invariably greater than the in situ quantity
dredged. Therefore for the purpose of assessing the productivity of a dredger, the volume of the material
placed in a hopper is taken into consideration.
Although we believe statistical and market data used in this Draft Prospectus are reliable, they have not
been independently verified. Similarly, internal operating data, while believed by us to be reliable, have
not been verified by any independent sources. Accordingly, you should not place undue reliance on the
statistical and market data used in this Draft Prospectus.
DREDGING EQUIPMENT AND PROCESS
There are three primary types of dredging equipment: mechanical dredgers, hydraulic dredgers and other
specialized dredgers:
Mechanical Dredgers
There are three basic types of mechanical dredgers: bucket-ladder, grab and backhoe. In each case, the
dredger uses a bucket or a grab which excavates the material at its in situ state from the seabed. The
dredged material is placed by the bucket or the grab into barges for transport to the designated disposal
area. The material in the barges is emptied by bottom-dumping, direct pump-out or removal by a crane
with a bucket. Mechanical dredgers are capable of removing hard packed sediments and debris and can
work in space-restricted areas such as along docks or terminals. There are three basic types of mechanical
dredgers:
Bucket-ladder Dredgers. Bucket-ladder dredgers once comprised a major portion of dredging fleets.
They use a series of buckets mounted to an endless chain loop but have fallen into disuse because of
their relatively low production rates, need for anchor lines and high noise levels.
Grab Dredgers. A grab dredger is a revolving crane equipped with a grab placed on a pontoon or a
hopper vessel. Grab dredgers with specialized buckets are ideally suited to handle material requiring
controlled disposal.
Backhoe Dredgers. Backhoe dredgers which are common to dry land excavation and may have an
articulated boom with an excavation bucket. Once the material is excavated, it is brought to the
surface and placed in barges for transport.
Hydraulic Dredgers
Hydraulic dredgers use hydraulic centrifugal pumps to provide the dislodging and lifting force and
remove the dredged material in a slurry form. These dredgers work well in loose silts, sands, gravels and
soft clays. For more consolidated materials, heavier excavating equipment, water jets or other loosening
devices at the mouth of the suction pipe may be applied to break up the material. Hydraulic dredging and
transport methods slurry the sediment by adding large amounts of process water to change the original
structure of the sediment. Transport methods associated with hydraulic dredgers are pipeline and hopper
transport. In some cases, hydraulic dredgers may pump the materials into barges for transport. Hydraulic
dredgers work with an assortment of support equipment which help with the positioning and movement of
the dredger, handling of the pipelines and placement of the dredged material. There are three basic types
of hydraulic dredgers:
Cutter Suction Dredgers. Cutter suction dredgers remove material using a revolving cutter head
which cuts and churns the sediment on the seabed and hydraulically pumps the material by pipe to
the disposal location. Cutter suction dredgers are most effective in capital dredging projects and are
suitable for use in high strength materials such as clays, packed or compacted sands and rocks.
Certain materials can be directly pumped as far as seven miles with the aid of a booster pump.
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Trailer Suction Hopper Dredgers. Trailer suction hopper dredgers are typically self-propelled and
have the general appearance of an ocean-going vessel. The dredger has hollow hulls into which
material is suctioned hydraulically through drag-arms and deposited. Once the hollow hulls or
“hoppers” are filled, the dredger will sail to the designated disposal site and either bottom dump the
material, pump the material from the hoppers through a pipeline to the designated site or “rainbow”
(spray through a nozzle) the material from approximately 100 meters to the designated site. Hopper
dredgers can operate in rougher waters as compared to cutter suction dredgers, thus are less likely to
interfere with ship traffic and can move quickly from one project to another, affording the flexibility
to respond quickly to time-sensitive projects. These dredgers can carry out land reclamation projects
and are also suitable for harbor maintenance dredging and pipe trenching.
Trailer suction hopper dredgers are rated according to their maximum hopper capacity, which is generally
in the range of 750 to 33,000 cubic meters.
Bucket Wheel Suction Dredgers. Bucket wheel suction dredgers are a modification of the bucket
wheel dredger which was used primarily for mining and are reportedly a highly efficient method of
capital dredging, particularly for stiff materials such as clay.
Source: The Handbook Dredging (A dredging reference manual ) published by Applied Dredging
Consultancy , The Hague Netherlands, 1989, published in association with Ministry of Foreign Affairs,
Kingdom of Netherlands and then the Ministry of Surface Transport, Republic of India.
Other Dredgers
Other types of specialized dredgers include low-impact “environmental/restoration” dredgers, water
injection dredgers, side casting dredgers and dustpan dredgers. The low-impact
“environmental/restoration” dredgers are existing dredgers that have been modified to increase precision
and limit the release of contaminants in the surrounding environment. The water injection dredger
involves a patented technique which uses water jets to bring sediments into suspension and hydrodynamic
principles to move the material.
Auxiliary Equipment
Auxiliary equipment associated with dredging includes pipelines, booster stations, barges, plough/bed
levelers, rock breakers and general construction equipment such as ploughs and bulldozers.
Dredging Process with a Cutter Suction Dredger
The cutter suction dredger’s rotating cutter head, which is situated around the mouth of the suction pipe,
is designed to cut the dredged material and, pump the dredge spoil with a centrifugal dredger pump
situated in the ship’s pump room. In operation, the cutter suction dredger sweeps the area while pivoting
around a spudpole mounted astern. The forward movement of the dredger is controlled by a hydraulic
ram, which pushes the lowered working spudpole. The actual cutting and dredging movement is done by
pulling on side wires connected to anchors which result in a dredged arc. Anchor handling is executed by
the dredger’s anchor boom system or an auxiliary anchor handling vessel.
The cutter head consists of cutter blades on which adaptors are welded. The adaptors form the base for the
attachment of pick points with which the virgin soil to be dredged will be loosened and cut before being
sucked by the dredge pump into the suction line. The choice of pick points together with their type, size
and dimensions is dependent upon the dredged material which can vary from compact material to rocks.
During the cutting process, the dredge pumps create a vacuum in the suction pipe, which draws the soil
loosened by the cutter head up the pipe and through the pump. The discharge of the dredged soil is
pumped through a floating pipeline to a shore pipeline which transports the dredged mixture to the
designated reclamation or discharge area.
Dredging Process with a Trailer Suction Hopper Dredger
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Trailer suction hopper dredgers have the ability to load hoppers while trailing one or two suction pipes
when the dredger is moving ahead. As the dredger approaches the dredging ground, the suction tubes are
swung outboard by means of winches and davits, and lowered to the water level. With the help of its
global positioning system, the dredger is aligned to the dredging track. The intake end of the suction pipe
is fitted with a draghead, the function of which is to maximize the concentration of solids entrained from
the seabed. The trailer suction hopper dredger’s draghead is lowered to a level close to the seabed and the
pressure differential across the draghead causes the soil to flow towards the suction mouth. The soil-water
mixture is raised by the dredge pumps through the suction pipe/drag-arms which are connected to the ship
by trunnions.
The speed of the dredger during this process is maintained between two to five knots and depends upon
the density of the seabed material. Once the hopper is full (20 to 30 minutes for very fine material, up to
150 minutes for coarser material), the ship proceeds to the designated dumping ground where the hopper
load is discharged, usually by dumping through bottom doors.
Technology
The dredging process is monitored and controlled with the help of dredging and survey instrumentation to
ensure that the dredging process parameters and production characteristics meet contract specifications.
This equipment includes:
Density, Velocity and Production Meters, which measure the amount of material dredged by
measuring the flow velocity and density in the dredge pipe.
Draught and Load Monitoring Systems, which measure the draught of the dredger and also the
volume of its hopper.
Hopper Volume and Load Monitoring Systems, which measure hopper volume and load conditions.
Suction Tube Position Monitoring Systems.
Automatic Radio Tide Gauges, which display tide data by receiving radio signals from a shore-based
tidal measuring unit.
Differential Global Positioning Systems (“DGPS”), which are satellite global positioning systems
accurate to plus or minus one meter.
Dredge Track Presentation and Plotting Software, which is linked to the DGPS for accurate
positioning and dredging on derived dredging tracks or areas.
Vacuum and Pressure Measurement Meters, which measure the force of suction and discharge of the
dredger pump.
Echo Sounders, which measure depth by sound waves.
Source: The Handbook Dredging (A dredging reference manual ) published by Applied Dredging
Consultancy , The Hague Netherlands, 1989 in association with Ministry of Foreign Affairs, Kingdom of
Netherlands and then the Ministry of Surface Transport, Republic of India.
Factors Affecting the Dredging Market
Waterways provide one of the most economical and efficient ways of transporting goods. In order to
promote trade, existing ports are being expanded and new ports are being developed across the world.
Any changes in port infrastructure will affect the dredging industry. Also, any developments in coastal
areas could lead to a significant dredging requirement. The size of the dredging market is therefore
largely dependent on port development, maintenance and expansion. The dredging market is affected by
the following factors:
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Growth in world trade;
Deeper draught requirements of ports;
Beach nourishment in coastal areas;
Land reclamation; and
Environmental aspects and regulations.
Other miscellaneous factors affecting the dredging market are:
Currency fluctuations, Import ( eg. From April 2011, a customs duty of 9.52% has been imposed on
import of dredgers, and can lead to a cost of 5%- 10% for a project spanning 18 months *) and
export license requirements and Changes in tariffs and taxes;
Restrictions on repatriating foreign profits back to India and Unfamiliarity with foreign laws and
regulations;
Difficulties in staffing and managing international operations; and Political, cultural and economic
uncertainties.
*Source: “Indian Infrastructure”- published September, 2011
Growth in World Trade
According to the International Monetary Fund’s World Economic Outlook (January, 2013), world trade
volumes are expected to grow at an annual rate between approximately 5.9%% and 2.8% during 2011to
2012.World seaborne trade grew by 4 per cent in 2011, whereas the tonnage of the world fleet grew at a
greater rate, by almost 10 per cent according to the United Nations Conference on Trade and
Development’s in its “Review of Maritime Transport”. The economic impact of a country’s port
industry, port users and port capital expenditures is significant.
For example, in India, according to the GoI’s Twelfth Five-Year Plan, over 95% of foreign trade by
volume, and approximately 65% by value, is seaborne. Foreign trade is an increasingly important element
of the Indian economy.
Deeper Draught Requirements of Ports
The growth in world trade has given rise to another factor that drives the dredging market: deeper draught
requirements of ports. As the world trade volume continues to grow, demand for shipping space increases
and advanced technology allows for ever-increasing ship sizes. The scaling up of tonnage due to increases
in world trade volumes has resulted in the increasing use of large vessels. Another factor leading to the
use of large vessels is cost advantage. Larger vessels can carry more freight, thus reducing freight costs
per tonne, and increasing emphasis on freight economics is leading to a shift towards the use of larger
capacity vessels in the global shipping industry.
As a result, ports need to be equipped to provide deeper draughts for handling additional tonnage of such
large vessels. A one meter reduction in draught results in a loss in the carrying capacity of the vessels.
The demand for dredging services is therefore significantly impacted by the size and tonnage of large
vessels.
In India, many ports are not capable of berthing fully-laden large vessels. The ability to berth large
vessels can only be achieved by dredging, resulting in the significant potential for increased dredging
activity in the Indian market.
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In addition, increasing traffic density, along with the trend towards larger ships, will likely exceed the
dimensions of the water navigation channels in most countries in the future, requiring enhancement and
new development of port infrastructure and related dredging services.
Beach Nourishment in Coastal Areas
Tourism development and the need for coastal protection stimulate the need for beach nourishment,
which involves significant dredging. For example, at Visakhapatnam more than 4 kilometers of beach are
annually nourished, with approximately Five Lakh cubic meters of sand dredged from the sand trap.* In
Paradip we have also carried out beach nourishment projects.
*Source: Website of Vishakhapatnam Port Trust – Environment Management.
Land Reclamation
The need for additional space in densely populated coastal areas has increased the creation of new land.
Land reclamation is a proven method for creating new land. The necessary sand is dredged and then
transported, often over considerable distances, to the reclamation area. Some of the largest land
reclamation projects in progress or contemplated are in Singapore, Malaysia, Hong Kong, Dubai, Qatar
and Bahrain. The Hong Kong airport, for example, is built entirely on reclaimed land.
Environmental Aspects and Regulations
Both dredging and disposal are carefully regulated on an international level. The most widely applicable
international regulatory instrument is the London Convention 1972 (“LC-72”), which covers global
marine waters. LC-72 recently adopted the Dredged Material Assessment Framework, a widely-reviewed
and accepted approach to the assessment of suitability of dredged material for disposal at sea. Legislation
controlling placement on land (and in inland waters) is based on national regulatory systems often
involving a variety of laws prepared for various waste materials, e.g. sewage sludge, agricultural and
industrial waste. Some countries are now developing regulations specifically for dredged material. In
India, coastal trading zones are considered as environmentally-sensitive areas and protected under Indian
environmental laws. See “Regulations and Policies - Environmental Regulations” on page 170 of this
Draft Prospectus.
International Trade Regulation
International Dredging services are regulated by the General Agreement on Trade in Services (“GATS”)
which aims to achieve greater liberalization in all service sectors, including maritime transport. The
sectors where market access for Indian service providers is specifically required include “Construction
and Related Engineering”, sub heading “General Construction Services of Harbors Waterways, Dam,
Irrigation, and Other Water Works” (CPC NO.54230 of the UN CPC Code) and dredging services, rock
and silt removal and other water associated construction services fall under the sub heading. Capital
dredging, which is normally a subsidiary activity in the construction of new ports/berths, will be classified
as “Construction and Related Engineering”. Maintenance dredging will be classified as support services
for maritime transport. Developed countries extend assistance to their domestic dredging industries by
way of subsidies, including financial aid for research and development. The GATS negotiations have not
addressed these subsidies or domestic coastal shipping known as cabotage (i.e. shipping between ports in
the same country), a highly protected sector. Many countries reserve this transportation for national-flag
ships. It is expected that future protection given to the dredging industry by national governments will
depend on the terms of GATS and on whether countries have included “dredging” services within their
schedule of commitments or not.
TECHNOLOGICAL DEVELOPMENTS IN THE DREDGING MARKET
Increasingly complex capital dredging and large land reclamation projects in the international dredging
market are resulting in a growing focus on technological developments targeted at efficiency
improvement and cost reduction. This has also led to the introduction of larger dredgers. Some of the key
technological developments in the international dredging market include:
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Jumbo Trailer Suction Hopper Dredgers. Jumbo trailer suction hopper dredgers have gained
increasing importance in recent years due to the significant economies that are offered by these
dredgers for large projects, especially in land reclamation activities. The trend towards these dredgers
began with the large land reclamation activity that was initiated in Southeast Asia with the launching
of the Hong Kong airport and the Singapore land reclamation projects. The new jumbo trailer suction
hopper dredgers can out-perform smaller vessels by providing a lower reclaimed unit spoil rate,
despite their massive investment. However, these dredgers have limited use in smaller ports such as
those found in India. Technology developed for these high capacity dredgers has already influenced
the trailer dredger market and there appears a strong possibility that many operators may have to
replace older tonnage to remain competitive.
New Ship Building. New cutter suction dredgers are being built for off-the-shelf delivery aimed at
the shallow water, low volume capital dredging market. In addition, customers are more frequently
ordering customized heavy duty cutter suction dredgers for rock dredging.
Water Injection Dredging. Large volumes of water are injected into sediment under low pressure. As
a result, a water sediment mixture is created with the characteristic of a fluid with extremely low
viscosity. The difference in density between the mixture and the surrounding water can make it flow.
The dredged material is then transported naturally along the gradient created. Water injection
dredging is one method for maintenance dredging.
Environmental-friendly Dredging. Auger and sweep dredging are two new forms of environmental-
friendly dredging. Auger dredging can be applied in sanitation and rehabilitation projects. Special
attention in the process of dredging contaminated silts is given to the prevention of turbidity, ensure
dredging precision and limit maneuvering time loss, resulting in significant time savings. In sweep
dredging, the sweep dredger installed on a cutter suction dredger is capable of dredging thin and
selective layers with a minimum of turbidity in shallow waters. Typically, the turbidity is only 10%
to 20% of that caused by conventional cutter dredging.
THE INTERNATIONAL DREDGING INDUSTRY
Overview of the International Dredging Industry
Large European dredging companies have traditionally dominated the international dredging market.
Europe has been the traditional hub of the international dredging market with activities concentrated in
the Netherlands, Belgium and the United Kingdom with the five leading Dutch and Belgian companies
highlighted in the table below controlling a substantial portion of the international dredging market.
A substantial portion of the international dredging market is not freely accessible and is closed to foreign
contractors, either as a result of local cartels or subsidized state-owned dredging fleets given preferential
treatment. For example, entry to the U.S. dredging market is restricted in the form of domestic
construction requirements, restrictions on foreign ownership and crews. Other markets have begun to
open in recent years as dredging projects have become more complex and as international dredging
companies develop new dredging techniques and more efficient dredgers to reduce unit costs well below
that of most local contractors. In addition, dredging contracts increasingly include more demanding
environmental clauses that must be satisfied during the performance of the work. Those contractors able
to meet stringent environmental requirements are therefore better placed to win contracts.
The leading international dredging companies and their areas of operation are set forth in the table below:
Company Country Area of Operation
IV..1
Royal Boskalis Westminster N.V. Netherlands International
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Van Oord ACZ Netherlands International
Ballast Ham Dredging B.V Netherlands International
Dredging International N.V Netherlands International
Jan de Nul Group of Companies Belgium International
Great Lakes Dredge & Dock Company U.S. International
Penta-Ocean Construction Co., Ltd. Japan International
Source: Company websites.
Notes:
(1) Van Oord ACZ and Ballast Ham Dredging B.V. merged in December 2003 to form Van Ooord B.V.
(2) In addition to the leading international dredging companies listed above, countries including China,
Japan, Korea, the United Kingdom and the Ukraine have large dredging companies mostly focused
on their respective domestic markets.
The international dredging industry has undergone consolidation in recent years, including the Ballast
Needam-HAM merger in 2001 and the merger between Ballast Ham Dredging B.V. and Van Oord ACZ
in December 2003. Increasing emphasis on globalization and the need to synergize existing fleet strengths
and competition may lead to further consolidation in the international dredging industry. In addition, new
players, especially from Asia, are entering the dredging market, although they are smaller in size.
The major European companies account for a large proportion of the total international dredging fleet.
Responding to demands from customers, continuous efforts are being made to increase the size of
dredgers, improve technology and reduce costs. Recently, for the purposes of large capital dredging and
reclamation projects, jumbo trailer suction hopper dredgers with hopper capacities as large as 17, 000
cubic meters are being deployed.
Internationally, the dredging industry is experiencing changing regional patterns. Demand in Europe,
which was formally concentrated in specific countries such as the Netherlands, Belgium and the United
Kingdom, has spread throughout Europe in recent years. However, overall growth for Europe has been
only marginal. Singapore, Hong Kong and the Middle East have witnessed higher levels of growth in
dredging operations, which is expected to continue in the coming years.
International Dredging Market Outlook
Based on industry publications and our communication with market participants, we believe the
international dredging market will continue to grow in the near to intermediate term. Dredging projects
are increasing in the Indian subcontinent and the Middle East. We also believe the Singapore and
Malaysia markets will be more active following settlement of regional disputes regarding dredged
material used for reclamation projects.
Overall, we believe the international market outlook remains positive. Demand for port construction, port
development and land reclamation is stimulated by the growth in world trade volume, which is increasing
substantially. It is also stimulated by the scaling-up of container transport and the need for more space in
densely populated coastal areas. The rapid increase in size and number of container ships, we believe, will
also lead to greater capital and maintenance dredging projects worldwide in the near future.
In addition, the growth in tourism and the need for coastal protection create a growing demand for beach
nourishment. Dredgers designed to work in shallow waters are needed for these jobs.
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THE INDIAN DREDGING INDUSTRY
Overview of the Indian Dredging Market
India has an extensive coastline of approximately 7517 kilometers. There are 13 major ports under the
administrative control of the MoS, approximately 176 non-major ports under the administrative control of
the Government, State Governments and private ports.
As per the report of the Working Group for Ports Sector for 12th Plan, as per the 11th
Plan, a total quantity
of 675.25 MCM and 429.99 MCM had been planned for capital and maintenance dredging respectively
for all the ports in the country. This quantity includes the dredging to be done for fishing harbours also
besides the major and non major ports. Against this targeted plan, only 278.93 MCM and 291.63 CM had
been achieved under the capital and maintenance dredging respectively. This constitutes 41.31% and
67.82% against the targeted quantity respectively. The major ports achieved 31.97% of the targeted
quantity in capital dredging work, and the non-major ports achievement was 49.55% in capital dredging
work. In maintenance dredging work, the achieved percentage of the target given are 68.89% and 59.92%
for major ports and non-major ports respectively.
The 13 Major Ports, which are designated as such under the Major Ports Trust Act, 1963, handle
approximately 75 % of India’s port traffic by volume* with non-Major Ports and private ports handling
the remainder. Rapid industrialization, particularly after the liberalization of the economy in the early
1990s, has resulted in the growth of a number of ports, shipyards and naval establishments in India.
The requirement of capital dredging in the Eleventh Plan was envisaged to increase more than two-fold,
to 298.MCM for major ports and 368.59 MCM for non-major ports, besides maintenance dredging of
380.06 MCM and 46.41 MCM, respectively. In the Twelfth Plan, the requirement of capital dredging has
been estimated at 221.11 MCM for major ports and 418.03 MCM for non-major ports, besides
maintenance dredging of 404.25 MCM and 125.58 MCM, respectively.
The Twelfth Five-Year Plan of the GoI, published in fiscal 2012, estimates that the annual Indian Major
Port traffic will increase to approximately 943.06 million tonnes by fiscal (2016–17)from approximately
560.15 million tonnes in fiscal 2011-12. Likewise, the GoI estimates Major Port capacity will increase
from approximately 689.93 million tonnes in fiscal 2011-12 to approximately 1229.24 million tonnes by
fiscal 2016–17. An expansion of Indian port capacity (both at Major Ports and non-Major Ports) to meet
this increased traffic, whether through construction of new ports or expansion of existing ports, including
through deepening draught requirements of ports, would create opportunities for both capital dredging
and increased maintenance dredging. In particular, deepening channels at ports also requires lengthening
and widening the channels, resulting in an increase in annual maintenance dredging requirements at the
ports.
As per the ‘Approach Paper’ to the Twelfth Five Year Plan – 2012-2017, published in October, 2011 by
the Planning Commission the capacity of India’s ocean ports to deal effectively with growing
international trade volumes has increased in the Eleventh Plan in part on account of private investment in
the so-called minor ports, as well as in container terminals, dry-bulk and liquid handling facilities in the
major ports. As a result, both berthing times and turn-around times have fallen. However, ports will meet
only 50.0 per cent of the Eleventh Plan target. It is imperative that the pace of expansion of the port sector
is accelerated, building on the successful experience of the past few years and increased co-operation
between the publicly owned ports and private container and other terminal operators, as well as the
strengthening of established private ports. It further states that the draught in most of India’s ports is not
adequate for dealing with bigger ships, an important component for reducing costs. Deepening of selected
ports and also intermediate off-loading terminals offer solutions that should be carried forward in the
course of the Twelfth Plan. The pace of dredging has been inadequate and needs to be greatly expanded.
The capacity for dredging of ports in the private sector needs to be further augmented and full operational
flexibility given to the ports to use it. While capital dredging of ports will lead to further deepening and
larger size ships will be able to use the port, maintenance dredging will ensure a continued efficient
operation of current port capacity.
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*Source: Secretariat for Infrastructure (Port), Planning Commission, Government of India.
Dredging Policy
The MoS is our principal ministry of the GOI which formulates the dredging policy from time to time.
The current MoS guidelines of 2007 have been periodically extended and the latest extension is effective
from November 10, 2010 till such time that a revised policy is issued The existing dredging policy
guidelines issued by MoS are as under:
a. All major ports shall invite open competitive bids for dredging works and Indian companies
owning Indian flag dredgers, including our Company shall have the right of first refusal if the rate
is within 10% of the lowest valid offer. This would apply to both maintenance and capital dredging
works with sole exception of the maintenance dredging requirement of Kolkata Port for which
separate instructions shall apply.
b. If more than one company owning Indian flag dredger participates in the tender, the right of first
refusal will go to that Indian company which has quoted the lowest rate and is within 10% of the
lowest valid offer.
c. All major ports may strictly adhere to the guidelines issued by the CVC from time to time for
processing the tenders in a transparent manner. Ports may ensure that a prequalification criteria is
fixed in advance and should not be very stringent to restrict entry of certain potential Indian
bidders. The prequalification conditions should be exhaustive, yet specific. The prescribed
conditions should be clearly specified in the bid documents to ensure fair competition and
transparency. Detailed instructions in this regard will be issued separately.
d. The Government of India through MoS reserves the right to assign, in public interest, any contract
for dredging work in any of the major ports to DCI on nomination.
e. Guidelines issued by DG (Shipping), Mumbai from time to time in terms of the relevant provisions
of Merchant Shipping Act shall be applicable.
Maritime Agenda – 2010-2020
Another vital policy document which the MoS during the year 2011-12 formulated was the Maritime
Agenda, 2020 (the “Agenda”) which is the perspective plan of the MoS for this decade. It identifies the
priority areas for Government intervention and is a road map for creation and upgradation of
infrastructure in the Ports and also for augmentation of Indian tonnage in the shipping sector. The Agenda
sets out that shipping lines have been representing time and again that port charges at Indian Ports are
very high as compared to other comparable International Ports. As a matter of fact, vessel related charges
are perhaps higher than some of the International Ports whereas cargo related charges are much lower in
some Indian Ports in comparison to ports abroad. The Agenda further states that if Vessel related charges
alone are taken, the reasons for higher charges are mainly two: (1) higher cost of dredging in certain
ports, requiring perennial dredging and (2) lack of subsidy on the part of Government.
In many parts of the world, some part of dredging (at least capital) is funded by provincial governments
or federal governments. If the same approach is adopted by the Central Government or State
Governments, the vessel related charges also could be brought to the reasonable levels. The Agenda also
states that Major Ports in India have drawn up some ambitious expansion plans during the next decade
including several dredging projects by some ports, thereby intending to create substantial additional
capacity. The dredging projects are mainly for deepening of channels, enhancing the available draft at
berths or for construction of more berths.
Ports are gateways to trade and must maintain specified draughts for safe navigation of vessels. This
places a heavy demand on the maintenance dredging activity in the Major Ports in India. The demand for
capital dredging arises when there is a new port development or a port expansion activity planned. States
like Maharashtra, Andhra Pradesh and Gujarat are promoting development of private ports, which would
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require extensive capital dredging. Also, several minor ports and fishing harbors with siltation problems
require the maintenance of adequate depths for which dredging is required.
Maintenance dredging and capital dredging requirements largely drive the Indian dredging market.
Minimal dredging requirements exist for beach nourishment, shore protection and land reclamation in
India. Also, inland water dredging is largely confined to riverbank ports.
This emphasis on maintenance dredging is particular to the Indian dredging market. The Indian capital
dredging market is also characterized by uncertainty in funding availability and government approvals for
and the realization of port development programs. Indian dredging customers generally expect dredging
companies to perform all elements of dredging contracts on a single contractor basis with minimal
customer involvement in the dredging process.
Report of the Working Group for Port Sector for the Twelfth Five Year Plan (2012-2017)
As per Report of the Working Group for Port Sector for the Twelfth Five Year Plan (2012-2017) dated
October, 2011 by the Ministry of Shipping, Government of India, one of its terms of reference is to
formulate dredging plan along with sources of financing to accommodate larger ships in major ports. Sub-
Groups were constituted to consider and make recommendations relating to development of Ports in the
Twelfth Plan period, including a Sub- group whose terms of reference included, inter alia, to assess
dredging requirements of Major and Minor Ports and prepare a road map/ Dredging plan for all Major
Ports during the Twelfth Plan, and to suggest measures to optimize the use of dredging fleet owned by our
Company and port authorities.
Indian Dredging Market Participants
Historically, the maintenance dredging needs of Major Ports, the Indian Navy and other maritime
requirements were primarily met by our Company. Post liberalization, a number of private players
including Indian Arms of the international Dredging Companies have entered into the foray. For details
to our existing contracts, see “Regulations and Policies –Dredging Policy Guidelines” on page 165 of this
Draft Prospectus.
On the basis of size of operations, the Indian dredging industry can be broadly divided into two segments:
High-volume segment. Consisting of large companies like our Company and other Indian and
foreign major dredging companies, this segment caters for the requirements of existing Major Ports
and newly developed private ports and involves dredging jobs greater than 0.5 million cubic meters
by volume. Nearly all the international dredging companies are active in this market segment.
Mid- and low-volume segment. Consisting of small Indian dredging companies, this segment caters
for the dredging requirements of the State Maritime Boards, the Inland Waterways Authority, private
ports and captive jetty operators with dredging volumes ranging from 0.05-0.5 million cubic metres.
With greater emphasis being given to deepening of the drafts in Indian Major Ports in Maritime Agenda
Indian dredging companies including DCI may have greater opportunities in this sector. Generally,
development activities taken up by existing as well as upcoming ports to enhance channel depth for
accommodating large vessels are likely to bring considerable opportunities as well as greater competition
in the Indian dredging industry.
The entry of international dredging companies into the Indian maintenance dredging market is a recent
development. Prior to their entry, only port authorities under the administrative control of the MoS and
our Company were involved in carrying out maintenance dredging operations in India. Currently, the
Indian dredging market consists of ports under the administrative control of the MoS and privately-held
ports, and domestic and international dredging companies.
Private port developers including at Pipavav, Kakinada, Mundra and Hazira, as well as the Indian Navy at
Karwar, have engaged the services of international dredging companies. Considering this trend,
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international players may also have an advantage to take up future capital dredging projects when private
ports are developed.
The Indian Economy
According to the Central Statistical Organization of India, India had an estimated GDP growth rate of 8%,
8.4 % and 6.5 % in fiscal 2009 , 2010 and 2011, respectively, based on constant prices for fiscal 1994.
The RBI estimates GDP growth of approximately 5.5% for fiscal 2012.* The GoI has played a significant
role in the development of the Indian economy. A series of comprehensive macroeconomic and structural
transformations were initiated by the GoI to promote greater market orientation and economic stability
and growth. The key policy reforms that have been implemented include:
Deregulation of industry;
Impetus for foreign direct investment for equity participation in Indian industry; and
Progressive reduction in the GoI’s role in production, except in strategic sector/ industries by
implementing a series of disinvestments in PSU.
As part of its ongoing disinvestment process, the GoI has disinvested 1.44% of its share holding in our
company in 1991-1992 and again in 2003-04, the Government disinvested a further 20% of its
shareholding in our company. The current equity holding of the Government in our Company is 78.56%.
*Source: Website of the Reserve Bank of India- Results of the Survey of Professional Forecasters on
Macroeconomic Indicators – 22nd Round (Q3:2012-13)
Increasing Foreign Competition
Our dominant market position in the Indian dredging market has historically resulted from the MoS
guidelines favoring our Company at Major Ports in India.
Since the opening of the Indian dredging industry to foreign competition by the GoI in fiscal 1993, a
number of international and domestic dredging companies have entered the Indian dredging market. As a
result, the Indian dredging market has become more competitive. While continuing to offer capital
dredging services in the Indian market, we are primarily focused on maintenance dredging which is price-
sensitive and constituted more than 80% of dredging volumes in the Indian Major Port dredging market in
fiscal 2012. We estimate that our market share for maintenance dredging at Major Ports fluctuated from
approximately 58% in fiscal 2008 to approximately 67% in fiscal 2012.
In the Indian dredging market, we compete primarily with Indian and international dredging companies,
which are enlisted below:-
Jaisu Shipping Company Private Limited, Kandla.
Mercator Lines Limited, Mumbai.
Dharti Dredging and Construction Limited, Hyderabad.
Meka Dredging Corporation, Mumbai.
Sical Logistics Limited, Mumbai.
Infra Dredge Services Private Limited, Mumbai.
Van Oord India Private Limited, Mumbai.
Van Oord Dredging & Marine Contactors BV, Netherlands.
Boscalis Dredging India Private Limited, Mumbai.
Royal Boskalis Westminister NV, Netherlands.
Jan De Nul Dredging India Private Limited, New Delhi.
Jan De Nul NV, Belgium.
Dredging International India Private Limited, New Delhi.
Dredging International NV, Belgium.
International Seaport Dredging Limited, Chennai.
76
Hyundai Engineering and Construction Company Limited, South Korea.
Chellaram Shipping (Hong Kong) Limited, Hong Kong.
Inaikiara (I) Dredging Private Limited, Mumbai.
Source: Press Release titled “Dredging companies working in the country” dated July 29, 2009 issued by
Press Information Bureau, Ministry of Shipping, Government of India dated July 27, 2009
In the future, we may also face competition from other domestic and international dredging companies
that enter the Indian market, including international dredging companies that have been successful in
foreign markets but are yet to enter the Indian dredging market. Some of the international dredging
companies that have entered the Indian market in recent years have significantly greater resources than
us, which may enhance their ability to compete with us. We have limited international dredging
experience. We expect to continue to face competition in foreign dredging markets, which may limit our
ability to enter those markets. We compete primarily in terms of price, availability of suitable equipment,
expertise, experience, season and volume of work, fleet mobilization and site conditions.
These and any further changes to the MoS guidelines are, therefore, likely to be increasingly critical in
determining our overall market share.
Changing Market Dynamics
Changing dynamics in the Indian market context are manifested in the form of:
An increasing trend towards privatization; and
A changing payment pattern from daily rate to quantitative or performance-based measures.
Post liberalization private sector participation has increased in the ports sector, particularly in the form
of development of berths and jetties at existing ports in India. Capital dredging requirements and
procurement policies and methods for these private sector projects are largely influenced by private
developers. Construction of berths and jetties is planned or under implementation through the “Build,
Operate, Transfer” process at Major Ports including JNPT, Kandla, Visakhapatnam, Mumbai, Mormugao,
Cochin and Tuticorin.
As a result, in the near future the customer profile for dredging companies in India is undergoing a
significant change from government customers to private sector developers with prominent examples
being Gangavaram Port, Dhamra Port, etc.
Expansion of Indian Port Capacity
An expansion of Indian port capacity (both at Major Ports and non-Major Ports) to meet the projected
increased port traffic, whether through construction of new ports or expansion of existing ports, including
through deepening draught requirements of ports, would create opportunities for both capital dredging
and increased maintenance dredging. In particular, deepening channels at ports also requires lengthening
and widening the channels, resulting in an increase in annual maintenance dredging requirements at the
ports. The MoS is contemplating several privatization projects, including the development of new berths
and terminals and expansion of existing berths and terminals, at a number of Major Ports in India. The
GoI’s Twelfth Five-Year Plan, published in fiscal 2012, estimated various port expansion programs
(Major and non-Major Ports) requiring dredging. .
Dredging Capacity and Utilization
We are the largest dredging company in India and have generally operated at close to 100% capacity
utilization. The capacity utilization is the ratio of the amount actually dredged by a dredging company in
a year and its derived annual dredging capacity. Annual dredging capacity is derived from a number of
parameters, including installed hopper volume, estimated number of days of dredging, location, soil
characteristics, number of loads and dumping distance. In fiscal 2012, we operated at a capacity
77
utilization of approximately 90% (based on actual days dredged and other factors affecting production).
We believe our capacity utilization is higher than that of our competitors in the Indian dredging market.
Source: Our Annual Report for 2011-12 – Director’s Report under the head “Dredging Operations”
Indian Dredging Market Outlook
Based on figures from the GoI’s Twelfth Five-Year Plan, published in fiscal 2012, we estimate a steady
growth in the Indian dredging market. This is primarily a result of consistent maintenance dredging
requirements at the Major Ports that is likely to provide a steady market in the coming years and the
increasing private sector participation in port development and related capital dredging activity.
78
OUR BUSINESS
In this section any reference to “we”, “us” or “our” refers to Dredging Corporation of India Limited.
Unless otherwise indicated, all financial and statistical data relating to the dredging industry in the
following discussion are derived from the MoS, the GoI, the GoI’s Twelfth Five Year Plan, our internal
operating data, the annual reports of the Major Ports in India and our correspondence with the Major
Ports in India. These data have been reclassified in certain respects for purposes of presentation and
pertain to CY/FY2012, unless specified otherwise. For more information, see “Certain Conventions, Use
of Market Data”, “Risk Factors - External Risk Factors - Statistical and market data on both the Indian
and international dredging markets are extremely limited” and “Industry Overview – Statistical and
Market Data for the Indian and International Dredging Industries”.
The following information should be read together with the more detailed financial and other information
included in this Draft Prospectus, including the information contained in the chapter titled “Risk
Factors” beginning on page 11 of this Draft Prospectus.
OVERVIEW
We are the premier dredging company in India, as measured by dredging capacity in terms of Hopper
Capacity/ Quantity dredged. We were established in 1976 as a Public Sector Undertaking (“PSU”) under
the administrative control of the Ministry of Shipping (“MoS”) to provide integrated dredging services to
India’s Major Ports, Non-Major Ports, Shipyards and Indian Navy in the form of maintenance dredging,
capital dredging, reclamation, hydrographic surveys and beach nourishment. We are a Mini Ratna
Category I PSU since November 1999.
India is a major maritime nation by virtue of its long coast line of around 7517 kilometers on the western
and eastern shelves of the mainland and also along the islands, bejewelled with 13 Major Ports under the
administrative control of the MoS and 176 Non-Major Ports under the administrative control of the
Government of India (“GoI”) and State Governments and the private ports, strategically located on the
world’s shipping routes, its long tradition of seafaring with a large pool of trained maritime personnel and
its dynamic and rapidly globalizing economy with a vast potential to expand its participation in trade and
development. A few such ports are natural harbours with sufficient water depth to handle vessels plying
cargo to and from them. Most of the other ports require capital dredging to expand vessel size handling
capability and maintenance dredging for maintenance of their existing/expanded capability to berth
vessels of different shapes and sizes.
Source: Maritime Agenda 2010 to 2020 issued by the MoS, GoI, dated January 2011.
The Indian dredging market consists primarily of maintenance dredging and capital dredging in addition
to a limited amount of inland dredging, beach nourishment and reclamation dredging, and we are a very
prominent player on account of our expertise in this highly technical and skilled sphere of business.
We have a leading presence in the Indian maintenance dredging market, and we also carry out limited
capital dredging. We own and operate 15 dredgers. The capacity of the dredgers as on March 31, 2012 is
as under:-
B. TRAILER SUCTION HOPPER DREDGERS:
Name of the Vessel Year
Built
Hopper
Capacity
(in Cu.M)
Annual
capacity
(Hopper
solids)
(M.Cu.M)
DCI DREDGE –V 1974 3450 4.00
DCI DREDGE –VI 1975 3770 4.00
DCI DREDGE –VIII 1977 6500 9.00
DCI DREDGE –IX 1984 4500 6.50
DCI DREDGE –XI 1986 4500 6.50
DCI DREDGE –XII 1990 4500 6.50
79
DCI DREDGE –XIV 1991 4500 6.50
DCI DREDGE –XV 1999 7400 10.20
DCI DREDGE –XVI 2000 7400 10.20
DCI DREDGE –XVII 2001 7400 10.20
DCI DREDGE-XIX 2012 5500 7.94
TOTAL (A) 81.54
B. CUTTER SUCTION AND BACK-HOE DREDGERS
DCI DREDGE –VII 1976 1.25
DCI AQUARIUS 1977 5.00
DCI DREDGE-XVIII 2009 5.00
DCI BACKHOE 2011 0.60
TOTAL (B) 11.85
GRAND TOTAL
(A+B) 93.39
Capital dredging is done to either create new channels, basins and berths or to deepen the existing
infrastructure of the ports. Maintenance dredging is carried out to maintain the depth at the existing
infrastructure. During the 11th five year plan, a total quantity of 675.25 MCM and 429.99 MCM had been
planned for capital and maintenance dredging respectively for all the ports in the country. This quantity
includes the dredging to be done for fishing harbours also besides the major and non major ports. Against
this targeted plan, only 278.93 MCM and 291.63 CM had been achieved under the capital and
maintenance dredging respectively. This constitutes 41.31% and 67.82% against the targeted quantity. Of
this the share of the Major Ports for capital and maintenance dredging is 95.36 Mln.Cum and 261.83
Mln.Cum respectively. We have estimated that our share of the maintenance dredging for the year Fiscal
year 2008 was 57.6% which increased to 66.5% for Fiscal 2012. Our share in capital dredging for the
Fiscal Year 2008 is 84.0% and for the Fiscal Year 2012 is 52.03%. This decrease was mainly because of
the stoppage of capital dredging work at the Sethusamudram Ship Channel Project, which was sanctioned
on June 1, 2005. Measurement of annual dredging volumes differs between the Major Ports and between
our operating data and those of the individual Major Ports as a result of different quantitative measures of
dredging and methods of recording data.
We have estimated our market shares in the Indian Major Port maintenance and capital dredging markets,
as well as the overall Major Port dredging market, based on the Report of the Working Group for Port
Sector for the Twelfth Five Year Plan 2012-17 prepared by the Planning Commission and our internal
operating data. Our customers include major ports, the Indian Navy and Shipyards. In fiscal 2012,
approximately 55% of our income from operations was earned from our maintenance dredging contract
with Kolkata Port (Haldia). Other key customers for Fiscal 2012 include Ennore Port, Cochin Port,
Cochin Navy, Mormugao Port, Visakhapatnam Port, New Mangalore Port, Karwar and Paradip Port.
Our operating revenue for the fiscal years ended March 31, 2010, 2011 and 2012 was ` 6,730 million, `
5,071 and ` 4,917 million, respectively.
Our Competitive Strengths
We believe that we are well -positioned to maintain and enhance our leadership position in the Indian
dredging market, on account of our competitive strengths, which include the following:
Premier and the only PSU dredging company in India
We are a premier and the only PSU dredging company in India. We are also the preferred dredging
company for Major Ports and the Indian Navy. We have been in this business since 1976 and have been
catering to the dredging requirements of the major ports/ Indian Navy since then. Owing to the long
association with the Major Ports, our Company is the most preferred company for dredging requirements
of most of the Major Ports and the India Navy.
Flexible portfolio of dredging assets
80
Our Company operates a diverse dredging fleet which is the largest in India in terms of capacity. The
size, versatility and technical capabilities of our fleet improves its competitiveness as it generally permits
our Company to select the appropriate equipment for a particular maintenance dredging job. To maintain
the value and effectiveness of fleet, the Company emphasizes preventive maintenance so as to reduce the
downtime, increase profitability, enhance the vessel life.
Strong relationships with Customers
Our Company caters to the dredging requirements of the Major Ports and the Indian Navy right from its
inception in 1976 and has a better understanding of the dredging requirements of the Indian Ports. Our
Company is the leader in maintenance dredging in India through its combination of usage of advanced
equipment and experience. Our Company believes that its size as the largest dredging company in India
and its extensive experience significantly enhanced its ability to profitably bid for and complete the
contracts awarded to it.
Experienced management team
Our Company’s senior managers have vast experience in the dredging and maritime industries. Our
Company believes that this experience provides the Company with a significant advantage over its
competitors. The Company’s floating personnel who manage the dredgers and the management team who
give the support services are well trained professionals having vast experience in the dredging and
maritime industries
Our Strategies
We intend to increase income from operations and strengthen our domestic and international competitive
position by expanding our operations in both our traditional and new dredging services and adopting a
pro-active marketing strategy for our domestic and foreign operations. We aim to achieve our mission by
pursuing the following business strategies:
Enhancement of market share in maintenance dredging and more participation in capital dredging in
India
With the proposed addition of the two new dredgers by June 2013 and January 2014 respectively of
higher capacity, our Company expects to maintain its domestic leadership position in maintenance
dredging by becoming more customer-focused and tailoring marketing initiatives that differentiate
between specific groups of customers. In particular, it is consolidating its relationships with the Major
Ports and developing marketing efforts aimed at non-Major Ports and new private port developers in
India. Also at present company is undertaking Capital dredging assignment at Ennore Port and Kandla
Port. We plan to undertake more such assignments subject to the availability of the fleet.
Making forays in foreign dredging market
Apart from consolidation in the Indian dredging market, we have plans to make forays in the foreign
dredging market. We are undertaking international dredging assignment at Kanakesanturai harbour, Sri
Lanka under the aegis of Ministry of External Affairs, GOI as per a bilateral arrangement with the
Government of Sri Lanka.
Enhancement of the fleet capability
In continuation of the efforts to sustain the existing capacity for which orders were placed for three
dredgers meant as replacement of existing aged dredgers, our Company plans to procure two higher
hopper capacity 9000 cubic meters trailer suction hopper dredgers in the twelfth plan. Our Company also
plans to refurbish the existing aged dredgers during the current plan period so as to increase their
effectiveness and enhance their economic life.
Reducing operational costs
81
Our Company proposes to reduce its operational costs by refurbishing the existing aged dredgers. Further,
in addition to its capacity utilization initiatives discussed above, our Company also intends to reduce
operational costs by focusing on fuel efficiency in ship operations and ship procurement and further
streamlining the spare parts procurement systems. Our Company also proposes to have tie-ups with ship
repair yards for continued maintenance of our vessels for a period of time so as to make available the
dredgers for a guaranteed minimum number of days every year.
Strategic alliances through long term contracts with major ports
Our Company proposes to have strategic alliances with major ports on similar terms with the Kolkata Port
at present. This will ensure assured business for the Company and enable the Company to plan in advance
regarding the deployment of the vessels.
Optimize capacity utilization
Our Company intends to continue to optimize its capacity utilization by continuous project monitoring
and review, reducing equipment downtime through preventive maintenance and working with repair
yards to accelerate dry dock repair periods, and increasing computerization, including introducing online
connectivity between dredgers, projects and the head office. Our Company also intends to continue to
invest in quality pre-dredging surveys and equipment and continue to invest in repairs and maintenance.
Through a renewed focus on training, our Company intends to introduce specific project planning and
management initiatives to educate its staff to identify and develop new market opportunities. Our
Company believes in the introduction of best practices in procurement, costing and working capital
management, along with the introduction of tailored human resources practices, participatory
management and new technologies, which will create new competencies in its organization and add value
for its dredging customers.
Key Financial Parameters
In ` million
S. No Particulars As at December
31, 2012
Fiscal
2012
Fiscal
2011
Fiscal
2010
1. Networth 13,912.65 13,817.30 13,685.49 13,290.34
2.
Total Debt
- Non-current maturities of
Long Term Borrowing
5,875.58 2,599.53 - -
- Short Term Borrowing - - - -
- Current Maturities of
Long Term Borrowings
- - - -
3. Net Fixed Assets 13,541.49 5,816.19 4,874.72 5,535.95
4. Non Current Assets 2,201.52 4,977.05 2,130.83 300.00
5. Cash and Cash Equivalents 188.56 783.16 2,352.74 2,433.44
6. Current Investments - - - -
7. Current Assets 8,104.16 8,044.86 9,459.48 10,654.58
8. Current Liabilities 3,993.67 2,357.63 2,706.24 3,196.18
9. Net Sales 4,474.18 4,916.58 5,071.42 6,730.35
10. EBITA 108.17 175.61 448.7 777.61
11. EBIT 108.17 175.61 448.7 777.61
12. Interest 1.31 - - 1.03
13. PAT 95.39 131.81 395.15 700.54
14. Dividend Amounts - - - 97.95
15. Current Ratio (times) 2.03 3.41 3.50 3.33
16. Interest coverage ratio (times) 82 - - 755
17. Gross Debt Equity Ratio (times) 0.42 0.19 - -
18. Debt Service Coverage Ratio
(times)
556 - - 1322
82
HISTORY
The MoS established and began operating a dredging pool, the Central Dredging Organization (the
“CDO”), in 1966 to meet the dredging requirements of the Major Ports in India. The CDO’s operations
were subsequently transferred to SCI in 1968 for managing on agency basis, which maintained a central
dredging pool consisting of dredgers, hopper barges, tugs, survey launches and other operational
equipment. Over the years, the development of ports continued and taking into account the increasing
dredging requirement, the GoI decided to form a separate company. Since dredging operations are capital
intensive and specialized, and in response to the growing demand for dredging services in India, the GoI
incorporated Dredging Corporation of India Limited on March 29, 1976 as a private limited and a wholly
owned Government of India Undertaking with the primary objective of catering to the dredging
requirements of Indian ports. Our Company’s arrangement with SCI continued during 1976-77. Our
Company started operating independently thereafter and provided integrated dredging services to India’s
Major Ports in the form of maintenance dredging, capital dredging, reclamation, hydrographic surveys
and beach nourishment. Our Company converted into a public company on March 10, 1992. The GoI
disinvested 1.44% of its shareholding in our Company in the year 1992 and further 20% in the year 2004.
The share of GoI in the Equity Share Capital of the Company of the Company as on date is 78.56%. The
Equity Shares of our Company are listed on the BSE, the NSE, the CSE and the DSE. We have been
declared a Mini Ratna-Category I public sector enterprise vide letter No. PD/28028/39/97-DCI dated
November 8, 1999 issued by the Ministry of Surface Transport(now Ministry of Shipping), GoI and have
been granted greater autonomy with respect to financial and operational areas, establishment of joint
ventures, overseas offices and technology alliances, among other areas, subject to the fulfillment by us of
the conditions contained in DPE Office Memorandum No.11/36/97-Fin dated October 9, 1997 as
amended from time to time Our registered office is located at Delhi and our head office/ Corporate Office
is located on the east coast of India at Visakhapatnam. At present we have project offices at Mumbai,
Kolkata, Haldia, Paradip, Kandla, Chennai, Kochi, Visakhapatnam.
OUR CORPORTE STRUCTURE
Our basic organizational structure is as under:-
OUR OPERATIONS
Maintenance Dredging
DIRECTOR (OPS. & TECH.) DIRECTOR (FIN) Chief Viligance
Officer
Operations Technical Marketing Information
Technology
Finance Human
Resources
Company
Secretary
Internal
Audit Project
Enginee
ring
Dept.
Health, Safety
and
Environment
BOARD OF DIRECTORS
CHAIRMAN AND MANAGING DIRECTOR
83
The Indian dredging market is primarily maintenance dredging-oriented. Maintenance dredging is carried
out either by the port authorities, our Company or other private Indian and international dredging
companies. As maintenance dredging is a repetitive activity, there is a consistent annual market for
maintenance dredging services as the quantum of dredging does not fluctuate excessively year to year.
The following table sets forth certain information with respect to the Indian maintenance dredging market
at Major Ports from fiscal 2010 to fiscal 2012
Customer Maintenance dredging – Fiscal 2010 to Fiscal 2012 (million Cubic Meters)
Fiscal 2010 Fiscal 2011 Fiscal 2012
Port DCI Others Port DCI Others Port DCI Others
Kolkata/ Haldia 0.80 30.00 0.00 0.60 31.00 0.00 0.60 18.06 0.00
Cochin 0.00 0.00 10.00 0.00 0.00 11.00 0.00 11.74 0.00
New Mangalore 0.20 6.00 0.00 0.00 5.50 0.00 0.00 0.00 5.50
Kandla 1.00 0.00 6.00 0.00 0.00 6.30 0.00 0.00 6.30
Paradip 0.10 2.60 0.00 0.00 0.70 2.60 0.00 0.00 2.60
Visakhapatnam 0.00 0.60 0.00 0.00 0.30 0.00 0.00 0.30 0.00
Ennore 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Chennai 0.50 0.00 0.00 0.50 0.00 0.00 0.50 0.00 0.00
Tuticorin 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Mormugao 0.00 4.00 0.00 0.00 4.50 3.00 0.00 4.50 0.00
Mumbai 0.00 0.00 4.20 0.20 0.00 2.30 0.20 0.00 2.30
JNPT 0.00 0.00 1.00 0.00 1.20 0.00 0.00 0.00 0.00
Sub-Total 2.60 43.20 21.20 1.30 43.20 25.20 1.30 34.60 16.70
Grand Total 67.00 69.70 52.60
DCI Share 64% 62% 66%
Capital Dredging
The capital dredging market in India is limited and capital dredging is characterized by high resource
requirements that necessitate continuous fleet utilization in order for the dredging to be economically
feasible. Capital dredging also involves substantial ancillary equipment requirements and extensive
project planning and management skills. In addition, as port development programs in India are not
continuous and soil strata varies from port to port, any equipment specifically purchased for a capital
dredging project may risk being under-utilized. In addition, the Indian Maritime Agenda for 2010 to 2020
offers potential extensive capital and maintenance dredging opportunities through qualitative and
quantitative improvements in port-related services and the development of new ports. There is no fixed
season for capital dredging, as timing depends on customers’ requirements and site conditions.
The following table sets forth certain information with respect to the Indian maintenance dredging market
at Major Ports, Sethusamudram from Fiscal 2010 to Fiscal 2012:
Customer Capital dredging – Fiscal 2010 to Fiscal 2012 (million Cubic Meters)
Fiscal 2010 Fiscal 2011 Fiscal 2012
Port DCI Others Port DCI Others Port DCI Others
Cochin 0.00 0.00 0.00 0.00 0.00 4.00 0.00 0.00 1.00
Kandla 0.00 0.00 0.65 0.00 0.00 0.65 0.00 0.00 0.86
Paradip 0.00 11.30 0.00 0.00 5.00 0.00 0.00 0.54 1.00
Visakhapatnam 0.00 0.00 0.00 0.00 1.70 0.00 0.00 0.66 0.00
Ennore 0.00 0.00 2.20 0.00 1.50 0.20 0.00 4.90 0.00
Mormugao 0.00 1.30 0.00 0.00 0.50 0.00 0.00 0.30 0.00
84
Sethusamudram 0.00 1.80 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Sub-Total 0.00 14.40 2.85 0.00 8.70 4.85 0.00 6.40 5.86
Grand Total 17.25 13.55 12.26
DCI Share 83% 64% 52%
International Experience
In April 2002, we completed a Rs. 311.7 million land reclamation and dredging contract at Taichung
Harbor, Taiwan where we dredged 2.68 million cubic meters. We chartered our 17,300 horse power cutter
suction dredger Aquarius to Dredging International N.V. (Belgium) from June 2002 till October, 2006 for
operation in international locations. Presently, we are also undertaking a dredging assignment at
Kanakesanturai harbour (Sri Lanka). Reclamation and Beach Nourishment.
Reclamation and Beach Nourishment operations
At present, our reclamation and beach nourishment operations have been limited. At Visakhapatnam more
than four kilometers of beach are annually nourished with approximately 500,000 cubic meters of sand
dredged from the sand trap. In Paradip we have also carried out beach nourishment projects. We own five
trailer suction hopper dredgers (Dredges XII, XIV, XVI, XVII and XIX) with shore pumping facilities
capable of undertaking reclamation and beach nourishment projects. Our two cutter suction dredgers can
also be used for reclamation work.
Major maintenance dredging assignments executed by our Company during the last ten years:
SI. No. Client Work done during the years Value of work per
year
( Average of lst 3 yrs)
(Rs. Crores)
1 Kolkata Port Trust,
Kolkata
2002-03, 2003-04, 2004-05 &2005-06,
2006-07, 2007-08, 2008-09, 2009-10,
2010-11, 2011-12
350.00
2 New Mangalore Port
Trust, Mangalore
2002-03, 2003-04, 2005-06,2006-07,
2007-08 &2008-09, 2009-10, 2010-11
38.70
3 Mormugao Port
Trust,Goa
2002-03, 2003-04, 2004-05 & 2005-06,
2008-09, 2009-10, 2010-11& 2011-12
30.45
4 Jawaharlal Nehru Port
Trust, Mumbai
2002-03, 2003-04, 2004-05,2005-06,
2006-07, 2007-08
11.65
5 Cochin Port Trust,
Kochi
2002-03, 2003-04, 2006-07 & 2011-12 54.21
6 Kandla Port Trust,
Kandla
2002-03, 2003-04, 2004-05 &2005-06 42.88
7 Mumbai Port Trust,
Mumbai
2002-03 & 2003-04 16.69
8 Paradip Port Trust,
Paradip
2002-03, 2003-04, 2004-05,2005-06,
2006-07, 2007-08, 2008-09 & 2009-10
37.45
9 Vishakhapatnam Port
Trust, Vishakhapatnam
2002-03, 2003-04, 2004-05,2005-06,
2006-07, 2007-08, 2008-09,2010-11 &
2011-12
6.33
10 Chennai Port 2003-04 12.08
11 Indian Navy, Kochi 2002-03, 2003-04, 2004-05,2005-
06,2006-07, 2007-08,2010-11 & 2011-
12
25.07
12 Ennore Port 2010-11 & 2011-12 63.31
13 Karwar Port 2011-12 30.67
85
The dredging industry’s customers include Major Ports under the administrative control of the MoS, non-
Major Ports under the administrative control of the GoI and State Governments, private ports, the Indian
Navy and shipyards. The Indian dredging market is primarily maintenance dredging-oriented. Kolkata
Port is the largest dredging customer in India and has responsibility for projects related to navigation and
development at the Haldia Dock Complex in Kolkata. In addition, the Indian Navy is responsible for
awarding contracts with respect to its own facilities.
We estimate that, based on data from the GoI’s 12th Five-Year Plan, Major Ports represent approximately
53% of the overall Indian dredging market by volume.
Contracts and Pricing
The MoS vide letter No. PO-28015/8/2000-DRG Delhi dated February 12, 2007 issued the Dredging
Policy to be followed by major ports with effect from April 1, 2007 for a period 3 years. Further by a
letter dated November 16, 2010, the MoS stated that the Major Ports shall continue to follow the existing
policy till the new policy is issued. The guidelines as per the existing dredging policy are as under:-
(i) All major ports shall invite open competitive bids for dredging works and Indian companies
owing Indian flag dredgers, including our Company shall have the right of first refusal if the
rate is within 10% of the lowest valid offer. This would apply to both maintenance and capital
dredging works with sole exception of the maintenance dredging requirement of Kolkata Port
for which separate instructions shall apply.
(ii) If more than one company owes an Indian flag dredger participates in the tender, the right of
first refusal will go to that Indian company which has quoted the lowest rate and is within 10%
of the lowest valid offer.
(iii) All major ports may strictly adhere to the guidelines issued by the Central Vigilance
Commission from time to time for processing the tenders in a transparent manner. Ports may
ensure that a prequalification criteria is fixed in advance and should not be very stringent to
restrict entry of certain potential Indian bidders. The prequalification conditions should be
exhaustive, yet specific. The prescribed conditions should be clearly specified in the bid
documents to ensure fair competition and transparency. Detailed instructions in this regard will
be issued separately.
(iv) GoI through the Department of Shipping reserves the right to assign, in public interest, any
contract for dredging work in any of the major ports to us on nomination.
(v) Guidelines issued by DG(Shipping), Mumbai from time to time in terms of the relevant
provisions of Merchant Shipping Act, 1958 shall be applicable.
We have a significant market share in the Indian dredging market primarily because of us being the
premier PSU dredging company in India. As per the existing policy, all major ports shall invite open
competitive bids for dredging works and Indian companies owing Indian flag dredgers, including our
Company shall have the right of first refusal if the rate is within 10% of the lowest valid offer. This would
apply to both maintenance and capital dredging works with sole exception of the maintenance dredging
requirement of Kolkata Port for which separate instructions shall apply. Owing to the competitive edge,
the Company has been able to bag contracts on open competitive bids. The dredging work at Kolkata
(Haldia) is being executed on nomination basis.
Payment Patterns
The standard units of measurement for payment under our current dredging contracts are:
Daily rate, which is normally utilized where the customer requires flexible deployment of dredgers
in different areas at different times. Daily rate contracts are based on a number of variables beyond
the control of the customer and contractor. We, therefore, charge our customers based on the
number of days the dredger has operated, regardless of the quantity dredged, excluding days when
the dredger is not available for work as a result of breakdowns and maintenance;
In situ, based on the volume of material dredged (derived from the change in the depth of the
dredging area), where the parameters effecting the quantity and quality (including density of slurry)
to be dredged can be measured accurately;
86
Hopper volume measurement, based on the volume or weight of material dredged, where the in situ
measurement is difficult. Hopper volume measurement is commonly used in maintenance dredging
projects where the siltation pattern cannot be established and more than one contractor is working in
the same area. There are three basic methods of measuring hopper volume: absolute volume in the
hopper, volume in the hopper relative to the in situ volume and absolute weight of dry solids in the
hopper;
Depth achieved in dredging, which is performance based; and
Lump sum basis, for certain maintenance dredging contracts where the price of the contract is fixed
per tender and certain key requirements such as minimum depth, width and tolerance levels are pre-
determined. We are exposed to certain operational risks such as unexpected soil conditions or
weather under these lump sum contracts, which are also performance-based.
Current Strategy and Pricing Policy for Contracts
Before initiating price negotiations we obtain details about the particular project and, based on the past
performance of similar projects, we estimate that the dredging production and the number of dredging
days. We then estimate the total cost of the project, including fixed costs, variable costs and project-
specific costs such as surveying and subcontracting. Specifically, our pricing policy is formulated
pursuant to the following factors:
Fixed and variable costs of the dredging equipment identified for deployment on the contract;
Marginal costs and standing costs of the dredging equipment, its potential utilization and idleness
in the event the contract is not awarded;
Customer loyalty and performance during the execution of past contracts; and
Long-term/short-term contract volume of work.
In addition, in the case of competitive bidding, pricing decisions are also made in light of our
competitiveness in the field and the performance of competitors under similar contracts. We have
operated for over 35 years in India and maintain an extensive database of dredging records from our own
activities. Prior dredging records help us predict sediment composition and optimum equipment
requirements. Management believes that our extensive database and our accumulated estimating and
bidding expertise allow us to be more accurate than our competitors in predicting dredging costs prior to
bidding for contracts.
Performance Bonds
For some domestic projects, dredging service providers are required to obtain bonds, which are typically
provided by banks. A bid bond is required to serve as a guarantee that if a service provider’s bid is
chosen, the service provider will sign the contract. The amount of the bond is typically 1% or 2% of the
service provider’s bid, although it may be as high as 5% in certain cases. After a contract is signed, the
bid bond is replaced by a performance bond. In some cases, where required by the customer, we also
provide a security deposit in addition to a performance bond, the purpose of which is to guarantee that the
job will be completed. A performance bond typically covers up to 10% of the contract value. A
company’s ability to obtain performance bonds with respect to a particular contract depends upon the size
of the contract, as well as the size of the service provider and its financial position.
Our projects are currently bonded by Syndicate Bank, India. We have never experienced difficulty in
obtaining Performance bonds for any of our projects.
Repairs And Maintenance
In Fiscal 2012, approximately 93% of our spare parts consumed were imported, while all of our stores,
fuels and lubricants were purchased from sources within India.
Spare Parts and Stores
87
The spare parts used in our dredgers primarily comprise dredging, propulsion, navigational engine and
auxiliary equipment as well as items such as bearings, gaskets and fasteners. Limited spare part
production facilities exist in India, resulting in longer lead times for imported spare parts. We purchase
spare parts primarily from OEMs located outside India and stores from local suppliers.
The stores used in our operations include wire, synthetic ropes, paints, general ship stores and gases. We
follow a tender system for the purchase of stores. Under this system, we float tenders to Indian suppliers
giving our specifications and accept the lowest price offered by a supplier who meets our specifications.
For spare parts, we issue standard purchase orders covering specific items for the purchase of spare parts
from OEMs.
We generally enter into two-year requirements contracts for the supply of standard stores and issue
purchase orders as and when we require spare parts. We require our suppliers to comply with stringent
quality specifications.
Fuel and Lubricant Supply
The fuels and lubricants used in our dredgers primarily comprise diesel oil, marine lubricant oil and
greases. We require our suppliers to comply with stringent quality specifications. We purchase diesel oil,
marine lubricant oil and greases from suppliers in different port cities in India where we perform dredging
operations. We do not store any fuels or lubricants other than onboard our ships.
Repairs
There are limited dredger repair facilities in India. Our principal repairs and maintenance facilities are
owned by third parties and located in India at Visakhapatnam, Cochin, Kolkata, Goa and Mumbai and
outside India in Colombo, Sri Lanka. The running repairs are undertaken by local workshops at the ports
where we conduct dredging operations.
Technology
All of our dredgers are equipped with industry-standard sophisticated instrumentation including
production meters, draught volume load monitoring systems and differential global positioning systems to
facilitate accurate and efficient dredging operations. See “Industry — Dredging Equipment and Process -
Technology”.
Equipment Certification
All our dredgers are registered under the Indian flag under the Merchant Shipping Act, 1958 and strictly
comply with all relevant national and international regulations and conventions including those for
construction, maintenance, manning, operation and safety.
As part of our effort to build a safety culture in our fleet and operations, we regularly conduct internal
audits, inspections and reviews of our safety management system.
As of date, we comply with the following international certifications:-
International Safety Management (“ISM”) Code
(i) All our dredgers (except dumb vessels Dr - VII and Dr. XVIII) and Tug- VII hold valid
safety management certificates (“SMC”).
(ii) We hold a document of compliance (“DOC”) valid till June 24, 2017. The same is
being endorsed every year after annual verification audit by DG Shipping.
Ship Security System (“ISPS”)
All our dredgers (except dumb vessels Dr. - VII and Dr. - XVIII) and Tug – VII hold valid
International Ship Security Certificates (“ISSC”).
88
Quality Management System (ISO 9001:2008)
We are certified for Quality Management System (ISO 9001:2008) by Indian Register of
Shipping (“IRQS”).
Environment Management System (ISO 14001:2004)
We are certified for Environmental Management System (ISO 14001:2004) by IRQS. All our
dredgers were issued Safety Management Certificates by the DG Shipping.
Competition
Since the opening of the Indian dredging industry to foreign competition by the GoI, a number of
international and domestic dredging companies have entered the Indian dredging market. As a result, the
Indian dredging market has become more competitive. While we continue to offer capital dredging
services in the Indian market, we are primarily focused on maintenance dredging. In the Indian dredging
market, we compete primarily with Indian dredging Companies/ Indian arms of the international dredging
companies including Jaisu Shipping, Van Oord, International Sea Ports Dredging, Mercator Lines,
MEKA Corporation, Dharti Dredging, Royal Boskalis, Jan De Nul, Dredging International, Chec
Shanghai and Great Lakes.
Marketing
We are adopting a pro-active marketing strategy for operations including:
Developing internal awareness of the importance of marketing;
Reinforcing our relationship with Major Ports in India;
Developing relationships with private port developers in India;
Establishing an effective customer feedback mechanism; and
Promoting our Company in the market through an advertising and publicity campaign.
Pursuant to this marketing strategy, we aim to commence maintenance dredging assignments as per the
specific time schedule of our customers. In addition, we no longer solely deploy dredgers on a daily basis,
but, where required by customers, we deploy dredgers on a volume dredged or on a lump sum basis,
thereby assuming the associated risks with respect to operational efficiency. We also aim to improve the
performance of all our dredging equipment to their optimum capacities.
Information Technology
Our information technology department is responsible for creating & maintaining IT infrastructure. Our
Information Technology department has developed software for payroll, finance, materials, human
resources, attendance, FS wages, dredgers inventory for maintaining the same. As per the government
guidelines, we have taken e-mail services from NIC, New Delhi. The e-mail facilities have been provided
to most of our executives. Video conferencing infrastructure has been created at our head office
connecting Haldia, Kolkata Project offices and also with Ministry of Shipping, New Delhi. As per
Government guidelines, we are hosting our official website www.dredge-india.com and tenders website
www.dcitendersonline.com on NIC servers. We do our maintenance of these websites internally.
Research and Development
As the dredging industry is heavily reliant on technology, research and development plays an integral role
in most dredging companies’ operations. Historically, because of the lack of competition in the Indian
89
dredging market, our research and development activities were limited. However, we are undertaking a
study on fuel oil consumption on our dredgers and production by overflow duct position as a part of our
research and development initiatives so as to reduce our cost of operations.
Insurance
We maintain insurance to cover risks of loss or damage to our equipment, injury to our employees and
damage or injury to third parties, subject to policy limitations and deductibles for which we are self-
insured. We make estimates and assumptions that affect the reported amount of liability and the
disclosure of contingent liabilities.
Training
We offer our employees a range of human resources training programs provided by third parties, from
general management to specific programs on project management, operations management, survey and
soil mechanics, dredging technology and information technology. We also sponsor employee
participation in a number of external training programs, conferences and seminars organized by reputable
training institutions.
Employees
The manpower position as on December 31, 2012 is as under:
Shore Employees
Executive 181
Non-Executive 157
Total – Shore Employees – A 338
Floating Regular Contract
Officers 127 48 175
Petty Officers 22 80 102
CREW 129 87 216
MPWs 01 35 36
Total Floating Employees – B 279 250 529
Total Employees (A+B) 867
Floating Staff
Our floating staff consists of officers, petty officers, crew and monthly-paid workers who work on our
dredgers and other floating craft on a shift basis. Our dredger staffing levels comply with safe manning
provisions of the Merchant Shipping Act, 1958 and DG Shipping guidelines that we receive from time to
time. Our current staffing levels of 30 to 40 employees per dredger are generally higher than those of
foreign dredging companies. This is partly a result of historical employment practices, as well as foreign
companies outsourcing certain activities and the use of multi-skilled workers in foreign fleets.
Shore Staff
Our shore staff consists of non-executive staff and executives at both our head office and our project
offices who provide shore support to our fleet operations. A productivity-linked incentive scheme covers
all full-time shore staff as per the DPE Guidelines. The scheme pays each employee as a percentage of
their basic pay based upon the category of employee and the rating of our Company with respect to
efficiency, financial and operating parameters as stated in the Memorandum of Understanding between
the MoS and our Company signed at the beginning of the relevant fiscal year.
Management Reviews
Our management, which comprises full-time directors and department heads, carries out comprehensive
reviews of our different departments every month. They review the progress made towards the goals for
90
each department, analyze the deficiencies and take corrective action. They receive inputs for these
reviews from internal audits that are carried out by our safety cell. Our management also conducts
periodic performance reviews that focus on contract performance, customer feedback and status of
corrective and preventive actions undertaken.
Property
The details of our immovable properties, freehold as well as leasehold are as set forth below:
S.No. Location Address Area Remarks
1 Registered Office
Delhi
Core-2, First
Floor“Scope
Minar”
Plot No. 2A & 2B,
Laxmi Nagar,
District Centre,
New Delhi 110-
091.
83.46 square
meters
Owned
2 Corporate/Head Office
Visakhapatnam
“Dredge House”
Port Area,
Visakhapatnam
530-035
2093.7 square
meters
The building owned
by our Company and
is built on leasehold
land from
Visakhapatnam Port
Trust
3 Project Office,
Visakhapatnam
Survey No 2/6
Lova Gardens,
Yerada,
Gandhigram,
Visakhapatnam
576 square
meters
The building owned
by our Company and
is built on leasehold
land from
Visakhapatnam Port
Trust
4 Project Office,
Mumbai
Office No101 A
10th Floor.
Mittal chambers
Nariman Point,
Mumbai 400-021
617 square feet Owned
In addition to the above office premises, the Company owns six residential flats in Mumbai and nine
residential flats in Kolkata. Further, our Company owns a 1.10 acre plot of land in Visakhapatnam.
91
HISTORY AND CERTAIN CORPORATE MATTERS
Brief background of our Company
Our Company was incorporated as a private limited company under the provisions of the Act on March 29,
1976. Subsequently the word ‘private’ was deleted from the name of the Company on January11, 1977 in
view of it being a government company. The Company became a public company limited by shares with
effect from March 10, 1992. In 1992, the Government of India disinvested 1.44% of its shareholding in our
Company and subsequently the Equity Shares of our Company got listed on BSE, CSE and DSE. In 2004,
our company’s Equity shares were listed on NSE.
We were declared as a Mini Ratna – Category I public sector enterprise by a letter no. PD/28028/39/97-
DCI dated November 8, 1999 issued by the GoI and were granted greater autonomy with respect to
financial and operational areas, establishment of joint ventures, overseas offices and technology alliances,
among other areas, subject to the fulfillment by us of the conditions contained in DPE Office
Memorandum No.11/36/97-Fin dated October 9, 1997, as amended till date.
In 2004, the President of India disinvested its shareholding upto an extent of 5,600,000 Equity Shares of
our Company through an offer for sale.
Changes in registered office of our Company since incorporation
Previous Address New Address Date of Change
Room No. 528, Transport
Bhavan, 1, Parliament Street,
New Delhi – 110001
212, Kanishka Shipping Plaza, 19 Ashok
Road, New Delhi – 110001
August 1, 1990
212, Kanishka Shipping Plaza,
19 Ashok Road, New Delhi -
110001
Core – 2, First Floor, “Scope Minar”,
Plot No. 2A & 2B, Laxminagar District
Centre, Delhi – 110091
May 1, 2010
Major events and Milestones
Date Major milestone/ achievement
March 1976 Our Company was incorporated as a private company limited by shares under the
name of Dredging Corporation of India Limited.
March 1992 Disinvestment by the GoI of 1.44% of its shareholding in the equity share capital
of our Company.
March 1992 Conversion of our Company from a private company limited by shares to a public
company limited by shares.
October 1992 Listing of the share capital of our Company on the BSE, the CSE and the DSE.
November, 1999 Our Company was declared Mini Ratna - Category - I public sector enterprise.
April 2002 Re-categorisation of our Company as a Schedule-B public sector enterprise vide
letter no.PD-28028/51/99-DCI issued by the MoS (Ports Wing).
January 2004 Listing of the share capital of our Company on NSE.
March 2004 Disinvestment by the GoI of 20% of its shareholding in the equity share capital of
our Company.
April 2010 Ministry of Shipping vide its letter no. 9/4/10 conveyed the approval of Cabinet
Committee on Infrastructure to the procurement of three new Trailer Suction
Hopper Dredgers of 5500 Cu.M capacity each by DCI at the total indicative price
of Euro 250 Mln equivalent to `1,570.21 crores at the exchange rate of 1 Euro =
`62.81 as on February 6, 2009 i.e date the date of opening of price bid, payable at
exchange rate prevailing on the date of stage payment.
April 2010 Contract for two TSHD of 5500 cubic meter hopper capacity signed with IHC
Dredgers BV, Holland
92
As on February 15, 2013, the total number of holders of Equity Shares was 51,755.
Our Company is not operating under any injunction or restraining order.
Capital Raising Activities through Equity and Debt
For details in relation to our capital raising activities through equity and debt, see the sections titled
“Capital Structure” and “Financial Indebtedness” on pages 51 and 109, respectively.
Defaults or Rescheduling of Borrowings with Financial Institutions/ Banks
For details in relation to defaults or rescheduling of borrowings with financial institutions/ banks,
conversion of loans into equity, see the section titled “Financial Indebtedness”on page 109.
Main objects of our Company
The main objects of our Company as contained in our Memorandum of Association are:
To acquire and take over from the government of India the MOT (Ministry of Shipping and
Transport) Dredger pool and Central Dredging Organisation along with all or any of the assets,
liabilities, responsibility and commitments of Government of India in connection therewith on which
terms and conditions as may be determined between the government and the company on its
incorporation.
To carry on all or any other business of owners, operators, contractors, charterers, agents, builders,
wrights, brokers, repairers, refitters or vendors and/ or salvagers of dredgers and dredging equipment
of all kinds including equipment afloat and ashore, ships, oil tankers, supporting craft, tugs, survey
ships, light ships, barges, launches, lighters, floating cranes, bouys, supply vessels, drilling platform,
submercibles, amphibian vehicles, helicopters, marine structure of all kinds, pipe lines and special
purpose vessels.
To carry on all or any of the business of dredging, drilling, blasting, land reclamation, shore
nourishment, ocean, harbour and inland towage, marine salvage, marine construction, subsea
structures, surveys and associated work on land, in and under water in any part of the world.
To carry on all or any of the business of proprietors, managers and/or operators of moorings,
wharves, jetties and piers.
To carry on the business of engineers, manufactures, repairers, assemblers, processors and/or fitters
of engines, boilers, machinery and equipments and components thereof for dredgers and vessels of all
kinds and uses.
To carry on the business of consultants in all fields in which the company is engaged or authorised to
engage in, including, dredging operations and management, dredging equipment design, marine,
mechanical, electrical, civil, metallurgical, land reclamation and associated works, harbour
engineering, beach nourishment and shore protection, manufacture of dredgers, salvage equipment
and ancillaries therefor, planning , layout, repair, design or work necessary for execution of all the
above works for the benefit of the company itself or for outside party with or without remuneration.
Amendments to our Memorandum
The following changes have been made to our Memorandum since incorporation:
February 2011 Contract for third TSHD of 5500 cubic meter hopper capacity signed with IHC
Dredgers BV, Holland
November 2012 Delivery of DCI Dredge XIX by IHC Dredgers BV, Holland to our Company.
December 2012 DCI DRXIX dedicated to the Nation.
93
Date of shareholders resolution Details
March 10, 1992 Alteration of equity share capital from ` 300,000,000 divided into 300,000 equity shares of ` 1000/- each to 30,000,000 Equity shares.
Details regarding acquisition of business/undertakings, joint ventures, mergers, amalgamation,
revaluation of assets
Our Company has neither acquired any entity, business or undertakings nor undertaken any joint
ventures, mergers, amalgamation, or revaluation of assets in one year prior to the date of this Draft
Prospectus.
Details of Reorganisation or Reconstruction
Our Company has not undertaken any reorganisation or reconstruction in one year prior to the date of this
Draft Prospectus.
Holding entity- Our Promoter
Our Promoter is the President of India, acting through the MoS, holding 78.56% of our Equity Share
capital as on the date of this Draft Prospectus.
Details regarding subsidiaries of our Company
Our Company has no subsidiaries.
Changes in our statutory auditors over last three years
Name of the Auditors and
Address
Date of Appointment/
Resignation
Auditor since Remarks
G.R.Kumar & Co.
Chartered Accountants
9 Merrylife, Doctors' Colony
Peda Waltair
Visakhapatnam - 530 017
Andhra Pradesh, India
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / Coy / Central
Government, Dredco (1) /
83 dated July 27, 2012 for
the year 2012-13
2011 - 2012
Nil
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / COY /
Central Government,
Dredco (1) / 87 dated
August 18, 2011 for the
year 2011-12.
Rao & Narayan
Chartered Accountants
Srinivasa Apartments
Flat No. 6 Raj Bhavan Road
Somajiguda
Hyderabad – 500082
Andhra Pradesh, India
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / COY /
Central Government,
Dredco (1) / 28 dated July
12, 2010 for the year 2010-
11
2008 - 2009 to 2010 -
2011
Nil
94
Name of the Auditors and
Address
Date of Appointment/
Resignation
Auditor since Remarks
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / COY /
Central Government,
Dredco (1) / 17 DT August
12, 2009 for the year 2009-
10
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / COY /
Central Government,
Dredco (1) dated July 31,
2008 for the year 2008-09
Key terms of our Material Agreements
Our Company has not entered into any material agreement which is out of ordinary course of business.
95
OUR MANAGEMENT
Board of Directors
The management of our affairs and business are supervised by our Board. In accordance with the Articles,
we are required to maintain a minimum of 4 (four) and a maximum of 12 (twelve) Directors on our
Board. Currently, we have 7 (seven) Directors on our Board. All Directors in our company are appointed
by the Promoter, the President of India, acting through the MoS.
Details relating to Directors as on the date of this Draft Prospectus
Name, Designation,
Age, DIN and
Occupation
Nationality Director of the
Company since
Address Other Directorships
Capt. D.K. Mohanty
Chairman and
Managing Director
Age: 57 years
DIN: 01513863
Occupation: Service
Indian
November 30,
2011
Dr. No. 15-3-27,
Opposite Century
Club, Maharanipeta
Visakhapatnam-530
002
1. Sethusamudram
Corporation
Limited; and
2. Indian National
Ship Owners
Association.
Mr. P.V. Ramana
Murthy
Director(Finance)
Age: 58 years
DIN: 01953748
Occupation: Service
Indian December 5, 2007 50-52-9/3, HIG-4
Seethammadhra
North Extension
Visakhapatnam – 530
013
Nil
Mr. P.Jayapal Director(Operational
and technical)
Age: 57 years
DIN: 03512808
Occupation: Service
Indian April 18, 2011 Flat No. 111
Akshaya Aspira
MIG 66 Kirlampudi
Layout
Visakhapatnam –
530 017
Nil
Mr. M.C. Jauhari
Non Executive Director
Age: 50 years
DIN: 05216913
Occupation: Service
Indian June 21, 2012 A-6, Tower-6
New Moti Bagh
New Delhi
1. Shipping
Corporation
Limited; and
2. Cochin Shipyard
Limited
Mr. Balachandran
Srinivasan
Independent Director
Age: 66 years
Indian November 11,
2011
D-1/38, Rabindra
Nagar, New Delhi
India 110 003
1. PTC India
Limited;
2. PTC Energy
Limited;
3. ONGC Petro
additions
96
Name, Designation,
Age, DIN and
Occupation
Nationality Director of the
Company since
Address Other Directorships
DIN: 01962996
Occupation: Retired
Limited; and
4. United Stock
Exchange
Limited
Dr. S. Narsimha Rao
Independent Director
Age: 71 years
DIN: 00602734
Occupation: Retired
Indian December 6, 2010 IIT Madras
Neelsagar Apartments
1st North Cross St.
24-25, Kapaleeswar
Nagar, Nilanganai
Chennai-600 041
Karaikal Port Limited.
Mr. Vinai Kumar
Agarwal
Independent Director
Age: 62 years
DIN: 00233282
Occupation: Retired
Indian November 11,
2011
114-B, Hamilton
Court, DLF Phase
IV, Gurgaon,
Haryana, India 122
009
1. KIOCL Limited;
and
2. NMDC Limited
None of the Directors are on the RBI defaulter list and/or the Export Credit Guarantee Corporation
default list.
Profile of Directors
Capt. D. K. Mohanty, aged 57 years is Chairman and Managing Director on the Board of our Company.
He holds a degree in bachelor’s of arts from the Indira Gandhi National Open University and has been
granted a certificate of service as master of foreign - going ship in the merchant navy by the GoI. He has
wide experience in shipping and port related sectors spanning over more than 30 years. Previously he had
worked as Director (Marine Services) in Ennore Port Limited and Deputy Conservator in Paradip Port
Trust.
Mr. P.V. Ramanamurthy, aged 58 years, is Director (Finance) of our Company. He holds a degree in
bachelors of commerce from the Andhra University and is a certified chartered accountant from the
Institute of Chartered Accountants of India. Prior to joining our Company he was the general manager
(finance) in Bharat Dynamics Limited. He also worked in Andhra Pradesh State Financial Corporation
and Hindustan Aeronautics Limited.
Mr. P.Jayapal, aged 57 years is Director (Operational and technical) of our Company. He holds a
bachelor’s degree in science from the Madurai University, a master’s degree in philosophy from the
Punjab University, a master’s degree of science in defence and strategic studies from the University of
Madras and is granted a certificate of service as master of foreign - going ship in the merchant navy by
the GoI. He is a master mariner and is a "charge hydrographic surveyor" from the Indian Navy. Prior to
joining our Company, he served in Indian Navy as Commodore in the Embarkation Head Quarters -
Chennai. He has wide experience in hydrographic and ocean surveys and harbour management,
hydrographic training, dredging and harbour maintenance etc.
Mr. M.C. Jauhari, aged 50 years is an Independent Director on the Board of our Company. He is a post
graduate in physics and graduated in physics, mathematics and statistics. He is from Indian
Administrative Service and joined Ministry of Shipping as Joint Secretary (Shipping) in January, 2012.
He has worked as Joint DG/Director in DGFT in Ministry of Commerce & Industry, GoI, New Delhi. He
97
has experience in land revenue administration, labour & employment, town & country planning, science
& technology, foreign trade, agriculture & co-operation, personnel & general administration, planning &
programme implementation etc. He is also director of GoI on the board of Shipping Corporation of India
Limited and Cochin Shipyard Limited.
Mr. Balachandran Srinivasan, aged 66 years is an Independent Director on the Board of our Company.
He holds a bachelor‘s degree in chemistry from Madras University and a master‘s degree in chemistry
from Madurai University. Mr. Balachandran was a member of Indian Railway Accounts Service,
additional member (Budget) in the Railway Ministry and also served as a managing director of Indian
Railway Finance Corporation Limited, a Public Financial Institution. He has also served as a director on
the board of Railtel Corporation (Public Sector Undertaking), Pipavav Rail Corporation and Karnataka
Rail Infrastructure Development Enterprises (Joint Ventures). He served as Deputy Secretary of Union
Public Service Commission and as joint director of the Office of the Comptroller and Auditor General of
India. He had served with Nigerian Railway Corporation as Chief Data Processing Officer in Lagos.He
was an independent Director in the Board of ONGC during 2008-2011.He is presently independent
director on the board of PTC Energy Limited, PTC India Limited, ONGC Petroadditions Limited and
United Stock Exchange Limited.
Dr. S. Narsimha Rao, aged 71 years, is an Independent Director on the Board of our Company. He holds
doctorate in soil mechanics from Indian Institute of Science, Bangalore, master’s degree in engineering
(soil mechanics) from Regional Engineering College, Waangal and bachelor’s degree in engineering
(civil) from Andhar University Engineering College, Waltair. He holds expertise in the field of dredging,
soil mechanics etc., and has rich experience in these fields. He is a project co-ordinator for many major
ports for CPWD, state PWD, power projects, fertilizer complexes, major irrigation project, major projects
for port and harbours. He is involved in developing some of recent modern ports like Kandla and Pipav
Port in West Coast of India. He has worked as lecturer, assistant professor, professor and professor
emeritus at Indian Institute of Technology (“IIT”), Madras, during the period between 1974 and 2006. He
was the head of the department of Ocean Engineering at IIT, Madras during the period between 1991 and
1994 and head, placement and training at IIT, Madras during the period between 2001 and 2003.
Mr. Vinai Kumar Agarwal, aged 62 years is an Independent Director on the Board of our Company. He
graduated in science and holds bachelor’s degree in engineering (civil) from IIT Roorkee (formerly
University of Roorkee). He joined the Indian Railway Service of Engineers (“IRSE”) on December 5,
1975 and retired on April 30, 2004. He worked as divisional railway manager, Jaipur and Delhi at IRSE.
He joined RITES Limited, as managing director on April 30, 2004 and resigned on October 31, 2010. He
also worked as an executive director – public grievances, land management and track modernisation,
Ministry of Railways, empanelled as Joint Secretary, GoI. He has extensive exposure in African countries
as chairman of board of directors of the two subsidiaries of RITES Limited. He is also an independent
director on the board of KIOCL Limited and NMDC Limited.
None of the Directors are on the RBI defaulter list and/or the Export Credit Guarantee Corporation
default list.
Our Company has not designated a Chief Financial Officer and finance functions are managed by Mr
P.V. Ramana Murthy, Director (Finance).
Appointment and Remuneration of the Managing Director and Whole-time Director
Our Company being a Government of India Undertaking, the remuneration payable to its Whole-time
Directors is in accordance with the rules and regulations prescribed by the MoS, GoI.
Capt. D. K. Mohanty
The MoS, GoI has appointed Capt. D. K. Mohanty, Chairman and Managing Director of our Company
vide letter dated November 18, 2011 for a period of 5(five) years from the date of assumption of the
charge of the post or till the date of his superannuation or until further order, whichever event occurs the
earliest at a remuneration of ` 75,000 to ` 90,000 per month. Capt. D. K. Mohanty consented to act as a
98
Director of our Company with effect from November 30, 2011, pursuant to consent letter dated November
30, 2011.
Mr. P.V. Ramanamurthy
The MoS, GoI has appointed Mr. P.V.Ramana Murthy as Director (Finance) of our Company vide letter
dated November 7, 2007 for a period of five years from the date of assumption of the charge of the post
on or after December 1, 2007 or till the date of his superannuation or until further order, whichever event
occurs the earliest. His remuneration as per the DPE Guidleines is in the range at a pay scale of ` 65,000
to ` 75,000 per month. The Ministry of Shipping vide letter dated January 21, 2013 conveyed the
approval of ad-hoc extension of tenure of Mr. P.V.Ramana Murthy, for a period of three months with
effect from December 5, 2012 to March 4, 2013 or until further order, whichever is earlier.
Mr. P.Jayapal
The Ministry of Shipping, Government of India has appointed Mr. P Jayapal as Director (Operational and
Technical) vide letter dated January 20, 2011 for a period of 5(five) years for a period of five years from
the date of assumption of the charge of the post or till the date of his superannuation or until further order,
whichever event occurs the earliest at a pay scale of ` 65,000 to ` 75,000 per month. Mr. P. Jayapal
consented to act as a Director of our Company with effect from April 18, 2011, pursuant to consent letter
dated April 18, 2011.
The remuneration paid to the Executive Directors of our Company in Fiscal 2012 is as mentioned below:
(` in lakhs)
Sr.
No.
Name of the
Director
Remuneration Performance
related incentive
Sitting Fees Total
1. Capt. D. K.
Mohanty
8.38 Nil Nil 8.38
2. Mr. P.V.
Ramanamurthy
20.49 Nil Nil 20.49
3. Mr. P.Jayapal 19.50 Nil Nil 19.50
Remuneration of Non-Executive Directors
The Non-Executive Directors were paid sitting fees of ` 10,000 for each Board meeting and ` 5,000 for
each committee meeting of our Company. The sitting fees for committee meetings was increased to ` 10,000 with effect from March 29, 2012.
The remuneration paid to the Non-Executive Directors of our Company in Fiscal 2012 is as mentioned
below:
(` in lakhs)
Sr.
No.
Name of the
Director
Remuneration Performance
related incentive
Sitting Fees Total
1. Dr. S. Narsimha
Rao
Nil Nil 1.45 1.45
2. Mr. Vinai Kumar
Agarwal
Nil Nil 0.80 0.80
3. Mr. Balachandran
Srinivasan
Nil Nil 1.55 1.55
4. Dr. Debashis*
Sanyal
Nil Nil 0.05 0.05
5. Mr. A.
Soundararaajan**
Nil Nil 0.05 0.05
6. Mr. M.C. Jauhari# Nil Nil Nil Nil
99
*Tenure ended on April 15, 2011.
** Tenure ended on April 15, 2011.
#Appointed with effect from August 21, 2012.
Borrowing Powers of the Board
Pursuant to resolution passed by the shareholders of our Company at our AGM held on September 28,
2012 and in accordance with provisions of Section 293 (1)(d) of the Act, the Board has been authorised to
borrow sums of money as they may deem necessary for the purpose of the business of our Company upon
such terms and conditions and with or without security as the Board of Directors may think fit, provided
that money or monies to be borrowed together with the monies already borrowed by our Company (apart
from temporary loans, including working capital facilities obtained from our Company’s bankers in the
ordinary course of business) shall not exceed ` 25,000 million.
The aggregate amount of the Issue including existing borrowings of our Company is within the borrowing
limits of the Board.
Interest of the Directors
All the directors of our Company, including our non-executive and independent Directors, may be
deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the board
or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses
payable to them. The managing director and executive Directors of our Company is interested to the
extent of remuneration paid for services rendered as an officer and/or employee of our Company.
None of the Directors of our Company had any interest in properties purchased, acquired or taken on
lease by our Company over the last two years.
All the directors of our Company, including non-executive directors, may also be deemed to be
interested to the extent of Equity Shares, if any, held by them or by companies, firms and trusts in which
they are interested as directors, partners, members or trustees and also to the extent of any dividend
payable to them and other distributions in respect of the said Equity Shares.
All our directors may be deemed to be interested in the contracts, agreements/arrangements entered into
or to be entered into by our Company with any company in which they hold directorships or any
partnership firm in which they are partners as declared in their respective declarations. Except as
otherwise stated in this Draft Prospectus in the “Related Party Transactions” under the section titled
“Financial Statements” on page 108 and statutory registers maintained by our Company at the
Registered Office in this regard, our Company has not entered into any contract, agreements or
arrangements during the preceding two years from the date of this Draft Prospectus in which the
directors are interested directly or indirectly and no payments have been made to them in respect of
these contracts, agreements or arrangements which are proposed to be made with them.
Our Company’s Directors have not taken any loan from our Company.
Debenture holding of Directors:
As on date of this Draft Prospectus, the Directors of our Company does not hold any debentures of the
Company.
Changes in our Board during the last three years:
The change in the Board of Directors of our Company in the three years preceding the date of this Draft
Prospectus is as follows:
100
Serial
No.
Name of the Director, DIN and
Designation
Date of
Appointment
Date of
Cessation
Remarks
For the period between April 1, 2012 to February 20, 2013
1. Mr. M.C.Jauhari,
Part-time Official Director
DIN : 05216913
June 21, 2012 Continuing Letter from
Ministry of
Shipping No.
SS
11012/1/2012-
SY-II dated
June 21, 2012
2. Mr. Rakesh Srivastava
Part-time Official Director
DIN : 00321459
- June 21, 2012
For the period between April 1, 2011 to March 31, 2012
3. Mr. P.Jayapal
Director (Operations &
Technical)
DIN : 03512808
April 18, 2011 Continuing Letter from
Ministry of
Shipping PO-
28028/15/2008-
DCI dated
January 20,
2011
4. Capt.D K Mohanty,
Chairman and Managing Director
DIN : 01513863
November 30,
2011
Continuing Letter from
Ministry of
Shipping no.
PO-
28028/16/2010-
DCI dated
November 18,
2011
5. Mr. S.Balachandran
Part-time Non-Official Director
DIN : 01962996
November 11,
2011
Continuing Letter from
Ministry of
Shipping no.
PO-
28028/18/2010-
DCI dated
October 17,
2011
6. Mr. Vinai Kumar Agarwal
Part-time Non-Official Director
DIN : 00233282
November 11,
2011
Continuing
7. Dr.Debashis Sanyal
Part-time Non-Official Director
DIN : 02055625
April 16, 2011 Letter from
Ministry of
shipping no.
PO-
28028/18/2010-
DCI dated
January 17,
2011
8. Mr. A.Sounderaraajan
Part-time Non-Official Director
DIN : 02180519
April 16, 2011
9. Dr.Gautam Barua
Part-time Non-Official Director
DIN : 01226582
April 16, 2011
10. Mr. S.Balachandran
Part-time Non-Official Director
DIN : 01962996
April 16, 2011
11. Dr.A.R.Goyal
Part-time Official Director
DIN : 01956010
March 7, 2012 Letter from
Ministry of
Shipping No.
PO-
28028/14/2011-
DCI dated
March 15, 2012
For the period between April 1, 2010 to March 31, 2011
12. Dr.S.Narasimha Rao
Part-time Non-Official Director
DIN : 00602734
December 6,
2010
Continuing Letter from
Ministry of
Shipping No.
101
Serial
No.
Name of the Director, DIN and
Designation
Date of
Appointment
Date of
Cessation
Remarks
PO
28028/39/97-
DCI dated
December 6,
2010
13. Mr. P.Sridharan
Director (Operations &
Technical)
DIN : 02377633
November 30,
2010
On
Superannuation
DCI OO No.
163/2010 dated
November 30,
2010
14. Capt.S.S.Tripathi
Chairman and Managing Director
DIN : 01843411
March 4, 2011 Letter from
Ministry of
Shipping No.
PO-
28028/20/2006-
DCI dated
March 4, 2011
For the period between April 1, 2009 to March 31, 2010
15. Shri P. Sridharan,
Director (Operations &
Technical)
DIN : 02377633
August 20, 2009 Superannuation
16. Dr.S.Narasimha Rao
Part-time Non-Official Director
DIN : 00602734
March 4, 2010 Letter from
Ministry of
Shipping
No.28028/39/97
-DCI dated
August 13,
2007
Shareholding of Directors, including details of qualification shares held by Directors
As per the provisions of our MOA and AOA, Directors are not required to hold any qualification shares.
None of our Directors hold any Equity Shares of our Company.
Details of various committees of the Board
Our Company has constituted the following committees:
A. Audit Committee
The members of the Audit Committee as on the date of this Draft Prospectus are:
1. Mr. S.Balachandran;
2. Dr. S. Narasimha Rao; and
3. Mr. Vinai Kumar Agarwal.
The terms of reference of the Audit Committee, inter alia, include:
1. Oversight of the Company’s financial reporting process and the disclosure of its financial
information to ensure that the financial statement is correct, sufficient and credible;
102
2. Recommending the remuneration to be paid to the Auditors and fees to be paid to the Auditors
for any other services rendered by them ;
3. Reviewing, with the management, the annual financial statements before submission to the board
for approval, with particular reference to:
a. Changes, if any, in accounting policies and practices and reasons for the same;
b. Major accounting entries involving estimates based on the exercise of judgment by
management;
c. Significant adjustments made in the financial statements arising out of audit findings;
d. The going concern assumption;
e. Compliance with stock excahnge and other legal requirements relating to financial
statements;
f. Disclosure of any related party transactions; and
g. Qualifications in the draft audit report.
4. Reviewing, with the management, the quarterly financial statements before submission to our
Board for approval; Reviewing, with the management, performance of statutory and internal
auditors, adequacy of the internal control system;
5. Reviewing the adequacy of internal audit function, if any, including the structure of the internal
audit department, staffing and seniority of the official heading the department, reporting
structure, coverage and frequency of internal audit;
6. Discussion with internal auditors in relation to any significant findings and follow-up there on;
7. Reviewing the findings of any internal investigations by the internal auditors into matters where
there is suspected fraud or irregularity or a failure of internal control systems of a material nature
and reporting the matter to our Board;
8. Discussion with statutory auditors before the audit commences, about the nature and scope of
audit as well as post-audit discussion to ascertain any areas of concern;
9. Reviewing the Company’s financial and risk management policy;
10. To look into the reasons for substantial defaults in the payment to the depositors, debenture
holders, shareholders (in case of non-payment of declared dividends) and creditors;
11. To receive and consider the periodical report on the share transfers and dematerialisation of
shares; and
12. Such additional function/features as contained in the Listing Agreement with the Stock
Exchanges.
B. Remuneration Committee
The members of the Remuneration Committee as on the date of this Draft Prospectus are:
1. Mr. S.Balachandran; and
2. Mr. Vinai Kumar Agarwal
The terms of reference of the Remuneration Committee include deciding the annual bonus/ variable pay
pool and policy for its distribution across the executives, within the prescribed limits.
C. Shareholders and Investors Grievance Committee
The members of the Shareholders and Investors Grievance Committee as on the date of this Draft
Prospectus are:
1. Dr. S. Narasimha Rao;
2. Mr. S.Balachandran; and
3. Mr. P.V. Ramanamurthy.
The terms of reference of the Shareholders and Investors Grievance Committee, inter alia, include:
1. Redressal of the shareholders complaints and queries;
2. Review the status of shareholders/investors grievances and services and recommend appropriate
action;
3. Consider and select suggestions given by shareholders for recommending to the Board;
4. Review the dissemination of information to shareholders/investors;and
103
5. Other matters of shareholders/investors interest.
D. Finance Committee
The members of the Finance Committee as on the date of this Draft Prospectus are:
1. Mr. S.Balachandran;
2. Mr.M.C.Jauhari; and
3. Mr. P.V. Ramanamurthy.
The terms of reference of the Finance Committee, inter alia, include examining the avenues for financing
including the issue of tax free infrastructure bonds for financing the third trailer suction hopper dredger
and other capital acquisitions and give its recommendation to the Board.
E. Project Review Committee
The members of the Project Review Committee as on the date of this Draft Prospectus are:
1. Mr. Vinai Kumar Agarwal;
2. Dr.S.Narasimha Rao; and
3. Mr. S.Balachandran.
The terms of reference of the Project Review Committee, inter alia, include to review the projects being
executed by our Company and also prospective projects and give its recommendations / directions as may
be necessary to the management of our Company.
F. Share Trasnsfer Committee
The members of the Share Transfer Committee as on the date of this Draft Prospectus are:
1. Capt. D. K. Mohanty, (Chairman and Managing Director);
2. Mr. P. Jayapal, Director (Operations and Technical); and
3. Mr. P.V. Ramana Murthy, Director (Finance)
The terms of reference of the Share Tranfser Committee is to conder and the approve the transfer
transmission of shares of the Company.
Payment of benefits and profit-share to Employees
Our employees are not entitled to any payment of benefits or share in the profits of our Company.
Key Management Personnel:
The organisational structure of our Company is as under:
104
The key management personnel of our Company, apart from our Executive Directors are as follows:
Mr. Divakar, aged 44 years, is a general manager-operations department of our Company. He holds a
degree in bachelor’s of commerce from CMJ University, Meghalaya and a certificate of competency as
dredge master grade-I from Directorate General of Shipping, GoI. He is associated with our Company
since December 19, 2012. Prior to joining our Company, he was associated with Mercator Lines Limited
and was a floating officer of our Company for the period between 1994 and 2007.
Mr. A Krishna Rao, aged 53 years, is a general manager-technical department of our Company. He holds
degree of bachelor of engineering in mechanical marine from the Andhra University and has been issued
certificate of competency as marine engineer officer class-I by the Government of India. He is associated
with our Company since May 12, 2003 in the offshore establishment and was associated with the floating
establishment of our Company since 1989. The remuneration paid to him in Fiscal 2012 was ` 1.53
million.
Mr. M.S. Rao, aged 48 years, is a general manager-project engineering and marketing department of our
Company. He holds degree of bachelor of technology in civil engineering from the Kakatiya University
and masters in business administration from the Andhra University. He is associated with our Company
since August 30, 2006. Prior to joining our Company, he was associated with NABARD, CEMAS
Consultants and Small Industries Development Bank of India. The remuneration paid to him in Fiscal
2012 was ` 1.39 million.
Mr. T Prasada Rao, aged 58 years, is a joint general manager-human resource department of our
Company. He holds degree in bachelors of arts and masters of arts from the Andhra University and
bachelor of laws from the Andhra University. He is associated with our Company since June 2, 1977. The
remuneration paid to him in Fiscal 2012 was ` 1.62 million.
Mr. P.P. Govindachari, aged 56 years, is a general manager-finance department of our Company. He
holds bachelors degree in commerce from the Andhra University and is a certified chartered accountant
from the Institute of Chartered Accountancy of India. He is associated with our Company since March 13,
1997. Prior to joining our Company, he was associated with Hindustan Shipyard Limited. The
remuneration paid to him in Fiscal 2012 was ` 1.81 million.
Mr. K. Radhakrishna, aged 59 years, is a joint general manager-internal audit department of our
Company. He holds bachelors degree in commerce from the Andhra University and is a certified
chartered accountant from the Institute of Chartered Accountancy of India. He is associated with our
Company since December 5, 1986. Prior to joining our Company, he was associated with Bharat Heavy
Plates and Vessels Limited, Visakapatnam for eight years. The remuneration paid to him in Fiscal 2012
was ` 1.37 million.
105
Mr. V.V. Narasimha Murthy, aged 59 years, is a deputy general manager-information technology
department of our Company. He holds a master’s degree in science (chemistry) from the Andhra
University, post graduate diploma in applied statistics from the Andhra University and masters in
business administration from the Andhra University. He is associated with our Company since January
31, 1980. Prior to joining our Company, he was associated with Electonics Corporation of India limited
for a period for four years. The remuneration paid to him in Fiscal 2012 was ` 1.48 million.
Mr. K. Aswini Sreekanth, aged 39 years, is a company secretary of our Company. He holds a bachelor’s
degree in commerce (honours) from the University of Calcutta and is a certified company secretary from
the Institute of Company Secretaries of India. He is associated with our Company since February 1, 1999.
Prior to joining our Company, he was associated with Dolphin Laboratories Limited, Kolkata. The
remuneration paid to him in Fiscal 2012 was ` 0.94 million.
Changes in our key management personnel during the last three years:
The change in the key management personnel of our Company in the three years preceding the date of
this Draft Prospectus is as follows:
Name of the key
management
personnel
Designation Date of
Appointment
Date of
Cessation
Reason
Mr. K. Kirti General Manager
(Finance)
- October 31,
2011 Superannuated
Mr. A. Bose General Manager
(Human Resource)
- July 31,
2011
Superannuated
Capt. M.V.R.
Murthy
General Manager
(Operations)
- December 7,
2009
Resigned
Interest of Key Managerial Personnel
Except as stated in “Financial Information – Related Party Transactions” beginning on page 108 , and
to the extent of remuneration or benefits to which they are entitled as per the terms of their appointment
and reimbursement of expenses incurred by them in the ordinary course of business, the Company’s key
managerial personnel do not have any other interest in the Company. The key managerial personnel may
also be deemed to be interested in the Company to the extent they or any of their relatives are allotted
Bonds pursuant to the Issue, if any.
Payment or Benefit to Officers of the Company
On retirement, our employees are entitled to superannuation benefits. No officer or other employee of the
Company is entitled to any benefit on termination of employment in the Company, other than statutory
benefits such as provident fund and gratuity in accordance with applicable laws.
106
SECTION V : STOCK MARKET DATA FOR OUR DEBENTURES AND EQUITY SHARES
The Company has not issued any non-convertible debentures as on the date of this Draft Prospectus.
As on date, 28,000,000 of our Equity Shares were subscribed and paid up.
Our Company’s Equity Shares have been listed on BSE, DSE and CSE since December, 1992 and NSE
since January, 2004, respectively.
The following tables set forth, for the period indicated, the reported high, low and average of closing
market prices of our Equity Shares on the BSE and the number of Equity Shares traded on the days such
high and low prices were recorded, for the Fiscal years 2012, 2011 and 2010.
Fiscal
Year
High
( )
Date of
High
Number
of Equity
Shares
traded
on date
of high
Volum
e on
date of
high (
In
Million
)
Low (
)
Date of
Low
Numbe
r of
Equity
Shares
traded
on date
of low
Volume
on date
of low (
In
Million
)
Avera
ge
price
for the
year (
)*
2011
–
2012
386.0
0
April 15,
2011
46,674 17.58 187.0
5
Decemb
er 20,
2011
1,570 0.03 278.03
2010
–
2011
640.0
0
April 5,
2010
27,563
16.88 322.6
5
March
22, 2011
5,285 1.73 504.62
2009-
2010
785.9
5
January
19, 2010
871,952 665.57
228.5
0
April 1,
2009
4,234
1.00
548.96
* Average of the daily closing prices
The following tables set forth, for the period indicated, the reported high, low and average of closing
market prices of our Equity Shares on the BSE and the number of Equity Shares traded on the days such
high and low prices were recorded, in each month during the last six months preceding the date of filing
of the Draft Prospectus:
Month,
Year
High
( )
Date of
High
Number
of
Equity
Shares
traded
on date
of high
Volume
on date
of high
( in
Million
)
Low (
)
Date of
Low
Numbe
r of
Equity
Shares
traded
on date
of low
Volume
on date
of low (
in
Million
)
Avera
ge
price
for the
month
( )*
January
2013
248.0
0
January
8, 2013
4,517 1.10 214.0
0
January
31,
2013
2,256 0.50 232.30
Decemb
er, 2012
249.5
0
Decemb
er
11,2012
15,583 3.81 223.5
0
Decemb
er 28,
2012
1,910 0.43 233.32
Novem
ber,
2012
253.0
0
Novem
ber 5,
2012
8,645 2.15 228.0
0
Novem
ber 23,
2012
9,563 2.26 238.56
October
, 2012
257.0
0
October
4, 2012
13,830 3.62 232 October
31,
2012
2,828 0.67 248.67
Septem
ber,
265.0
0
Septem
ber 8,
18,77 4.89 241.0
0
Septem
ber 6,
14,271 3.85 251.94
107
Month,
Year
High
( )
Date of
High
Number
of
Equity
Shares
traded
on date
of high
Volume
on date
of high
( in
Million
)
Low (
)
Date of
Low
Numbe
r of
Equity
Shares
traded
on date
of low
Volume
on date
of low (
in
Million
)
Avera
ge
price
for the
month
( )*
2012 2012 2012
August,
2012
285.2
0
August
8, 2012
179,144 49.54 230.6
0
August
30,
2012
7,477 1.77 254.94
* Average of the daily closing prices
108
SECTION VI : FINANCIAL INFORMATION
FINANCIAL STATEMENTS
Sr.
No.
Particulars Page No.
1. Limited review report for the period ended December 31, 2012 F-1
2. Statement of unaudited financial results of our Company for the nine months
period ended December 31, 2012
F-2 – F-6
3. Audit report for the financial years ended March 31, 2008, 2009, 2010, 2011 and
2012 along with teh Annexure to the Audit Report
F-7 – F-11
4. Statement of audited financial results of our Company for the financial years
ended March 31, 2008, 2009, 2010, 2011 and 2012 along with the Annexures
F-12 – F-63
F-1
Limited Review Report for the quarter ended 31st
December, 2012
To
The Board of Directors
Dredging Corporation of India Limited
“Dredge House”, Port Area,
Visakhapatnam – 530035
Andhra Pradesh
India
Dear Sirs,
Re: Proposed public issue by the Dredging Corporation of India Limited (“Issuer”) of Tax Free
Bonds of 1,000 in the nature of secured, redeemable, non-convertible (“Bonds”), up to
5,000 million by way of issuance of Bonds at par in one or more tranches.
We have reviewed the accompanying statement of un-audited financial results of Dredging
Corporation of India Limited for the period ended December 31st, 2012 except for the disclosures
regarding Public Shareholding’ and Promoter and Promoter Group Shareholding’ which have
been traced from disclosures made by the management and have not audited by us. These Financial
Statements are the responsibility of the Company’s Management and has been approved by the
Board of Directors. Our responsibility is to issue a report on these financial statements based on our
review.
We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410,
“Review of Interim Financial Information Performed by the Independent Auditor of the Entity”
issued by the Institute of Chartered Accountants of India. The Standard requires that we plan and
perform the review to obtain moderate assurance as to whether the financial statements are free of
material misstatement. A review is limited primarily to inquiries of company personnel and
analytical procedures applied to financial data and thus provide less assurance than an audit. We
have not performed an audit and accordingly, we do not express an audit opinion.
Based on our review conducted as above, nothing has come to our attention that causes us to believe
that the accompanying statement of un-audited financial results prepared in accordance with
applicable accounting standards and other recognized accounting practices and policies has not
disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement
including the manner in which it is to be disclosed, or that it contains any material misstatement.
For G R Kumar & Co.
Chartered Accountants
[Firm Regn No. 004941S] (G R Kumar)
Partner
M. No. 052367
Place: Visakhapatnam
Date: 21.02.2013
F-2
DREDGING CORPORATION OF INDIA LIMITED
Rs. In million
PART 1
STATEMENT OF UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND NINE
MONTHS ENDED 31.12.2012
Particulars
Quarter ended Nine Months ended Year ended
31-12-
2012
30-09-
2012 31-12-2011
31-12-
2012
31-12-
2011 31-03-2012
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
1 Income from
Operations
Net Income from Core
Drdging Operations 1677.99 1461.02 777.07 4418.01 3052.77 4682.73
Other Operating
Income 47.69 -5.22 79.13 56.17 159.49 233.84
Total Income from
Operations 1 725.68 1455.80 856.20 4474.18 3212.26 4916.57
2 Expenses
Employee benefits
expense 212.35 201.22 251.19 614.74 746.42 928.63
Depreciation and
amortization expense 191.50 219.04 219.42 631.50 644.95 879.52
Repairs and
Maintenance ( Vessels) 52.49 292.81 163.38 516.83 318.60 639.16
Fuel and Lubricants 590.60 458.93 395.39 1527.59 1190.50 1605.30
Spares & stores 199.21 76.15 18.12 474.37 225.36 437.24
Finance costs 1.31 - - 1.31 - -
Other expenses 446.13 88.33 104.76 627.45 325.89 380.36
Total expenses 1693.59 1336.48 1152.26 4393.79 3451.72 4870.21
3
Profit /Loss from
Operations before
other income and
exceptional items (1-
2)
32.09 119.32 -296.06 80.39 -239.46 46.36
4 Other Income 9.76 9.66 12.92 26.47 122.56 129.25
5
Profit /Loss from
ordinary activities
before tax and
exceptional items (3 +
4)
41.85 128.98 -283.14 106.86 -116.90 175.61
6 Exceptional Items - - - - - -
7
Profit(+)/ Loss(-) from
Ordinary Activities
before tax (5-6)
41.85 128.98 -283.14 106.86 -116.90 175.61
8 Tax Expense 6.00 2.67 3.00 11.47 41.00 43.80
9
Net Profit/ Loss from
Ordinary Activities
after tax (7-8)
35.85 126.31 -286.14 95.39 -157.90 131.81
10
Extraordinary
Items(net of tax
expense)
- - - - - -
11 Net Profit/ Loss for the
period (9-10) 35.85 126.31 -286.14 95.39 -157.90 131.81
F-3
12 Share of profit/loss of
associates - - - - - -
13 Minority interest - - - - - -
14
Net profit/ loss after
taxes, minority interest
and share of profit
/loss of associates
35.85 126.31 -286.14 95.39 -157.90 131.81
15
Paid-up equity share
capital
(Face Value of the
share: ( each 10 )
280.00 280.00 280.00 280.00 280.00 280.00
16
Reserves excluding
Revaluation Reserves
as per Balance sheet of
Previous Accounting
Year
- - - - - 13537.30
17.i Earnings per Share (
before extraordinary
items)
(of ` 10 each ) Not to
be annualised
Basic 1.28 4.51 -10.21 3.40 -5.64 4.71
Diluted 1.28 4.51 -10.21 3.40 -5.64 4.71
17.ii Earnings per Share (
after extraordinary
items)
(of ` 10 each ) Not to
be annualised
Basic 1.28 4.51 -10.21 3.40 -5.64 4.71
Diluted 1.28 4.51 -10.21 3.40 -5.64 4.71
PART 2
STATEMENT OF UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND NINE
MONTHS ENDED 31.12.2012
Particulars
Quarter ended Nine Months ended Year ended
31-12-2012 30-09-2012 31-12-2011 31-12-2012 31-12-2011 31-03-2012
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
A
PARTICULAR
S OF
SHAREHOLDI
NG
1 Public
Shareholding:
Number of
shares 6002300 6002300 6002300 6002300 6002300 6002300
Percentage
of shareholding 21.44% 21.44% 21.44% 21.44% 21.44% 21.44%
2 Promoters and
Promoter group
shareholding
a)
Pledged/Encum
bered
Number of
F-4
shares
Percentage
of shares (as a
percentage of
total
shareholding of
promoter &
promoter group)
-
-
-
-
-
-
Percentage
of shares (as a
percentage of
total share
capital of the
Company)
-
-
-
-
-
-
b) Non-
encumbered
Number of
shares 21997700 21 997700 21997700 21997700 21997700 21997700
Percentage
of shares (as a
percentage of
total
shareholding of
promoter &
promoter group)
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Percentage
of shares (as a
percentage of
total share
capital of the
Company)
78.56% 78.56% 78.56% 78.56% 78.56% 78.56%
Particulars
Quarter ended
Equity Securities
B NUMBER OF INVESTOR COMPLAINTS
Pending at the beginning of the quarter 0
Received during the quarter 25
Disposed off during thequarter 25
Lying unresolved at the end of the quarter 0
( In Million)
Consolidated Statement of Assets and Liabilities
Particulars
As at As at As at
31-12-2012
(Unaudited)
31-12-2011
(Unaudited)
31-03-2012
(Audited)
I. EQUITY AND LIABILITIES
1 SHAREHOLDERS' FUNDS
Share capital 280.00 280.00 280.00
Reserves and surplus 13632.65 13247.59 13537.30
F-5
SUB-TOTAL (1) 13912.65 13527.59 13817.30
2 NON-CURRENT LIABILITIES
Long-term borrowings 5875.58 524.06 2599.53
Deferred tax liabilities (Net) - - -
Other Long term liabilities 13.63 11.81 12.00
Long-term provisions 51.64 - 51.64
SUB-TOTAL (2) 5940.85 535.87 2663.17
3 CURRENT LIABILITIES
Short-term borrowings 10.80 10.09 9.47
Trade payables 509.43 590.02 308.01
Other current liabilities 3473.45 2084.30 1988.03
Short-term provisions - - 52.13
SUB-TOTAL (3) 3993.67 2684.41 2357.64
TOTAL (1+2+3) 23847.17 16747.87 18838.11
II. ASSETS
1 NON-CURRENT ASSETS
Fixed assets 13541.49 8227.82 5816.19
Non-current investments 300.00 300.00 300.00
Deferred tax assets (net) - - -
Long-term loans and advances 1901.52 120.38 4 677.05
Other non-current assets - - -
SUB-TOTAL (1) 15743.01 8648.20 10 793.24
2 CURRENT ASSETS
Current investments - - -
Inventories 1014.84 988.83 976.62
Trade receivables 4576.19 4816.17 3893.05
Cash and cash equivalents 188.56 789.79 783.16
Short-term loans and advances 600.29 559.81 136.02
Other current assets 1724.29 945.06 2256.02
SUB-TOTAL (2) 8104.16 8099.66 8044.87
TOTAL (1+2) 23847.17 16747.87 18838.11
Notes
1. N.A. = Not applicable since DCI is not a Manufacturing Company
F-6
2. Segmental Reporting as per AS-17 issued by the ICAI is not applicable since the company has
only one segment income i.e., dredging.
3. The company vide its letter no DCI /legal/SSCP/Arbitraction/2012 dt 06-06-2012 requested
Ministry of Shipping (GOI) to appoint a sole arbitrator under clause 22 of the contract for
realisation of its outstanding dues of ` 42641 lakhs payble by Sethusamudram Corporation
Ltd.No provision is made during the quarter for ` 4859 Lakhs outstanding for more than 3 years
in this regard.
4. During the quarter ended 31/12/12 a new TSHD of 5,500 cum. hopper Capacity (Dredge XIX)
has been added to DCI’s existing fleet and is commissioned on 20/12/12 and accordingly
capitalization of expenses has been made up to that date as per consistent practice .
5. The Auditors of the Company have carried out a Limited Review of the aforesaid financial
results for the quarter ended 31st Dec , 2012 in terms of Clause 41 of the Listing Agreement with
Stock Exchanges.
6. The above financial results were reviewed by the Audit Committee at its meeting held on
06/02/2013 and have taken record by the Board of Directors at its meeting held on 07/02/2013.
7. Figures of the previous years have been regrouped/ reclassified where ever
necessary.
By Order of the Board
For Dredging Corporation of India Limited
Place : New Delhi Capt.D.K.Mohanty
Date : 7/2/13 Chairman and Managing Director
F-7
AUDITOR’S REPORT
To
The Board of Directors
Dredging Corporation of India Limited
“Dredge House”, Port Area,
Visakhapatnam – 530035
Andhra Pradesh
India
Dear Sirs,
Re: Proposed public issue by the Dredging Corporation of India Limited (“Issuer”) of Tax Free
Bonds of 1,000 in the nature of secured, redeemable, non-convertible (“Bonds”), up to
5,000 million by way of issuance of Bonds at par in one or more tranches.
1. We have examined the reformatted financial information of Dredging Corporation of India
Limited (“the Company”), as attached to this report stamped and initialled by us for
identification purposes only. The reformatted financial information, which has been prepared in
accordance with Paragraph B(I), Part II of Schedule II of the Companies Act, 1956 (‘the Act’)
and the Securities and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008, (“SEBI Regulations”) issued by Securities and Exchange Board of India, as
amended from time to time, in pursuance of Section 11A of the Securities and Exchange Board
of India Act, 1992 and in terms of our Appointment letter dated 19.02.2013 and scope agreed
upon with you in connection with the Draft Shelf Prospectus, Shelf Prospectus and Tranche
Prospectus (Collectively referred to as “Offer Documents”) being issued by the Company for
Proposed Issue of Tax Free, Secured, Redeemable, Non-convertible Bonds.
2. Financial Information as reformatted on the basis of the Audited Financial Statements
A. (a) We have examined the attached “Reformatted Statement of Assets and Liabilities” of the
Company as at March 31, 2008, 2009, 2010, 2011 and 2012 (Annexure I) and the attached
“Reformatted Statements of Profit and Loss” for the year ended March 31, 2008, 2009, 2010,
2011, and 2012 (Annexure II) and the attached “Reformatted Statement of Cash Flows” for the
year ended March 31, 2008, 2009, 2010, 2011, and 2012 (Annexure III), which together with
the related Notes (Annexure IV) are referred to as ‘Reformatted Audited Financial Information’.
(b) The preparation and presentation of these reformatted financial information is the
responsibility of Company’s management. These have been extracted by the management from
the financial statements after making such adjustments and regroupings as considered
appropriate and fully described in the Notes and the significant accounting policies and other
notes to accounts appearing in Annexure IV and V respectively, to this report. For our
examination, we have placed reliance on the financial statements audited by M/s Ambika &
Isha for the year ended March 31, 2008 and by M/s Rao & Narayan for the years ended March
31, 2009, March 31, 2010 and March 31, 2011. The financial statements of the company as at
and for the financial year ended March 31, 2012 have been audited by us. These Financial
Statements have been approved / adopted by the Board of Directors/members for the respective
years.
(c) We have performed such tests and procedures, which in our opinion were necessary for the
purpose of our examination. These procedures, mainly involved comparison of the attached
Reformatted Audited Financial Information with the Company’s audited financial statements,
for the financial years ended March 31, 2008, 2009, 2010, 2011 and 2012 and reclassification as
per 'SEBI Regulations' and Schedule VI of the Companies Act, 1956, as amended.
F-8
Based on the above, we report that in our opinion and according to the information and
explanations given to us, we have found the same to be correct and the same have been
accordingly used in the Reformatted Audited Financial Information appropriately.
B. Based on our examination of Reformatted Financial Statements we further report that:
a) There is no qualification in the auditor’s report on the financial statements for the year ended
March 31, 2008, 2009, 2010, 2011 and 2012. However, there are observations in the annexure to
the auditor’s reports as included in Annexure – A to this report which is to be read with
Significant Accounting Policies and Other Notes to Accounts. These observations do not have
any quantifiable impact on the Reformatted Audited Financial Information.
b) There are no extraordinary items that need to be disclosed separately in the Reformatted Audited
Financial Information.
c) The reformatted financial statements have been prepared in “ in Million” for the convenience of
the Readers.
3. Other Financial Information
We have examined the following financial information relating to the Company proposed to be
included in the Offer Documents and annexed to this report:
i. Significant Accounting Policies and other notes to Accounts on the Audited Financial
Statements as at and for each of the years ended March 31, 2008, 2009, 2010, 2011 and
2012 (Annexure V)
ii. Statements of Accounting Ratios- as at and for each of the years ended March 31, 2008,
2009, 2010, 2011 and 2012 (Annexure VI)
iii. Statement of Dividend – as at and for each of the years ended March 31, 2008, 2009,
2010, 2011 and 2012 (Annexure VII)
iv. Capitalization Statement- as at and for each of the years ended March 31, 2008, 2009,
2010, 2011 and 2012 (Annexure VIII)
4. We further state that the Reformatted Financial Statements are subject to the following: We have
examined the Reformatted Financial Statements taking into consideration the Guidance Note on
Reports in Company prospectus (Revised) issued by the Institute of Chartered Accountants of
India, except that these Reformatted Financial Statements have not been adjusted for changes in
accounting policies retrospectively in the respective financial years to reflect the same accounting
treatment as per changed accounting policy for all the reporting periods and for adjustment of
amounts pertaining to previous years in the respective financial year to which they relate.
5. Based on our examination of these Reformatted Audited Financial Information of the Company
and subject to our comments in paragraph 4 above, we state that in our opinion, the ‘Financial
Information as reformatted on the basis of the Audited Financial Statements ‘ and ‘Other Financial
Information’ mentioned above as at and for five financial years ended March 31, 2008, 2009, 2010,
2011 and 2012 have been regrouped and reclassified in accordance with Paragraph B, Part II of
Schedule II, and Revised Schedule VI of the Companies Act, 1956 and the SEBI Regulations
(but not restated retrospectively for change in any accounting policy).
6. Based on our examination of these Reformatted Audited Financial Information of the Company
for five financial years ended March 31, 2008, 2009, 2010, 2011 and 2012 and the information and
explanations furnished by the company, we report that
F-9
a. There have not been any material changes in the activities of the Company which may have had
a material effect on the statement of profits for the last five years
b. There has not been any discontinuance in the lines of business, or markets
c. There has not been any change in the share capital since the date i.e. December 31, 2012 as of
which the financial information has been disclosed in the Offer Document.
7. This report should not, in any way, be construed as a re–issuance or redrafting of any of the
previous audit reports issued by other firms of chartered accountants nor this should be
construed as a new opinion on any of the financial statements referred to herein.
8. We have no responsibility to update our report for events and circumstances occurring after the date
of the report for the financial position, results of operations or cash flows of the Company as of any
date or for any period subsequent to December 31, 2012.
9. This report is intended solely for your information and for inclusion in the Offer Documents, in
connection with the proposed issue of Secured, Redeemable, Non-convertible Bonds having
benefits under Section 10(5)(iv)(h) of the Income Tax Act, 1961 and is not to be used, referred
to or distributed for any other purpose without our prior written consent.
For G R Kumar & Co.
Chartered Accountants
[Firm Regn No. 004941S]
(G R Kumar)
Partner
M. No. 052367
Place: Visakhapatnam
Date: 21.02.2013
F-10
ANNEXURE- A
ANNEXURE TO THE AUDIT REPORT OF EVEN DATE FOR THE FINANCIAL YEAR
ENDED MARCH 31, 2008 TO MARCH 31, 2012
AUDIT REPORT FOR THE YEAR ENDED MARCH 31, 2012
Related area of paragraph 3 of audit report for the year ended 2011 - 2012 (ii) (a). Physical verification of inventory has been conducted by the management at reasonable intervals
during the year; except in case of Stock of stores / Spares-in-transit
(b). In respect of procedure of physical verification of Stock of spares / Spares-in-transit followed by
the management, the same needs substantial improvement, which should commensurate with
the size of the Company and the nature of its business.
(c). Except in case of Stock of spares / Spares-in-transit, the Company has maintained proper records
of inventory; and as informed to us, no material discrepancies were noticed on physical
verification as compared to the book records.
(vii) In our opinion although the Company has an internal audit system commensurate with its size and
nature of its business; yet the same needs to be transformed into risk based audit and focus on
internal controls, risk assessment etc.
AUDIT REPORT FOR THE YEAR ENDED MARCH 31, 2011
No significant comments in audit report for the year ended 2010-2011
AUDIT REPORT FOR THE YEAR ENDED MARCH 31, 2010
No significant comments in audit report for the year ended 2009-2010
AUDIT REPORT FOR THE YEAR ENDED MARCH 31, 2009
Related area of paragraph 5 of audit report for the year ended 2008- 2009 (vi) (a). Change in accounting policy on spares, the profit for the year is increased by Rs. 331 million.
(Previous years – Spares delivered to the crafts during the year and acknowledged by the
Master / CEO are charged to revenue. Current Year – Spares issued to Dredgers, of the nature
of inventory, are charged to revenue as and when consumed.
(vi) (b). Sethusamudram Project income accounted for on cubic meter basis as per agreement signed on 7-
11-2008 which resulted in reduction of Rs. 545.1 million in current year’s income from this
project in respect of cumulative income considered up to 31.03.2008
AUDIT REPORT FOR THE YEAR ENDED MARCH 31, 2008
Related area of paragraph 4 of audit report for the year ended 2007- 2008 (iv) The Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the
Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956,
except for accountal of issue of spares to vessels.
F-11
(vi) The accounting practice of charging off spares to expenditure as and when issued to dredgers is
not in accordance with the provisions of AS 10 and its effect on current year’s profit is not
quantifiable.
F-12
DREDGING CORPORATION OF INDIA LIMITED
REFORMATTED STATEMENT OF ASSETS AND LIABILITIES
( Rs. In
Million)
Particulars
Note As at
No. 31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
I. EQUITY AND
LIABILITIES
1 SHAREHOLDERS'
FUNDS
(a) Share Capital A 280.00 280.00 280.00 280.00 280.00
(b) Reserves and
Surplus B 13537.30 13405.49 13010.34 12407.76 12107.85
SUB-TOTAL (1) 13817.30 13685.49 13290.34 12687.76 12387.85
2 NON-CURRENT
LIABILITIES
(a) Long-Term
Borrowings C 2599.53 0.00 0.00 55.10 165.31
(b) Other Long-
Term Liabilities D 12.00 15.63 0.00 0.00 0.00
(c) Long-Term
Provisions E 51.64 57.68 4.01 4.01 4.01
SUB-TOTAL (2) 2663.17 73.31 4.01 59.12 169.32
3 CURRENT
LIABILITIES
(a) Short-Term
Borrowings F 9.47 12.01 41.51 102.12 97.07
(b) Trade Payables G 308.01 846.62 1156.31 1274.99 833.33
(c) Other Current
Liabilities H 1988.02 1832.97 1823.56 2032.64 1654.74
(d) Short-Term
Provisions E 52.13 14.64 174.79 236.26 314.08
SUB-TOTAL (3) 2357.63 2706.24 3196.18 3646.02 2899.22
TOTAL (1+2+3) 18838.11 16465.04 16490.53 16392.89 15456.39
II. ASSETS
1 NON-CURRENT
ASSETS
(a) Fixed Assets I
(i) Tangible
Assets 5332.06 4872.71 2844.62 3122.65 3317.00
(ii) Capital
Work-in-progress 484.13 2.01 2691.33 2384.99 2355.15
(b) Non-Current
Investments J 300.00 300.00 300.00 300.00 245.00
(c) Long-Term
Loans & Advances K 4677.05 1830.83 0.00 0.00 0.00
SUB-TOTAL (1) 10793.25 7005.56 5835.95 5807.63 5917.16
2 CURRENT
F-13
ASSETS
(a) Inventories L 976.62 918.67 894.51 817.88 295.60
(b) Trade
Receivables M 3893.05 3823.84 4233.72 3147.68 3081.93
(c) Cash & Bank
Balances N 783.16 2352.74 2433.44 3318.44 2734.09
(d) Short-Term
Loans & Advances O 136.02 622.53 851.57 785.49 565.15
(e) Other Current
Assets P 2256.02 1741.70 2241.35 2515.76 2862.45
SUB-TOTAL (2) 8044.86 9459.48 10654.58 10585.25 9539.23
TOTAL (1+2) 18838.11 16465.04 16490.53 16392.89 15456.39
F-14
DREDGING CORPORATION OF INDIA LIMITED
REFORMATTED STATEMENT OF PROFIT AND LOSS
( Rs. In Million)
Particulars
Note Year Ended
No. 31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
I Revenue from
Operations Q 4916.58 5071.42 6730.35 7906.68 7248.62
II Other Income R 129.25 155.83 209.11 415.55 466.03
III Total Revenue
(I+II) 5045.83 5227.25 6939.46 8322.23 7714.65
IV Expenses
Employee
benefits expenses S 928.63 667.31 728.73 828.41 783.43
Finance costs 0.00 0.00 1.03 -17.18 13.00
Depreciation
and amortization
expense 879.52 703.21 660.20 526.81 417.34
Repairs and
Maintenance (
Vessels) 639.17 234.54 678.58 944.82 615.77
Fuel and
Lubricants 1605.30 1994.83 1721.72 2027.52 2023.50
Spares &
stores 437.24 416.06 640.18 350.86 549.92
Insurance 110.07 108.67 49.56 39.54 58.81
Other
expenses T 243.43 230.34 1350.90 2830.64 1694.18
Allowance for
Provisions U 20.27 423.60 335.85 170.60 50.98
Total Expenses
(IV) 4863.62 4778.55 6166.75 7702.03 6206.92
V
Profit before prior
period
items,exceptional
and extraordinary
items and tax (III-
IV)
182.21 448.70 772.71 620.20 1507.73
VI Prior period items 6.60 0.00 -3.87 1.32 0.00
VII
Profit before
exceptional and
extraordinary items
and tax (V-VI)
175.61 448.70 776.58 618.88 1507.73
VIII Exceptional items 0.00 0.00 0.00 0.00 0.00
IX
Profit before
extraordinary items
and tax (VII-VIII)
175.61 448.70 776.58 618.88 1507.73
X Extraordinary Items 0.00 0.00 0.00 0.00 0.00
XI Profit before tax
(IX-X) 175.61 448.70 776.58 618.88 1507.73
XII Tax Expense : V
Current Year 43.80 53.55 76.04 155.17 170.07
Earlier Years 0.00 0.00 0.00 0.00 -210.52
XIII Profit (Loss) for 131.81 395.15 700.54 463.72 1548.19
F-15
the period(XI-XII)
XIV Earnings per equity
share: (In Rs. ) W
Basic 4.71 14.11 25.02 16.56 55.29
Diluted 4.71 14.11 25.02 16.56 55.29
F-16
DREDGING CORPORATION OF INDIA LIMITED
REFORMATTED STATEMENT OF CASH FLOWS
( In million)
PARTICULARS
PERIOD ENDED YEAR ENDED
31.12.2012 30.09.2012 31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
A
Cash Flow from
Operating
Activities :
Net Profit before
Tax 106.80 64.90 175.60 448.70 776.60 618.88 1507.73
Adjustments
for:
Profit / Loss
on Sale of Fixed
Assets
0.00 0.00 0.20 -0.60 0.05 0.05 0.03
Depreciation 631.50 440.00 880.30 703.20 660.20 526.81 417.34
Imapirment
loss 0.00 0.00 0.00 0.00 0.30 -1.75 0.00
Interest
Expenses 1.30 0.00 0.00 0.00 1.03 -17.18 13.00
Interest Income -26.50 -16.00 -128.90 -124.70 -211.24 -313.50 -355.92
Operating profit
before Changes in
Operating Assets
& Liabilities:
713.10 488.90 927.20 1026.60 1226.94 813.31 1582.18
Increase /
Decrease : [See note-2 below]
Inventory -38.20 -2.40 -58.00 -24.10 -76.63 -522.28 -69.70
Trade Receivables -314.70 -627.30 -69.30 652.60 -967.68 -123.57 -668.72
Other Current
Assets -205.30 69.10 7.30 376.90 295.29 575.91 -1135.07
Trade Payables -266.30 66.80 80.10 -1089.70 -513.77 734.70 470.56
Cash generated
from Operations -111.40 -4.90 887.30 942.30 -35.84 1478.08 179.25
Adjustments
for:
Interest paid -1.30 0.00 0.00 0.00 -1.36 16.44 -13.79
Income Tax
paid -54.00 -29.50 -164.50 79.70 -230.50 -429.36 669.85
Net Cash Flow
from Operating
Activities ( A )
-166.70 -34.40 722.80 1022.00 -267.71 1065.16 835.31
F-17
B Cash Flow from
Investing Activities
Purchase of Fixed Assets -3679.70 -2510.00 -5080.70 -1154.70 -688.90 -360.59 -1687.88
Proceeds from
sale of Fixed Assets 0.00 0.00 0.00 0.00 0.01 0.01 0.04
Interest
received 59.50 49.00 188.80 150.00 290.50 290.65 377.86
Investments 0.00 0.00 0.00 0.00 0.00 -55.00 -100.00
Net Cash Flow
from Investing
Activities ( B )
-3620.20 -2461.00 -4891.90 -1004.70 -398.39 -124.93 -1409.98
C
Cash Flow from
Financing
Activities
Proceeds from
Long term
Borrowings
3276.10 1965.40 2599.60 0.00 0.00 0.00 0.00
Payment of long term
Borrowings
0.00 0.00 0.00 0.00 -55.10 -110.21 -136.30
Payment of Dividend 0.00 0.00 0.00 -84.00 -140.00 -210.00 -462.00
Payment of
Dividend Tax 0.00 0.00 0.00 -14.00 -23.80 -35.70 -78.50
Net Cash flow
from Financing
Activities ( C )
3276.10 1965.40 2599.60 -98.00 -218.90 -355.91 -676.80
Net
Increase/Decrease
in Cash & Cash
Equivalents
(A) + (B) + (C)
-510.80 -530.00 -1569.50 -80.70 -885.00 584.33 -1251.47
Cash & Cash
Equivalents as at
the beginning of the year
783.20 783.20 2352.70 2433.40 3318.40 2734.07 3985.54
Cash & Cash
Equivalents as at the end of the year
272.40 253.20 783.20 2352.70 2433.40 3318.40 2734.09
Net
Increase/Decrease
in Cash & Cash
Equivalents
-510.80 -530.00 -1569.50 -80.70 -885.00 584.33 -1251.47
Note:
1. Previous period figures have been rearranged and regrouped wherever necessary.
2. Increase or decrease in Inventory, Trade Receivables, Other Current Assets and Trade Payables includes non-current assets / liabilities portion also.
F-18
Annexure-IV
DREDGING CORPORATION OF INDIA LIMITED
NOTES - STATEMENT OF
BALANCE SHEET
Note A - Share Capital
( In
Million)
Particulars
As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Authorised :
3,00,00,000 Equity shares of 10
each 300.00 300.00 300.00 300.00 300.00
Issued, Subscribed and Paid up
:
For Cash
1400 Equity Shares of Rs.10/-
each fully paid 0.014 0.014 0.014 0.014 0.014
For consideration other than cash
2,79,98,600 Equity Shares of
Rs.10/- each allotted as fully paid 279.99 279.99 279.99 279.99 279.99
Total 280.00 280.00 280.00 280.00 280.00
Note B - Reserves and Surplus
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
CAPITAL RESERVE:
As per last Balance Sheet 45.18 45.18 45.18 45.18 45.18
Add: Transfer during the year 0.00 0.00 0.00 0.00 0.00
Less: Transfer to profit &
Loss Account during the year 0.00 0.00 0.00 0.00 0.00
Balance as at the end of the
year 45.18 45.18 45.18 45.18 45.18
GENERAL RESERVE : As per last Balance Sheet 4290.40 4250.40 4175.40 4125.40 3970.40
Add : Transfer during the year 0.00 40.00 75.00 50.00 155.00
Less: Transfer to profit &
Loss Account during the year 0.00 0.00 0.00 0.00 0.00
Balance as at the end of the 4290.40 4290.40 4250.40 4175.40 4125.40
F-19
year
Reserve U/s 33AC of the
Income Tax Act 1961
As per last Balance Sheet 1800.00 3270.00 3330.00 3330.00 3330.00
Add : Transfer during the year 0.00 0.00 0.00 0.00 0.00
Less: Transfer to Reserve U/s
33 AC utilisation Account /
Profit & Loss A/c
1800.00 1470.00 60.00 0.00 0.00
Balance as at the end of the
year 0.00 1800.00 3270.00 3330.00 3330.00
Reserve U/s 33AC Utilisation
Account
As per last Balance Sheet 0.00 0.00 560.00 560.00 560.00
Add : Transfer during the year 1800.00 1470.00 0.00 0.00 0.00
Less: Transfer from Reserve
U/s 33AC to Profit & Loss A/c 1800.00 1470.00 560.00 0.00 0.00
Balance as at the end of the
year 0.00 0.00 0.00 560.00 560.00
Tonnage Tax Reserve u/s 115
VT of IT Act
As per last Balance Sheet 1755.00 1555.00 1330.00 1170.00 820.00
Add: Transfer during the year 50.00 200.00 225.00 160.00 350.00
Less: Transfer to Reserve u/s
115 VT 1755.00 0.00 0.00 0.00 0.00
Balance as at the end of the
year 50.00 1755.00 1555.00 1330.00 1170.00
Reserve U/s 115 VT Utilisation
Account
As per last Balance Sheet 0.00 0.00 0.00 0.00 0.00
Add: Transfer during the year 1755.00 0.00 0.00 0.00 0.00
Less: Transfer to Reserve u/s
115 VT utilisation Account 0.00 0.00 0.00 0.00 0.00
Balance as at the end of the
year 1755.00 0.00 0.00 0.00 0.00
PROFIT AFTER TAX 131.81 395.15 700.54 463.72 1548.19
Deduct: Transfer to Tonnage
Tax Reserve U/s 115 VT of IT
Act
50.00 200.00 225.00 160.00 350.00
Deduct: Transfer to General
Reserve
0.00
40.00 75.00 50.00 155.00
Add:Balance Brought Forward
from previous year 5514.91 3889.76 2967.17 2877.26 2325.47
Deduct:
Interim Dividend paid 0.00 0.00 0.00 0.00 210.01
Proposed Dividend 0.00 0.00 84.00 140.00 210.00
F-20
Dividend Tax on
Interim Dividend paid 0.00 0.00 0.00 0.00 35.69
Proposed Dividend 0.00 0.00 13.95 23.81 35.69
Add: Transfer from Reserve
U/s 33 AC 0.00 0.00 60.00 0.00 0.00
Add: Transfer from 33 AC
Utilisation A/c 1800.00 1470.00 560.00 0.00 0.00
Balance as at the end of the
year 7396.72 5514.91 3889.76 2967.17 2877.26
Total Reserves and Surplus 13537.30 13405.49 13010.34 12407.76 12107.85
Note C - Long-Term
Borrowings
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Secured Borrowings
Term Loans - from Banks 2599.53 0.00 0.00 55.10 165.31
Total Secured Long-Term
Borrowings 2599.53 0.00 0.00 55.10 165.31
Note D - Other Long-term
Liabilities
(In Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Non-Current Portion of Deposits
from customers 12.00 15.63 0.00 0.00 0.00
Total 12.00 15.63 0.00 0.00 0.00
Note E -Long-term&Short-
term Provisions
(In Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Non-Current (Long-term)
Provisions
Provision for employee benefits 51.64 53.67 0.00 0.00 0.00
Others 0.00 4.01 4.01 4.01 4.01
Total 51.64 57.68 4.01 4.01 4.01
Current (Short-term)
Provisions
F-21
Employee benefits 52.13 14.64 76.84 72.47 66.84
Provision for Dividend 0.00 0.00 84.00 140.00 210.00
Provision for Dividend Tax 0.00 0.00 13.95 23.79 35.69
Others 0.00 0.00 0.00 0.00 1.55
Total 52.13 14.64 174.79 236.26 314.08
Note F - Short-term
Borrowings
(In Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Deposits from Contractors 5.31 7.06 34.03 59.60 51.15
Advances from Customers 4.16 4.95 7.49 42.52 45.92
Total 9.47 12.01 41.51 102.12 97.07
Note G - Trade payables
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Trade payables 308.01 846.62 1156.31 1274.99 833.33
Total 308.01 846.62 1156.31 1274.99 833.33
Note H - Other Current
Liabilities
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Interest accrued but not due on
borrowings 13.75 0.00 0.00 0.34 1.07
Interest accrued and due on
borrowings 0.00 0.00 0.00 0.00 0.00
Unclaimed Dividends 0.97 1.26 1.22 1.11 1.76
Other Liabilities 1973.30 1831.71 1822.35 2031.20 1651.90
Total 1988.02 1832.97 1823.56 2032.64 1654.74
Note I - Fixed Assets
( in
Million)
Particulars As at As at As at As at As at
F-22
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Tangible Assets
Freehold Land 3.60 3.60 3.60 3.60 3.60
Buildings 6.21 6.36 6.51 7.74 8.95
Plant & Machinery
Dredgers 5011.47 4455.71 2317.13 2565.75 2857.98
Ancillary Crafts 219.27 236.82 260.29 283.06 126.20
Pipelines,Balls & Sockets
Joints etc., 54.26 135.11 221.03 225.65 285.94
Other Operational Assets 6.74 7.49 8.26 9.04 9.81
Furniture, Fixtures & Office
equipment 21.02 22.58 24.24 23.88 20.64
Motor Vehicles 2.85 0.55 0.70 0.84 0.99
Computers 6.64 4.50 2.87 3.09 2.89
5332.06 4872.71 2844.62 3122.65 3317.00
Capital Work In Progress
Back-hoe Dredger 0.00 1.16 0.00 0.00 0.00
DCI DR XIX 484.13 0.00 2691.33 2384.99 2355.15
Others 0.00 0.85 0.00 0.00 0.00
Total 484.13 2.01 2691.33 2384.99 2355.15
Note:
Capital Work in Progress include Capital advances for the financial years: 2007-08, 2008-09 and
2009-10
Note J - Investments
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Valued at Cost
Non-Current Investments
Investment in Equity Instruments
Trade Investments(Unquoted)
i) 5 equity Shares of Rs.50/-
each fully paid-up in Mittal
Chambers Premises Co-operative
Society Ltd.,Bombay
0.00 0.00 0.00 0.00 0.00
ii) Sethusamudram Corporation
Ltd 300 million Equity shares
of Rs 10 each fully paid
300.00 300.00 300.00 300.00 245.00
Total 300.00 300.00 300.00 300.00 245.00
F-23
Note K - Long-term Loans &
Advances
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Capital Advances 4524.89 1708.49 0.00 0.00 0.00
Security Deposits 108.97 78.66 0.00 0.00 0.00
Other Loans & Advances 43.19 43.68 0.00 0.00 0.00
Total 4677.05 1830.83 0.00 0.00 0.00
Note L-Inventory
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Stock of spares and stores 856.67 860.18 718.07 646.54 217.34
Less: Provision for
unserviceable Spares & Stores 36.90 16.63 28.25 30.04 23.61
Sub-total 819.77 843.55 689.83 616.51 193.73
Spares and stores in Transit 156.84 75.12 204.69 201.37 101.87
Total 976.62 918.67 894.51 817.88 295.60
Note M-Trade Receivables
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Debts outstanding for a period
exceeding 6 months 4146.01 3149.44 4023.22 2131.39 2485.06
Other Debts 503.31 1747.47 959.03 1493.15 1854.76
Sub-total 4649.32 4896.91 4982.25 3624.54 4339.82
Less:Considered Doubtful and
provided for-
Debts considered good
756.27 1073.07 748.53 476.88 1257.89
Total 3893.05 3823.84 4233.72 3147.66 3081.93
F-24
Note: (For the financial year 2011-12)
(a) Trade receivables include Service tax and education cess thereon amounting to Rs. 567.4 million.
The provision for bad debts is on net dredging charges (i.e., on Rs. 4,081.9 million but not on entire
Trade receivables).
(b) The Company vide its Letter No. DCI/Legal/SSCP/ Arbitration/ 2012 dt. 06-06-2012 requested
Ministry of Shipping ( GOI ), to appoint a sole Arbitrator under Clause 22 of the contract for realisation
of its outstanding dues payable by Sethusamudram Corporation Ltd.
Note N - Cash and Cash
Equivalents
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Balances with Banks 51.77 413.16 363.42 129.48 107.02
Cheques/ Drafts in Hand 40.62 0.66 142.10 0.09 4.91
Cash on Hand 9.80 39.56 21.15 27.35 20.39
Others
Term Deposits with Scheduled
Banks 680.00 1898.10 1905.50 3160.40 2600.00
Earmarked balances with
Banks 0.97 1.26 1.26 1.12 1.77
Total 783.16 2352.74 2433.44 3318.44 2734.09
Note O - Short-term Loans &
Advances
( In
Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Secured Loans 2.39 3.44 13.21 16.37 21.55
Unsecured Loans 133.63 619.09 838.35 769.12 543.60
Total 136.02 622.53 851.57 785.49 565.15
Note P - Other Current Assets
(In Million)
Particulars As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Interest Accrued & Not Due on
Deposits & Advances 35.60 114.36 139.70 218.99 196.16
Recoverable from Ports
Dredging Services (Unbilled 1121.67 794.29 1073.63 1438.32 1149.06
F-25
Operational Income)
Sub-total 1121.67 794.29 1073.63 1438.32 1149.06
Income Tax Paid & Tax deducted
at source 811.35 647.95 861.27 662.36 437.59
Less: Provision for Income
Tax 354.32 311.57 390.63 346.22
395.63
Sub-total 457.03 336.38 470.64 316.14 41.95
Current Portion of Deposits
Customs, Post & Telegraphs 0.00 0.00 0.58 0.61 0.61
Others 89.46 32.46 109.83 89.75 98.73
Sub-total 89.46 32.46 110.41 90.36 99.33
Prepaid Expenses 40.71 24.77 30.47 14.97 12.45
Claims & Other Recoverables 512.73 440.62 417.68 438.17 1364.67
Less:Provision for Doubtful
Claims 1.18 1.18 1.18 1.18 1.18
Sub-total 511.55 439.44 416.50 436.99 1363.49
Total 2256.02 1741.70 2241.35 2515.76 2862.45
Note:
(a) Income tax paid, TDS and provision for income tax are not adjusted even after the completion
of assessment upto Assessment year: 2010-11 in view of the fact that certain information is yet to be
obtained.
(b) Claims & other recoverables include insurance recoverables, tax refunds, recoverables from
employees and others.
Annexure-IV
DREDGING CORPORATION OF INDIA LIMITED
NOTES - STATEMENT OF
PROFIT & LOSS ACCOUNT
Note Q - Revenue
from Operations
(In Million)
Particulars
Year
ended
Year
ended
Year
ended
Year ended Year ended
31.03.20
12
31.03.20
11
31.03.20
10
31.03.2009 31.03.2008
Core Dredging
Services 4682.73 4578.73 6454.28 6852.77 7053.69
F-26
Other Operating
Revenue 233.85 492.85 276.26 1054.47 195.45
Less:
Rebates/Discounts 0.00 0.17 0.19 0.55 0.52
Total 4916.58 5071.42 6730.35 7906.68 7248.62
Note R - Other
Income
( In Million)
Particulars
Year
ended
Year
ended
Year
ended
Year ended Year ended
31.03.20
12
31.03.20
11
31.03.20
10
31.03.2009 31.03.2008
Interest Income
earned on:
(Other than
Operating Income)
Fixed Deposits 126.97 122.90 208.26 309.89 353.08
House Building
and other Advances 1.92 1.80 2.97 3.59 2.84
Tax refunds 0.36 31.13 -2.12 102.07 110.10
Total 129.25 155.83 209.11 415.55 466.03
Note S - Employee
Benefits Expenses
(In Million)
Particulars
Year
ended
Year
ended
Year
ended
Year ended Year ended
31.03.20
12
31.03.20
11
31.03.20
10
31.03.2009 31.03.2008
Salaries and
Allowances
Operational Staff 546.87 410.97 495.97 513.46 439.16
Shore Employees 342.15 227.01 205.53 289.09 321.45
Sub-total 889.02 637.98 701.50 802.55 760.60
Contribution to
Provident Fund and
Other Funds
Operational Staff 8.81 8.25 8.14 10.84 9.35
Shore Employees 25.97 15.50 12.96 12.35 11.51
Sub-total 34.77 23.75 21.10 23.19 20.86
Remuneration to
Directors:
Chairman-and-
Managing Director 0.84 2.28 2.45 1.08 0.43
Director (Finance) 2.05 2.25 2.14 1.05 0.75
Director
(Operations &
Technical)
1.95 1.05 1.54 0.54 0.79
Sub-total 4.84 5.58 6.13 2.68 1.97
Total 928.63 667.31 728.73 828.41 783.43
F-27
Note T - Other
Expenses
( In Million)
Particulars
Year
ended
Year
ended
Year
ended
Year ended Year ended
31.03.20
12
31.03.20
11
31.03.20
10
31.03.2009 31.03.2008
Other Operational
Expenses
Lodging Expenses:
Floating Staff 9.70 9.48 11.07 17.47 14.29
Travelling,
Porterage &
Conveyance-Floating
Staff
6.79 8.24 7.84 9.88 4.54
Equipment
Transportation
Expenses
7.76 1.72 76.12 31.49 111.69
Direct Works
Expenses:
Boat/Tug Hire
charges 24.66 24.06 18.87 24.24 53.27
Crane Hire
charges 1.39 0.27 0.42 0.31 0.68
Pipeline
laying/maintenance
expenses
10.25 3.92 2.94 6.12 9.41
Payments to
Contractors 27.83 9.12 18.93 18.78 10.25
Others 17.23 26.96 1089.35 2684.56 1298.40
Miscellaneous
Expenses 30.85 35.68 28.17 29.86 28.14
Sub-total 136.46 119.44 1253.70 2822.71 1530.67
Rent 10.00 4.03 4.48 3.87 2.69
Rates and Taxes 0.90 0.89 0.98 1.32 0.94
Other Establishment
Expenses
Donations 0.14 0.00 0.11 0.16 0.11
Travelling
Expenses 34.14 40.20 39.40 45.37 47.37
Bank Charges &
Guarantee fee 8.41 8.37 5.63 -122.47 2.84
Printing &
Stationery 2.85 1.98 2.83 3.14 2.92
Postage,
Telegrams, Phones &
Telex
3.78 3.79 4.04 4.15 4.62
Repairs and
Maintenance of
Building
11.44 10.85 11.23 8.97 11.26
Expenditure on
data processing 1.08 0.35 1.86 0.94 1.92
F-28
Advertisement &
Publicity (including
NIT)
1.95 1.59 1.72 1.91 1.84
Dailies &
Periodicals and Cost
of Library
2.16 0.83 1.30 0.96 1.50
Remuneration to
Auditors :
As Auditors 0.25 0.25 0.25 0.25 0.25
Tax Audit Fees 0.04 0.04 0.04 0.04 0.04
For other
Services 0.21 0.25 0.27 0.17 0.17
Legal Adviser fee
& expenses 2.87 0.96 1.19 0.96 0.83
Electricity, Water
Charges 4.40 4.91 5.28 4.12 3.68
Expenses on
Seminars 1.40 3.21 1.64 1.61 0.62
Expenditure on
Corporate Social
Responsibility
2.50 14.00 0.00 0.00 0.00
Others 18.45 14.38 14.96 52.46 79.91
Sub-total 96.07 105.97 91.75 2.74 159.88
Total 243.43 230.34 1350.90 2830.64 1694.18
Note U - Allowance
for Provisions
( In Million)
Particulars
Year
ended
Year
ended
Year
ended
Year ended Year ended
31.03.20
12
31.03.20
11
31.03.20
10
31.03.2009 31.03.2008
Provisions
For Doubtful Debts - 423.60 335.55 115.16 50.98
For Unserviceable
Spares and Stores 20.27 - - 6.43 -
Impairment Loss - - 0.30 - -
For Losses
writtenoff - - - 49.02 -
Total 20.27 423.60 335.85 170.60 50.98
Note V - Prior
Period Adjustments
( In Million)
Particulars
Year
ended
Year
ended
Year
ended
Year ended Year ended
31.03.20
12
31.03.20
11
31.03.20
10
31.03.2009 31.03.2008
Prior Period
Adjustments
Debits 47.34 - 8.56 1.32 -
Credits 40.74 - 12.43 - -
Total Debits 6.60 - - 1.32 -
Credits - - 3.87 - -
F-29
Note W - Tax
Expenses
( In Million)
Particulars
Year
ended
Year
ended
Year
ended
Year ended Year ended
31.03.20
12
31.03.20
11
31.03.20
10
31.03.2009 31.03.2008
Income tax
Current year 42.50 54.18 76.67 146.69 160.00
Earlier years - - - - 210.52
FBT - - - 9.11 9.43
Wealth Tax 1.30 0.64 0.64 0.64 0.64
Total 43.80 53.55 76.04 155.17 -40.46
Note X - Earning
per Share
Particulars
Year
ended
Year
ended
Year
ended
Year ended Year ended
31.03.20
12
31.03.20
11
31.03.20
10
31.03.2009 31.03.2008
Profit after Tax
(In Million) 131.81 395.15 700.54 463.72 1 548.19
Weighted average
number of Equity
Shares (Nos.) of face
Value Rs 10/-per
share (in number)
2800000
0
2800000
0
2800000
0 28000000 28000000
Basic Earnings Per
Share (in ) 4.71 14.11 25.02 16.56 55.29
F-30
ANNEXURE-V
SIGNIFICANT ACCOUNTING POLICIES AND OTHER NOTES TO ACCOUNTS:
1. Basis of preparation of financial statements:
A. The financial statements have been prepared under the historical cost convention in accordance
with the generally accepted accounting principles.
B. The company generally follows mercantile system of accounting and recognizes significant
items of income and expenditure on accrual basis.
2. Operational income:
A. Unbilled values of works executed up to 31st march are considered as income although bills are
raised subsequently. the corresponding debit balances are shown under “current assets-unbilled
operational income receivable”.
B. Claims preferred on customers for works/items not contemplated are considered as income on
their acceptance.
C. Income in respect of incomplete dredging jobs undertaken on insitu basis are accounted for on
the basis of estimated realizable value of the work done up to 31st march.
3. Other income:
A. Sale proceeds of condemned and unserviceable spares, stores, empties, waste oil, etc are
accounted for in the year of disposal.
B. Liquidated damages recovered from suppliers are accounted on settlement of bills.
C. Interests on tax refunds are accounted on receipt basis.
4. Operational expenses:
A. Spares:
Till the period ended 31st march, 2008, spares delivered to the crafts during the year and
acknowledged by the master/ceo are charged to revenue. provision is made towards
consumption for the material delivered to crafts up to 31st march in respect of which
acknowledgements are not received. during the year ended 31st march, 2009, the company
changed its accounting policy where spares issued to dredgers, of the nature of inventory, are
charged to revenue as and when consumed.
Adjustments on account of change in accounting policy: ( in million)
Particulars Year ended Year ended Year ended Year ended Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
accounting for valuation
of spares & stores
expenses
- - - 331.00 -
B. Stores and lubricants:
Stores and lubricants delivered to the crafts during the year and acknowledged by the
master/ceo are charged to revenue. provision is made towards consumption for the material
delivered to crafts up to 31st march in respect of which acknowledgements are not received.
C. Insurance:
F-31
Final adjustments to insurance premium paid are considered in accounts on the basis of
demands received.
D. Insurance claims of hull and machinery:
Yill the period ended 31st march, 2011 until final settlement, 80% of the claimable amount
based on estimate of technical department, after deductible excess, or the actual amount
received, whichever is higher, is treated as income from insurance claims. provision for repair
expenditure is simultaneously made as per the estimate of technical department where actual
repairs have not been completed and/or bills not settled with the repairers. in respect of other
claims, the same are accounted for on realization/settlement by the underwriters. this was
included as a part of “other income” accounting policy upto the period ended 31st march, 2011.
during the year ended 31st march, 2012, the company changed its accounting policy where
insurance claim is accounted as claims recoverable from underwriters as and when the repair
bill is submitted by yard/firm. necessary adjustments are made as and when the claim is
accepted by underwriters. in respect of other insurance claims, the same are accounted for on
realization / settlement of the same by the underwriters.
Adjustments on account of change in accounting policy: ( in million)
Particulars Year ended Year ended Year ended Year ended Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
accounting for recognition
of insurance claims - income
- 84.00 94.56 49.14 1.76
accounting for recognition
of insurance claims - expense
- 28.00 64.50 28.40 39.20
accounting for recognition
of insurance claims - net
effect
- 56.00 30.06 20.74 (37.44)
5. Depreciation:
Depreciation is provided under straight-line method in accordance with schedule xiv of the
companies act. in respect of the following assets, depreciation is provided on straight-line
method at the following rates based on the technical estimation of the useful lives of such
assets:-
A. Pipeline equipment: 25% for mild steel pipeline equipment and 12.5% for high density
polyethylene pipeline equipment.
B. Second hand assets/ retrofit of vessels: as per the estimated balance service life.
C. Building on lease: cost of buildings constructed on lease hold land is amortized over the lease
period.
D. Items of fixed assets whose cost does not exceed 5000/- (rupees five thousand) each are
capitalized and depreciated 100% during the year.
E. Cost of library: cost of library is considered as other establishment expenditure.
6. Fixed assets:
A. Fixed assets are stated at historical cost less depreciation (historical cost includes financing cost
and other related overheads).
F-32
B. Grants in aid relating to specific fixed assets are shown as deduction from the gross value of the
assets concerned in arriving at book value.
C. During the year ended 31st march, 2009, the company extended its accounting policy where in
items of the nature of capital / equipment’s are capitalized and depreciated over the remaining
useful life of the asset. however, addition in accounting policy does not have any effect on any
quantities in the financial statements.
7. Borrowing costs:
Borrowing costs attributable to acquisition, construction or production of qualifying assets are
capitalized as part of the cost of that asset, till the time the asset is put to use. other borrowing
costs are recognized as an expense in the period in which they are incurred.
8. Stock of spares and stores:
A. Stock of spares and stores is valued at weighted average cost and is inclusive of:
I) Customs duty, if any, as applicable to the whole consignment and
II) Overheads at pre-determined rate.
B. Reconditioned spares are valued at the respective cost of reconditioning.
C. Value of materials dispatched on f.o.b. basis by foreign suppliers on or before 31st march of a
year is considered in the accounts of that year, provided dispatch documents are
retired or accepted within 15 days of the end of the accounting year.
9. Investments:
Till the period ended 31st march, 2011, investments are classified as long term and are carried at
cost. during the year ended 31st march, 2012, the company changed its accounting policy where
in (i) long term investments are stated at cost and provision for diminution is made to recognize
a decline, other than temporary in the value of such investments and (ii) current investments
are stated at lower of cost and fair value. however, change in accounting policy does not have
any effect on any quantities in the financial statements.
10. Employee benefits:
Provisions for gratuity liability and leave encashment liability are made on the basis of actuarial
valuation using the projected unit credit method. in the case of crew and mpw of floating
employees who are entitled to settlement of leave in full on signing off, provision is made for
the leave at credit of such employees as on 31st march. actuarial liability in excess of respective
plan assets is recognized during the year.
Provision for gratuity as per the actuarial valuation is funded with a separate trust.
11. Provisions, contingent liabilities & contingent assets
Provisions involving substantial degree of estimation in measurement are recognized when
there is a present obligation as a result of past events and it is probable that there will be an
outflow of resources. contingent assets are neither recognized nor disclosed in the financial
statements. contingent liabilities, if material, are disclosed by way of notes.
F-33
NOTES TO ACCOUNTS FOR
THE F.Y: 2011-12
Note A - Share Capital
(In Million)
Particulars As at As at
31.03.2012
31.03.2011
Authorised :
3,00,00,000 Equity shares of Rs. 10/- each
300.00 300.00
Issued, Subscribed and Paid up :
For Cash
1400 Equity Shares of Rs.10/- each fully paid 0.014 0.014
For consideration other than cash
2,79,98,600 Equity Shares of Rs.10/- each allotted as fully paid 279.99 279.99
Total 280.00 280.00
A.1 The shareholders of the equity shares of the company are entitled to receive dividends as and when
declared by the company and enjoy proportionate voting rights in case any resolution is put to vote.
Further, the shareholders have all such rights, as may be available to a shareholder of a listed public
company, under the Companies Act, the terms of the listing agreements executed with the Stock
Exchanges, and our Memorandum of Association and Articles of Association.
A.2 Shareholders holding more than 5% of fully paid-up equity
shares: (in numbers)
Name of the share holder
As at 31st March 2012 As at 31st March 2011
No. of Shares Percentage No. of Shares Percentage
President of India 21997700 78.56 21997700 78.56
Note B - Reserves and Surplus
(In Million)
Particulars
As at
As at
31.03.2012 31.03.2011
CAPITAL RESERVE:
As per last Balance Sheet 45.18 45.18
Add: Transfer during the year 0.00 0.00
Less: Transfer to profit & Loss Account
during the year 0.00 0.00
Balance as at the end of the year 45.18 45.18
F-34
GENERAL RESERVE :
As per last Balance Sheet 4290.40 4250.40
Add : Transfer during the year 0.00 40.00
Less: Transfer to profit & Loss Account
during the year 0.00 0.00
Balance as at the end of the year 4290.40 4290.40
Reserve U/s 33AC of the Income Tax Act
1961
As per last Balance Sheet 1800.00 3270.00
Add : Transfer during the year 0.00 0.00
Less: Transfer to Reserve U/s 33 AC
utilisation Account / Profit & Loss A/c 1800.00 1470.00
Balance as at the end of the year 0.00 1800.00
Reserve U/s 33AC Utilisation Account
As per last Balance Sheet 0.00 0.00
Add : Transfer during the year 1800.00 1470.00
Less: Transfer from Reserve U/s 33AC
to Profit & Loss A/c 1800.00 1470.00
Balance as at the end of the year 0.00 0.00
Tonnage Tax Reserve u/s 115 VT of IT
Act
As per last Balance Sheet 1755.00 1555.00
Add: Transfer during the year 50.00 200.00
Less: Transfer to Reserve u/s 115 VT 1755.00 0.00
Balance as at the end of the year 50.00 1755.00
Reserve U/s 115 VT Utilisation Account
As per last Balance Sheet 0.00 0.00
Add: Transfer during the year 1755.00 0.00
Less: Transfer to Reserve u/s 115 VT
utilisation Account 0.00 0.00
Balance as at the end of the year 1755.00 0.00
PROFIT AFTER TAX 131.81 395.15
Deduct: Transfer to Tonnage Tax
Reserve U/s 115 VT of IT Act 50.00 200.00
Deduct: Transfer to General Reserve 0.00 40.00
Add:Balance Brought Forward from
previous year 5514.91 3889.76
Deduct:
Interim Dividend paid 0.00 0.00
Proposed Dividend 0.00 0.00
F-35
Dividend Tax on
Interim Dividend paid 0.00 0.00
Proposed Dividend 0.00 0.00
Add: Transfer from Reserve U/s 33 AC 0.00 0.00
Add: Transfer from 33 AC Utilisation
A/c 1800.00 1470.00
Balance as at the end of the year 7396.72 5514.91
Total Reserves and Surplus 13537.30 13405.49
Note C - Long-Term Borrowings
(In Million)
Particulars As at As at
31.03.2012 31.03.2011
Secured Borrowings
Term Loans - from Banks 2599.53 -
Total Secured Long-Term Borrowings 2599.53 -
C.1 The above said borrowing is secured by charge on TSHD DCI Dredger XIX and loan is
repayable in 20 equal half yearly installments starting from 15th May 2013 for Dredger XIX and
final installment falls on 15th May 2023 for Dredger XIX.
Note D - Other Long-term
Liabilities
(In Million)
Particulars As at As at
31.03.2012 31.03.2011
Non-Current Portion of Deposits
from customers 12.00
15.63
Total 12.00 15.63
D.1 Non-current portion of Deposits from contractors have been classified as long-term borrowings
and the current portion of the Deposits from contractors have been classified under "Short term
borrowings".
Note E -Long-term & Short-
term Provisions
(In Million)
Particulars As at As at
31.03.2012 31.03.2011
Non-Current (Long-term)
Provisions
F-36
Provision for employee
benefits 51.64 53.67
Others - 4.01
Total 51.64 93.78
Current (Short-term)
Provisions
Employee benefits 52.13 14.64
Total 52.13 57.68
Note F - Short-term
Borrowings
(In Million)
Particulars As at As at
31.03.2012 31.03.2011
Deposits from Contractors 5.31 7.06
Advances from Customers 4.16 4.95
Total 9.47 12.01
F.1 Current portion of Deposits from contrators and Advance from customers have been classified
here as short-term borrowings.
Note G - Trade payables
(In Million)
Particulars As at As at
31.03.2012 31.03.2011
Trade payables 308.01 846.62
Total 308.01 846.62
Note H - Other Current
Liabilities
(In Million)
Particulars As at As at
31.03.2012 31.03.2011
Interest accrued but not due on
borrowings 13.75 0.00
Unclaimed Dividends 0.97 1.26
Other Liabilities 1973.30 1831.71
Total 1988.02 1832.97
F-37
Note I - Fixed Assets
(In Million)
Particulars As at As at
31.03.2012 31.03.2011
Tangible Assets
Freehold Land 3.60 3.60
Buildings 6.21 6.36
Plant & Machinery
Dredgers 5011.47 4455.71
Ancillary Crafts 219.27 236.82
Pipelines,Balls & Sockets
Joints etc., 54.26 135.11
Other Operational Assets 6.74 7.49
Furniture, Fixtures & Office
equipment 21.02 22.58
Motor Vehicles 2.85 0.55
Computers 6.64 4.50
5332.06 4872.71
Capital Work In Progress
Back-hoe Dredger 0.00 1.16
DCI DR XIX 484.13 0.00
Others 0.00 0.85
Total 484.13 2.01
F-38
Fixed Assets GROSS BLOCK DEPRECIATION NET BLOCK
As at
31.03.2
011
Additio
ns
during the
year
ending 31.03.2
012
Sales/Adjust
ments
during the year ending
31.03.2012
Closin
g as on
31.03.2012
Upto
31.03.2
011
Depreci
ation
during the year
ending
31.03.2012
Depreci
ation
adjustment
during
the year ending
31.03.20
12
Depreci
ation as
on 31.03.20
12
As at
31.03.2
012
As at
31.03.2
011
TANGIBLE ASSETS
Freehold Land 3.60 0.00 0.00 3.60 0.00 0.00 0.00 0.00 3.60 3.60
Buildings 34.63 0.00 0.00 34.63 28.27 0.15 0.00 28.41 6.21 6.36
Plant & Machinery
Dredgers
11486.
83
1320.3
8 0.00
12807.
21
7031.1
3 764.61 0.00 7795.74
5011.4
7
4455.7
1
Ancillary Crafts 342.95 11.14 0.00 354.10 106.13 28.70 0.00 134.83 219.27 236.82
Pipelines,Balls & Sockets Joints etc.,
665.26 0.00 0.00 665.26 530.15 80.85 0.00 611.00 54.26 135.11
Other Operational
Assets 28.69 0.00 0.00 28.69 21.21 0.75 0.00 21.95 6.74 7.49
Furniture, Fixtures & Office equipment
46.56 1.04 0.28 47.32 23.98 2.52 0.20 26.30 21.02 22.58
Motor Vehicles 1.56 2.90 1.56 2.90 1.01 0.17 1.13 0.05 2.85 0.55
Computers 51.84 3.04 2.10 52.77 47.34 1.77 2.98 46.13 6.64 4.50
Temporary Structure, Fixtures & Erections
11.91 0.00 0.00 11.91 11.91 0.00 0.00 11.91 0.00 0.00
TOTAL
12673.
84
1338.5
0 3.94
14008.
39
7801.1
2 879.52 4.31 8676.33
5332.0
6
4872.7
1
Previous Year 9945.7
9 2730.9
9 2.95
12673.84
7101.17
703.21 3.26 7801.12 4872.7
1 2844.6
2
INTANGIBLE ASSETS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Capital Work In Progress
484.13
Previous Year
2.01
F-39
Note J – Investments
( In Million)
Particulars As at As at
31.03.2012 31.03.2011
Valued at Cost
Non-Current Investments
Investment in Equity Instruments
Trade Investments(Unquoted)
i) 5 equity Shares of Rs.50/- each fully paid-up in Mittal
Chambers Premises Co-operative Society Ltd.,Bombay 0.00 0.00
ii) Sethusamudram Corporation Ltd 300 million Equity
shares of Rs 10 each fully paid 300.00 300.00
Total 300.00 300.00
J.1 Sethusamudram Corporation Ltd. (SCL), a special purpose vehicle was incorporated on 06.12.2004 for
developing the Sethusamudram Channel Project with Tuticorin Port Trust, Ennore Port Ltd., Visakhapatnam
Port Trust, Chennai Port trust, Dredging Corporation of India Ltd., Shipping Corporation of India Ltd. and
Paradip Port Trust as the shareholders. DCI invested in equity share capital 300 million rupees (previous year
300 million).The dredging work at Palk Strait was suspended from 16-07-2009. The Management does not
consider any diminution in the value of the investment and the same has been carried out at cost.
Note K - Long-term Loans & Advances
( In Million)
Particulars As at As at
31.03.2012 31.03.2011
Capital Advances 4524.89 1708.49
Security Deposits 108.97 78.66
Other Loans & Advances 43.19 43.68
Total 4677.05 1830.83
Note L-Inventory
( In Million)
Particulars As at As at
31.03.2012 31.03.2011
Stock of spares and stores 856.67 860.18
Less: Provision for unserviceable Spares & Stores 36.90 16.63
Sub-total 819.77 843.55
Spares and stores in Transit 156.85 75.12
Total 976.62 918.67
F-40
Note M-Trade Receivables
( In Million)
Particulars As at As at
31.03.2012 31.03.2011
Debts outstanding for a period exceeding 6 months 4146.01 3149.44
Other Debts 503.31 1747.47
Sub-total 4649.32 4896.91
Less:Considered Doubtful and provided for-
Debts considered good 756.27 1073.07
Total
3893.05 3823.84
Note: (For the financial year 2011-12)
N.
1
Trade receivables include Service tax and educationcess thereon amounting to 567.4 million rupees.The
provision for bad debts is on net dredging charges (4,081.9 million rupees) but not on entire Trade
Receivables.
N.
2
The Company Vide its Letter No DCI/Legal/SSCP/Arbitration/2012 dt 06-06-2012 requested Ministry of
Shipping (GOI), to appoint a sole Arbitrator under clause 22 of the contract for the realisation of its
outstanding dues payable by Sethusamudram Company Ltd.
Note N - Cash and Cash Equivalents
( In Million)
Particulars As at As at
31.03.2012 31.03.2011
Balances with Banks 51.77 413.16
Cheques/ Drafts in Hand 40.62 0.66
Cash on Hand 9.80 39.56
Others
Term Deposits with Scheduled Banks 680.00 1898.10
Earmarked balances with Banks 0.97 1.26
Total 783.16 2352.74
Note O - Short-term Loans & Advances
( In Million)
Particulars As at As at
31.03.2012 31.03.2011
Secured Loans 2.39 3.44
Unsecured Loans 133.63 619.09
Total 136.02 622.53
F-41
Note P - Other Current Assets
( In Million)
Particulars As at As at
31.03.2012 31.03.2011
Interest Accrued & Not Due on Deposits & Advances 35.60 114.36
Recoverable from Ports
Dredging Services (Unbilled Operational Income) 1121.67 794.29
Sub-total 1121.67 794.29
Income Tax Paid & Tax deducted at source 811.35 647.95
Less: Provision for Income Tax 354.32 311.57
Sub-total 457.03 336.38
Current Portion of Deposits
Customs, Post & Telegraphs 0.00 0.00
Others 89.46 32.46
Sub-total 89.46 32.46
Prepaid Expenses 40.71 24.77
Claims & Other Recoverables 512.73 440.62
Less:Provision for Doubtful Claims 1.18 1.18
Sub-total 511.55 439.44
Total 2256.02 1741.70
Note:
(a) Income tax paid, TDS and provision for income tax are not adjusted even after the completion of
assessment upto Assessment year: 2010-11 in view of the fact that certain information is yet to be obtained.
(b) Claims & other recoverables include insurance recoverables, tax refunds, recoverables from employees and
others.
F-42
DREDGING CORPORATION OF INDIA LIMITED
NOTES - STATEMENT OF PROFIT & LOSS ACCOUNT
Note Q - Revenue from Operations ( In Million)
Particulars
Year ended Year ended
31.03.2012 31.03.2011
Core Dredging Services 4682.73 4578.73
Other Operating Revenue 233.85 492.85
Less: Rebates/Discounts 0.00 0.16
Total 4916.58 5071.42
Note R - Other Income
( In Million)
Particulars
Year ended Year ended
31.03.2012 31.03.2011
Interest Income earned on:
(Other than Operating Income)
Fixed Deposits 126.97 122.90
House Building and other Advances 1.92 1.80
Tax refunds 0.36 31.13
Total 129.25 155.83
Note S - Employee Benefits Expenses ( In Million)
Particulars
Year ended Year ended
31.03.2012 31.03.2011
Salaries and Allowances
Operational Staff 546.87 410.97
Shore Employees 342.15 227.01
Sub-total 889.02 637.98
Contribution to Provident Fund and Other Funds
Operational Staff 8.81 8.25
Shore Employees 25.96 15.50
Sub-total 34.77 23.75
Remuneration to Directors:
Chairman-and-Managing Director 0.84 2.28
Director (Finance) 2.05 2.25
Director (Operations & Technical) 1.95 1.05
Sub-total 4.84 5.58
Total 928.63 667.31
Note T - Other Expenses
( In Million)
Particulars
Year ended Year ended
31.03.2012 31.03.2011
Other Operational Expenses
Lodging Expenses: Floating Staff 9.70 9.48
Travelling, Porterage & Conveyance-Floating Staff 6.79 8.24
Equipment Transportation Expenses 7.76 1.72
Direct Works Expenses:
Boat/Tug Hire charges 24.66 24.06
Crane Hire charges 1.39 0.27
Pipeline laying/maintenance expenses 10.25 3.92
Payments to Contractors 27.83 9.12
Others 17.23 26.96
Miscellaneous Expenses 30.85 35.68
F-43
Sub-total 136.46 119.45
Rent 10.00 4.03
Rates and Taxes 0.90 0.89
Other Establishment Expenses
Donations 0.14 0.00
Travelling Expenses 34.14 40.20
Bank Charges & Guarantee fee 8.41 8.37
Printing & Stationery 2.85 1.98
Postage, Telegrams, Phones & Telex 3.78 3.79
Repairs and Maintenance of Building, 11.44 10.85
Expenditure on data processing 1.08 0.35
Advertisement & Publicity (including NIT) 1.95 1.59
Dailies & Periodicals and Cost of Library 2.16 0.83
Remuneration to Auditors :
As Auditors 0.25 0.25
Tax Audit Fees 0.04 0.04
For other Services 0.21 0.25
Legal Adviser fee & expenses 2.87 0.96
Electricity, Water Charges 4.40 4.91
Expenses on Seminars 1.40 3.21
Expenditure on Corporate Social Responsibility 2.50 14.00
Others 18.45 14.38
Sub-total 96.07 105.97
Total 243.43 230.34
Note U - Alloawance for Provisions
( In Million)
Particulars
Year ended Year ended
31.03.2012 31.03.2011
Provisions
For Doubtful Debts - 423.60
For Unserviceable Spares and Stores 20.27 -
Impairment Loss - -
For Losses writtenoff - -
Total 20.27 423.60
Note V - Prior Period Adjustments
( In Million)
Particulars
Year ended Year ended
31.03.2012 31.03.2011
Prior Period Adjustments
Debits 47.34 -
Credits 40.74 -
Total 6.60 -
Note W - Tax Expenses
( In Million)
Particulars
Year ended Year ended
31.03.2012 31.03.2011
Income tax 42.50 54.18
FBT - -
Wealth Tax 1.30 -0.64
Total 43.80 53.54
Note X - Earning per Share
F-44
Particulars
Year ended Year ended
31.03.2012 31.03.2011
Profit after tax in Rs. Million 131.81 395.15
Weighted average number of Equity Shares (Nos.) of
face Value Rs 10/-per share 28000000 28000000
Basic Earnings per Share (in Rs.)
4.71 14.11
F-45
NOTES TO ACCOUNTS:
For the Financial Years 2007-08 to FY 2011-12
a) Letters seeking confirmation of balances have been sent to Customers and replies from the Customers are awaited
and as such could not be reconciled.
b) The CEGAT issued orders during the year 2001-02 setting aside the earlier orders of the Customs Department
levying duty of 113.28 million on the accessories and spares of Dr-Aquarius. The Department while accepting
CEGAT order sanctioned the refund of 113.28 million under 27 (2) of Customs Act 1962, but ordered to credit
the same to Consumer Welfare Fund. Aggrieved by this order DCI filed an appeal before CESTAT, Kolkata for
issuance of necessary directions to the Department for refunding the Customs Duty. Necessary adjustments to
capital cost of the dredger will be made on receipt of the refund.
c) Escalation Claims (Labour / Material) have been preferred on the basis of latest available indices.
d) Earnings per share:
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Profit after Tax ( In
Million) 131.81 395.15 700.54 463.72 1548.19
Weighted average number of
Equity Shares (Nos.) of face
Value Rs 10/-per share (in
number)
2,80,00,000 2,80,00,000 2,80,00,000 2,80,00,000 2,80,00,000
Basic Earnings Per Share (in
) 4.71 14.11 25.02 16.56 55.29
e) In view of adoption of Tonnage Tax Scheme under Income Tax Act 1961, no provision is required for deferred
tax liability/asset for the year.
f) The Company has suspended the works at Sethusamudram Project w.e.f 16-07-2009. The Company incurred an
expenditure of 9282.30 million in execution of Sethusamudram Project and inconsideration received 5927
million. The Company approached the Ministry for revision of price on the cost plus basis and the same is
pending with the Ministry of Shipping. (MOS).
g) Due to change in the Accounting policy - Note XVII -4 (d) in respect of Insurance claims, there is decrease in
Profit by 2.93 million and due to change in Accounting policy Note- -XVII 9 in respect of Investments there
is no effect on profit.
h) Figures have been rounded off to decimals of million.
i) Figures for the previous year have been re-grouped / reclassified wherever necessary to conform to current year
groupings.
j) Disclosure requirements under AS 15 on Employee benefits are given here under:
Defined Contribution Plan: Contribution to Defined Contribution Plan, recognized as expense for the year, is
under:
F-46
( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Employer’s Contribution to
Provident Fund (inclusive of
Contribution to Pension
Fund)
34.80 23.70 21.10 23.20 20.90
The Company offers to its employees defined benefit plans in the form of Gratuity, Leave Encashment and Post-
retirement Medical Benefits as given under.
Gratuity: This benefit accrues to employee on retirement/ resignation and is based on the number of years of
service rendered by the employee. A separate trust is formed for gratuity, which is funded by the Company.
Assumptions
Particulars
Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Mortality
Interest/Discount Rate 8.57% 8.17% 7.00% 7.00% 7.50%
Rate of increase in Compensation 4.00% 4.00% 4.00% 4.00% 0.00%
Rate of return (expected) on plan assets 8.00% 8.00% 10.00% 0.00% 8.00%
Withdrawal rate 0.00% 0.00% 0.00% 5.00% 6.00%
Employee Attrition Rate (Past Service
(PS)
PS: 0 to
42:5%
PS:0 to 42:
5%
PS:0 to 42:
5% 0.00% 0.00%
Expected average remaining service
(years) 6.74 6.28 6.25 5.98 8.56
Changes in present value of obligations
( ( in Million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
PVO at beginning of period 158.40 145.70 155.60 105.50 134.60
Interest Cost 11.10 9.90 10.00 6.80 9.20
Current Service Cost 10.30 11.70 15.30 15.70 3.20
Benefits paid -43.20 -44.40 -25.00 -28.30 -22.60
Actuarial (gain)/loss on obligation 9.30 35.40 -10.20 -55.90 -19.00
PVO at end of the period 146.00 158.40 145.70 155.60 105.40
Particulars
Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Fair Value of Plan Assets at beginning
of period 118.00 145.70 132.80 150.60 153.70
F-47
Adjustment to Opening balance 40.60 - - - -
Amount receivable from LIC - - 4.10 - -
Expected return on Plan Assets 12.40 10.30 13.40 - 11.40
Contributions 37.70 4.40 27.80 - -
Benefits paid -43.20 -44.40 -25.00 -28.30 -22.60
Actuarial gain/(loss) on plan assets 3.50 -2.20 17.60 10.50 -0.70
Fair Value of Plan Assets at end of
period 162.20 118.10 154.80 132.80 141.90
Fair value of plan assets
( in
Million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Fair Value of Plan Assets at beginning
of period 118.00 145.70 132.80 150.60 153.70
Adjustment to Opening balance 40.60 - - - -
Amount receivable from LIC - - 4.10 - -
Actual return on Plan Assets 8.90 8.20 15.20 10.50 10.70
Contributions 37.70 4.40 27.80 - -
Benefits paid -43.20 -44.40 -25.00 -28.30 -22.60
Fair Value of Plan Assets at end of
period 162.20 118.10 158.50 132.80 141.90
Funded Status (including unrecognized
past service cost) 16.30 -40.30 9.10 -22.70 36.50
Excess of actual over estimated return
on Plan Assets -3.50 -2.20 17.60 10.50 -0.70
Experience History
( in
Million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Gain/ loss on obligation due to change
in Assumption -2.00 -0.90 -5.60 18.20 -
Experience Gain / (Loss) on obligation 11.20 36.40 -4.60 37.60 -
Experience Gain / (Loss) on Plan Assets -3.50 -2.20 - 10.50 -
Actuarial Gain / (Loss) on Plan Assets - - 1.80 - -
Actuarial Gain/(Loss) recognized
( in
Million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Actuarial Gain/(Loss) for the period
(Obligation) -9.30 -35.40 10.20 -55.90 19.00
F-48
Actuarial Gain/(Loss) for the period
(Plan Assets) -3.50 -2.20 1.80 10.50 -0.70
Total Gain/(Loss) for the period -12.80 -37.60 12.00 -45.40 18.30
Actuarial Gain/(Loss) recognized for the
period -12.80 -37.60 12.00 -45.40 18.30
Unrecognized Actuarial Gain’(Loss) at
end of period - - - - -
Amounts recognized in the Balance Sheet & Statement of Profit & Loss Account
( in
Million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
PVO at end of period 145.90 158.40 145.70 155.50 105.50
Fair Value of Plan Assets at end of
period 162.20 118.10 154.90 132.80 141.90
Funded Status 16.20 -40.30 9.10 -22.80 36.50
Unrecognized Actuarial Gain/(Loss) - - - - -
Unrecognized Past service Cost – non
vested benefits - - - - -
Net Asset/(Liability) recognized in the
balance sheet 16.20 -40.30 9.10 -22.80 36.50
Expenses recognized in the statement of Profit & Loss Account
( in
Million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Current Service Cost 10.30 11.80 15.40 15.70 3.20
Interest cost 11.10 9.90 10.00 6.80 9.20
Expected Return on Plan Assets -12.50 -10.30 -13.40 - -11.40
Net Actuarial Gain / (Loss) recognized
for the period 12.80 37.60 -12.00 45.40 -18.30
Expense recognized in the statement of
P&L A/c 21.8 48.90 -0.10 67.90 -17.30
Movements in the Liability recognized in Balance Sheet
( in
Million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Opening Net Liability 40.30 - 22.80 -45.10 -19.20
Adjustment to Opening balance -40.60 - - - -
Amount receivable from LIC - - -4.10 - -
Expenses as above 21.80 48.90 -0.10 67.90 -17.30
Contribution paid -37.80 -4.40 -27.80 - -
Closing Net Liability 16.30 -40.30 -9.20 22.70 -36.50
F-49
Short Term Compensated Absence Liability
Particulars
Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Valuation date 31-03-2012 31-03-2011 31-03-2010 31-03-2009 31-03-2008
No of days - - - - -
Amount * ( in million)
(* Not included in the Net liabilities
under item No VIII)
Leave Encashment: This benefit represents un-availed leave accruing to the credit of the employees accumulated and
paid to shore and floating employees as per respective rules.
For Floating Staff:
Assumptions
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Mortality
Interest/Discount Rate 8.57% 8.17% 7.00% 7.00% 7.50%
Rate of increase in Compensation 4.00% 4.00% 4.00% 4.00% 0%
Rate of return (expected) on plan
assets 0% 0% 0% 0% 0%
Withdrawal rate 0% 0% 0% 5.00% 6.00%
Employee Attrition Rate (Past
Service (PS)
PS : 0 to
42:5%
PS: 0 to 42:
5%
PS:0 to 42:
5% 0% 0%
Expected average remaining
service 1.84 4.75 8.54 7.51 9.83
Changes in present value of obligations ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
PVO at beginning of period 1.00 5.30 15.40 17.90 21.60
Interest Cost - 0.40 1.10 1.20 1.50
Current Service Cost 1.00 1.10 14.50 28.80 13.60
Benefits paid -3.30 - - -3.20 -2.40
Actuarial gain / (loss) on
obligation 2.00 -5.80 -25.60 -29.30 -16.40
PVO at end of the period 0.70 1.00 5.30 15.30 17.90
Changes in fair value of plan assets
( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Fair Value of Plan Assets at
beginning of period - - - - -
F-50
Adjustment to Opening balance - - - - -
Amount receivable from LIC - - - - -
Expected return on Plan Assets - - - - -
Contributions 3.30 - - 3.20 2.40
Benefits paid -3.30 - - -3.20 -2.40
Actuarial gain/(loss) on plan
assets - - - - -
Fair Value of Plan Assets at end
of period - - - - -
Fair value of plan assets
( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Fair Value of Plan Assets at
beginning of period - - - - -
Adjustment to Opening balance - - - - -
Amount receivable from LIC - - - - -
Actual return on Plan Assets - - - - -
Contributions 3.30 - - 3.20 2.40
Benefits paid -3.30 - - -3.20 -2.40
Fair Value of Plan Assets at end
of period - -1.00 -5.30 - -
Funded Status (including
unrecognized past service cost) -0.70 - - -15.40 -17.90
Excess of actual over estimated
return on Plan Assets - - - - -
Experience History ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Gain/ loss on obligation due to
change in Assumption 0.30 0.40 -0.30 -2.00 -
Experience Gain / (Loss) on
obligation 1.70 -6.30 -25.30 -27.30 -
Experience Gain / (Loss) on Plan
Assets - - - - -
Actuarial Gain / (Loss) on Plan
Assets - - - - -
Actuarial Gain/(Loss) recognized
( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Actuarial Gain / (Loss) for the
period (Obligation) -2.00 5.80 25.60 29.30 16.40
F-51
Actuarial Gain / (Loss) for the
period (Plan Assets) - - - - -
Total Gain / (Loss) for the period -2.00 5.80 25.60 29.30 16.40
Actuarial Gain / (Loss) recognized
for the period -2.00 5.80 25.60 29.30 16.40
Unrecognized Actuarial Gain /
(Loss) at end of period - - - - -
Amounts recognized in the Balance Sheet and Statement of Profit & Loss Account ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
PVO at end of period 0.70 1.00 5.30 15.40 17.90
Fair Value of Plan Assets at end
of period - - - - -
Funded Status -0.70 -1.00 -5.30 -15.40 -17.90
Unrecognized Actuarial
Gain/(Loss) - - - - -
Unrecognized Past service Cost –
non vested benefits - - - - -
Net Asset/(Liability) recognized
in the balance sheet -0.70 -1.00 -5.30 -15.40 -17.90
Expenses recognized in the statement of Profit & Loss Account ( in million)
Particulars
Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Current Service Cost 0.90 1.10 14.50 28.70 13.60
Interest cost - 0.40 1.10 1.20 1.50
Expected Return on Plan Assets - - - - -
Net Actuarial Gain / (Loss)
recognized for the period 2.00 -5.90 -25.60 -29.30 -16.40
Expense recognized in the
statement of P&L A/c 2.90 -4.30 -1.00 0.70 -1.30
Movements in the Liability recognized in Balance Sheet ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Opening Net Liability 1.00 5.30 15.40 17.90 21.60
Adjustment to Opening balance - - - - -
Amount receivable from LIC - - - - -
Expenses as above 2.90 -4.30 -10.00 0.70 -1.30
Contribution paid -3.30 -
-3.20 -2.40
Closing Net Liability 0.70 1.00 5.30 15.40 17.90
F-52
Short Term Compensated Absence Liability
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Valuation date 31-03-2012 31-03-2011 31-03-2010 31-03-2009 31-03-2008
No of days 1710 1710 7133 6447
Amount * ( in million) 0.60 3.30 22.70 16.10
(* Not included in the Net
liabilities under item No VIII)
For Shore Staff:
Assumptions
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Mortality
Interest/Discount Rate 8.57% 8.17% 7.00% 7.00% 7.50%
Rate of increase in Compensation 4.00% 4.00% 4.00% 4.00% 0%
Rate of return (expected) on plan
assets 0% 0% 0% 0% 0%
Withdrawal rate 0% 0% 0% 5.00% 6.00%
Employee Attrition Rate (Past
Service (PS)
PS: 0 to
42:5%
PS:0 to 42:
5%
PS:0 to 42:
5% 0% 0%
Expected average remaining
service 5.64 6.28 & 4.77 5.74 5.69 9.29
Changes in present value of obligations ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
PVO at beginning of period 67.30 71.50 57.10 45.30 54.50
Interest Cost 4.90 5.30 3.60 3.20 3.90
Current Service Cost 9.40 8.90 9.50 11.70 6.60
Benefits paid -15.70 -10.30 -9.90 -4.10 -4.70
Actuarial (gain)/loss on obligation 2.80 -8.10 11.10 1.00 -15.10
PVO at end of the period 68.60 67.30 71.60 57.10 45.20
Changes in fair value of plan assets ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Fair Value of Plan Assets at
beginning of period - - - - -
Adjustment to Opening balance - - - - -
Amount receivable from LIC - - - - -
Expected return on Plan Assets - - - - -
Contributions 15.80 10.30 9.90 4.10 4.70
Benefits paid -15.80 -10.30 -9.90 -4.10 -4.70
F-53
Actuarial gain/(loss) on plan
assets - - - - -
Fair Value of Plan Assets at end
of period - - - - -
Fair value of plan assets
( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Fair Value of Plan Assets at
beginning of period - - - - -
Adjustment to Opening balance - - - - -
Amount receivable from LIC - - - - -
Actual return on Plan Assets - - - - -
Contributions 15.80 10.30 9.90 4.10 4.70
Benefits paid -15.80 -10.30 -9.90 -4.10 -4.70
Fair Value of Plan Assets at end
of period - - - - -
Funded Status (including
unrecognized past service cost) -68.60 -67.30 -71.60 -57.10 -45.30
Excess of actual over estimated
return on Plan Assets - - - - -
Experience History ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Gain/ loss on obligation due to
change in Assumption 0.90 -0.40 2.90 10.60 -
Experience Gain / (Loss) on
obligation 3.70 -7.70 14.00 -9.70 -
Experience Gain / (Loss) on Plan
Assets - - - - -
Actuarial Gain / (Loss) on Plan
Assets - - - - -
Actuarial Gain/(Loss) recognized ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Actuarial Gain/(Loss) for the
period (Obligation) -2.80 8.10 -11.10 -1.00 15.10
Actuarial Gain/(Loss) for the
period (Plan Assets) - - - - -
Total Gain/(Loss) for the period -2.80 8.10 -11.10 -1.00 15.10
Actuarial Gain/(Loss) recognized
for the period -2.80 8.10 -11.10 -1.00 15.10
Unrecognized Actuarial
Gain’(Loss) at end of period - - - - -
F-54
Amounts recognized in the Balance Sheet and Statement of Profit & Loss Account ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
PVO at end of period 68.60 67.30 71.60 57.10 45.30
Fair Value of Plan Assets at end
of period - - - - -
Funded Status -68.60 -67.30 -71.60 -57.10 -45.30
Unrecognized Actuarial
Gain/(Loss) - - - - -
Unrecognized Past service Cost –
non vested benefits - - - - -
Net Asset/(Liability) recognized
in the balance sheet -68.60 -67.30 -71.60 -57.10 -45.30
Expenses recognized in the statement of Profit & Loss Account
( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Current Service Cost 9.30 8.90 9.50 11.70 6.60
Interest cost 4.90 5.30 3.70 3.20 3.90
Past service cost (non-vested
benefits) - - - - -
Past service cost ( vested benefits) - - - - -
Expected Return on Plan Assets - - - - -
Net Actuarial Gain / (Loss)
recognized for the period 2.80 8.10 11.10 1.00 -15.10
Expense recognized in the
statement of P&L A/c 17.00 6.10 24.20 16.00 -4.60
Movements in the Liability recognized in Balance Sheet ( in million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Opening Net Liability 67.30 71.60 57.10 45.20 54.50
Adjustment to Opening balance - - - - -
Amount receivable from LIC - - - - -
Expenses as above 17.00 6.10 24.20 16.00 -4.50
Contribution paid -15.80 -10.30 -9.90 -4.10 -4.70
Closing Net Liability -68.60 67.30 71.60 57.00 45.30
Short Term Compensated Absence Liability
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Valuation date 31-03-2012 31-03-2011 31-03-2010 31-03-2009 31-03-2008
No of days 18585 17652 20025 37779
Amount * ( in million) 33.90 25.30 29.80 50.90
F-55
(* Not included in the Net
liabilities under item No VIII)
Post-retirement Medical benefits: The Company is obtaining Medi-Claim Policy for an insurance coverage at the rate
of Rs.one lakh per individual per annum. The medi-claim policy covers hospitalization, medical treatment and
domiciliary medical treatment. The retired employees and his/her spouse are entitled to this policy subject to an annual
payment of 100 per head per annum. The balance annual premium payable towards the medi-claim policies is met
by the Company. During the year the Company paid a Premium of 1.45 million (inclusive of members’
contribution).
k) Disclosure of provisions required by Accounting Standard 29 “Provisions, Contingent Liabilities and
Contingent Assets”:
Employee benefits
( in
Million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Carrying amount at the
beginning of the year 68.30 76.84 72.47 66.84 -
Additional provisions made
during the year 35.47 - 4.37 5.63 -
Amounts used during the year - 8.54 - - -
Carrying amount at the end of
the period 103.77 68.30 76.84 72.47 66.84
Contractual obligations
( in
Million)
Particulars Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Carrying amount at the
beginning of the year 4.01 4.01 4.01 4.01 4.01
Additional provisions made
during the year - - - - -
Amounts used during the year 4.01 - - - -
Carrying amount at the end of
the period - 4.01 4.01 4.01 4.01
\
Contingent Liabilities
( In Million)
Year ended Year ended Year ended Year ended Year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
a. Letters of Credit 5.54 14.53 55.66 128.35 60.12
b. Claims made against the
company not acknowledged as
debts
530.01 427.25 35.94 29.43 39.19
F-56
c. Estimated amounts of contracts
remaining to be executed on
capital accounts are not provide
for
10737.71 13685.41 1170.41 1819.64 924.60
d. Income tax demands received
but disputed by the company 157.71 109.81 179.15 0.00 0.00
For the Financial Year 2010-11
The income in respect of Haldia Project is on Cost plus basis as in previous year and is recognized based on the
contractual terms of payments and any adjustments are accounted for after the audit of relevant year’s actual
expenditure.
For the Financial Year 2009-10
a) During the year the Company has suspended the works at Sethusamudram Project wef 16-07-2009. The
Company approached the Ministry for revision of price on the cost plus basis, the actual cost incurred up to 16-
07-2009 being 8677.30 million. Pending revision of price, income is considered as per existing contract/
directions issued by Ministry in this regard.
b) Pursuant to arbitration award in respect of Link Road Project, Kochi, adjudicated in favour of the Company,
Cochin Port Trust (CPT) has settled the principal amount and other dues during the year. However, CPT stated
that interest will be paid after receiving the same from Ministry of National High Ways. The matter is being
taken up through Ministry of Shipping.
For the Financial Year 2008-09
a) During the year, the Accounting policies No 4(a) Spares and stores and Accounting policy No. 6 Fixed assets
have been changed pursuant to the expert opinion given by the Institute of Chartered Accountants of India, New
Delhi. Implemented w.e.f. 01-04-2008 prospectively. Accordingly, spares of the nature of inventory issued to
dredgers are charged to revenue as and when consumed (Accounting policy 4(a). Items of Capital nature/
equipments are capitalized and depreciated over the remaining useful life of the asset. (Accounting Policy 6 (c).
Consequent to the change in the policy, profit for the year increased by 331 million.
b) During the year the cumulative income for the works executed for Sethusamudram Project from 2-05-2007 to
31-03-2009 have been reviewed and accounted for on the basis of contract signed on 7-11-2008 adjusting the
income considered during earlier years on the basis of agreement dated 25-06-2005. This has resulted in
reduction of 545.10 million in the current year’s income from this project, in respect of cumulative income
considered up to 31-03-2008.
c) Income in respect of works executed in the estuary of River Hoogly ( Haldia Port ) up to 31-12-2008 is
recognized on the basis of existing rates. With effect from 1-01-2009 income is recognized on the basis of
contract signed on 6-5-2009.
d) Consequent to the capsizing of DCI TUG-VI off the Nagapattinam Coast on 06-05-2006, SMP Club,
Luxembourg, undertook wreck removal operations through Sea lord Diving and Salvage Pvt. Ltd, Mumbai
including the sale of the salvaged wreck. SMP Club have claimed US $ 291,800 which in turn was forwarded
to United India Insurance Company Limited as the same is recoverable under the war policy. The total loss
claim amounting to 25 million in this regard is not recognized in the income owing to prevailing uncertainty
in its realization.
e) The arbitration in respect of Link Road Project, Kochi, has been adjudicated in favour of the Company
awarding principal amount of 28.90 million plus interest amounting to 85.50 million upto 31-03-2009.
However, Cochin Port Trust has not paid any amount. In view of the uncertainty in realization of the amount,
income thereto has not been considered in the accounts.
f) Provision for bad and doubtful debts amounting to 817.90 million was created in respect of works executed
during the period 1-06-2000 to 31-03-2002 in the estuary of River Hoogly
(Haldia Port). During the year these claims were accepted by the port and admitted for payment. In view of the
certainty of its receipt the provision made in the earlier years is reversed and taken in other income.
F-57
g) Consequent upon the observation of Comptroller and Auditor General of India, during the course of their audit
under Section 619(4) of the Companies Act, 1956, the accounts and notes forming part of the accounts as
approved by Board of Directors in the 238th
Board meeting held on 29-06-2009 have been revised. These
changes resulted in increase in Profit Before and After Tax by 2.13 million and an increase in Fixed Assets by
16.66 million and decrease in net current assets by 14.52 million.
For the Financial Year 2007-08
a) Provision for current tax liability for the year ended 31st March 2008 has been made as per the provisions of
Tonnage Tax Scheme adopted by the Company under section 115 VT of Income Tax Act 1961 and for “other
income” provision is made as per applicable provisions of the Income Tax Act,1961.
b) On a reference made by DCI regarding Accounting treatment of Spares issued to dredgers, the Expert Advisory
Committee of Institute of Chartered Accountants of India gave its opinion on 27th May, 2008, which was
received by the Company on 31st May, 2008. As per the opinion, if the spares are of capital nature and
purchased subsequent to the acquisition of particular dredger these need to be capitalized and depreciated
systematically over the remaining useful life of the particular dredger. In case where the useful life of the
particular dredger has been completed, the same is to be charged to Profit & Loss A/c through depreciation.
Since the opinion has come after the close of the accounting period and several complexities are involved, no
adjustments have been made in the Accounts for the year in this regard. The company proposes to implement
the same from Financial Year 2008-09 onwards after examining all the issues involved.
c) Pending finalization of cubic meter rate in respect of Sethusamudram Channel Project income is recognized on
the basis of mutual agreement between Sethusamudram Corporation Limited and the Company.
d) Pending finalization of contract rate in respect of works executed in the estuary of River Hooghly, income is
recognized on the basis of existing rates.
e) Consequent to the capsizing of DCI TUG-VI off the Nagapattinam Coast on 06-05-2006, SMP Club,
Luxembourg, undertook wreck removal operations through Sea lord Diving and Salvage Pvt. Ltd, Mumbai
including the sale of the salvaged wreck. SMP Club have claimed US $ 291,800 which in turn was forwarded
to United India Insurance Company Limited as the same is recoverable under the war policy. The total loss
claim amounting to 25 million in this regard is not recognized in the income owing to prevailing uncertainty
in its realization.
f) During the year, the arbitration in respect of Balari Bar has been adjudicated in favour of the Company. Kolkata
Port Trust paid the principal amount of 50.20 million. However, KOPT disputed payment of the interest
amounting to 114.40 million upto 31-03-2008 awarded under the award. Hence, income thereto is recognized
in the current year accounts to the extent of principal amount received.
g) During the year, the arbitration in respect of Link Road Project, Kochi, has been adjudicated in favour of the
Company awarding principal amount of 28.90 million plus interest amounting to 80.10 million upto 31-03-
2008. However, Cochin Port Trust has not paid any amount. In view of the uncertainty in realization of the
amount, income thereto has not been considered in the accounts.
F-58
Annexure
-VI
Statement
of
Accountin
g Ratios
( In Million)
Descriptio
n
As at / For
the year ended
As at / For
the year ended
As at / For
the year ended
As at / For
the year ended
As at / For
the year ended
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Basic and
Diluted
Earning
per Share
(Rs.)
(Annualis
ed)
4.71 14.11 25.02 16.56 55.29
[Net
Profit after
Tax/
Weighted
average
number of
shares
outstandin
g during
the year]
(a) Net
Profit after
tax
131.81 395.15 700.54 463.72 1548.19
(b)
Weighted
average
number of
shares
outstandin
g during
the year
(In
Number)
28000000 28000000 28000000 28000000 28000000
Return on
Average
Net
Worth
(%)
(Annualis
ed)
1% 3% 5% 4% 13%
[Net
Profit after
Tax/
Average
Net Worth
X 100]
(a) Net 131.81 395.15 700.54 463.72 1 548.19
F-59
Profit after
tax
(b) Net
Worth
(Sharehold
ers Funds)
13817.30 13685.49 13290.34 12687.76 12387.85
(c)
Average
Net Worth
13751.40 13487.92 12989.05 12537.80 11859.45
Net Asset
Value per
Share
(Rs.)
49.35 48.88 47.47 45.31 44.24
[Net
Worth/
Number of
equity
shares at
the end of
the period]
(a) Net
Worth
(Sharehold
ers Funds)
13817.30 13685.49 13290.34 12687.76 12387.85
(b)
Number of
equity
shares at
the end of
the period
(In
Number)
28000000 28000000 28000000 28000000 28000000
Debt to
Equity
Ratio
0.188 - - 0.004 0.013
[Total
Debt/ Net
Worth]
(a)
Total debt
outstandin
g
2599.53 0.00 0.00 55.10 165.31
(b) Net
Worth
(Sharehold
ers Funds)
13817.30 13685.49 13290.34 12687.76 12387.85
Long
Term
Debt to
Equity
Ratio
0.188 - - 0.004 0.013
[Long
F-60
Term
Debt/ Net
Worth]
(a)
Long term
debt
outstandin
g
2 599.53 - - 55.10 165.31
(b) Net
Worth
(Sharehold
ers Funds)
13817.30 13685.49 13290.34 12687.76 12387.85
F-61
Annexure-VII
Statement of Dividend
( In
Million)
Description As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Equity Share Capital (As at
period end) (In Number 28000000 28000000 28000000 28000000 28000000
Amount of Dividend:
Interim Dividend - - - - 210.01
Final Dividend - - 84.00 140.00 210.00
Total - - 84.00 140.00 420.01
Rate of dividend
Interim Dividend 0% 0% 0% 0% 75%
Final Dividend 0% 0% 30% 50% 75%
Corporate dividend tax on:
Interim Dividend - - - - 35.69
Final Dividend - - 13.95 23.81 35.69
Total - - 13.95 23.81 71.38
F-62
Annexure-VIII
Capitalization Statement
( In
Million)
Description As at As at As at As at As at
31.03.2012 31.03.2011 31.03.2010 31.03.2009 31.03.2008
Debt
Long Term Debt 2599.53 0.00 0.00 55.10 165.31
Short Term Debt 0.00 0.00 0.00 0.00 0.00
Total 2599.53 0.00 0.00 55.10 165.31
Shareholders Funds
Share Capital 280.00 280.00 280.00 280.00 280.00
Reserves & Surplus 13537.30 13405.49 13010.34 12407.76 12107.85
Total 13817.30 13685.49 13290.34 12687.76 12387.85
Long Term Debt to Equity
Ratio 0.188 - - 0.004 0.013
[Long Term Debt/Shareholders'
Funds]
Debt to Equity Ratio 0.188 - - 0.004 0.013
[Total Debt/Shareholders'
Funds]
FINANCIAL INDEBTEDNESS
Set forth below is a brief summary of our Company’s outstanding secured borrowings of € 80.52 million (Rs. 5875.58
million) as on December 31, 2012, together with a brief description of certain significant terms of such financing
arrangements.
1. Secured foreign currency term loans from banks availed by our Company
(All figures are in (€) millions, except in percentages)
Sl.
No
Name of
Lender
Type of
Facility
Loan
Documentation
Facility /
Amount
Sanctioned
(€ million)
Amount
Outstanding
(€ million) as
on December
31st, 2012
Rate of
Interest
%
Repaym
ent
Date/Sch
edule
Security
1 BNP
PARIBA
S
Secured
Foreign
currency
Term
Loan
Term Loan
agreement dt:
30/09/2011 for
building and
delivering two
Trailer Suction
Hopper
Dredgers of
5500 cu.m.
[DREDGE XIX
& DREDGE
XX]
116.75 80.52 6
Months
EURIBO
R + 0.825
p.a.
10 year
Tenor
payable
in 20 half
- yearly
equal
instalme
nts
commen
cing
from
May,
2013
The
vessel is
subject
to a first
priority
mortgag
e in
favour
of BNP
Paribas
F-63
(Dredger
XIX) &
6 months
from the
date of
delivery
(Dredger
XX)
2. Servicing behaviour on existing debt securities, payment of due interest on due dates on term loans and
debt securities:
As at the date of the Draft Prospectus, there has been no default in payment of principal or interest on any existing
secured term loan undertaken by the Company and it has neither defaulted in repayment or redemption of any of
its borrowings nor affected any kind of rollover against any of its borrowings in the past.
The Company does not have any outstanding unsecured loans, short term borrowings, corporate guarantees, non-
convertible debentures, commercial paper or hybrid debt as on December 31, 2012.
The Company confirms that it has not issued any debt securities or availed any borrowings for a consideration
other than cash, whether in whole or in part, at a premium or discount or in pursuance of an option since
inception.
109
FINANCIAL INDEBTEDNESS
A. Details of Secured Borrowings:
Our Company’s secured borrowings as on December 31, 2012 amount to ` 5,875.58 million. The details of the
individual borrowings are set out below:
Sr.
No.
Name of
lender
Loan
documents
Type of
facility
Amount
sanctioned
Amount
outstandi
ng as of
December
31, 2012
Tenure Rate of interest
(per annum) as on
December 31, 2012
Repayment Security
1. BNP Paribas
Atradius Facility
Agreement
dated September 30,
2011 and Supplemental
Agreement
dated December 11, 2012; Deed
of Morgage
dated December 28, 2012.
Term Loan facility
EUR 116.75 million
EUR 80.52 million
126 months
Six month Euribor plus a margin
0.825% per annum
20 equal semi-annual
repayment
instalments, the first
instalment falling due on
May 15, 2013
First priority statutory
mortgage of all
the shares in the First Trailer
Suction Hopper Dredger Vessel-
DCI Dredge XIX
(Vessel)
110
MATERIAL DEVELOPMENTS
Save as disclosed hereinafter, there have been no material developments since March 31, 2012 which effect the
operations, or financial condition of our Company:
Dredge XIX, TSHD was delivered to our Company on November, 2012 at Holland and was dedicated to our Country on
December 22, 2012.
111
SECTION VII : ISSUE RELATED INFORMATION
ISSUE STRUCTURE
Public issue of tax-free bonds of face value of ` 1,000 each in the nature of secured, redeemable, non-convertible
debentures having tax benefits under section 10(15)(iv)(h) of the income tax act, 1961, as amended, aggregating up to ` 5,000 million* in the fiscal year 2013.
The Issue is being made under the provisions of SEBI Debt Regulations and CBDT Notification by virtue of powers
conferred upon it by item (h) of sub-clause (iv) clause (15) of section 10 of the income tax act, 1961 (43 of 1961).
*In terms of CBDT Notification, besides the public issue, our Company may also raise Bonds through private placement
route in one or more tranches during the process of the present Issue, not exceeding ` 1,250 million, i.e. upto 25% of the
allocated limit for raising funds through tax free Bonds during Fiscal Year 2013, at its discretion. Our Company shall
ensure that Bonds issued through public issue route and private placement route shall together not exceed ` 5,000 million.
In case our Company raises funds through private placement during the process of the present Issue, the limit for the Issue
shall get reduced by such amount raised.
The Board, at the meetings held on November 10, 2012, approved the Issue of the Bonds in the nature of secured
redeemable non-convertible bonds, by public issue(s) and/or on private placements(s) basis in India to eligible
investors, in one or more tranches, in the aggregate amount of up to ` 5,000 million during Fiscal 2013, as allocated in
the Notification.
Particulars of the Bonds
The following are the key terms of the Bonds. This section should be read in conjunction with, and is qualified in its
entirety by, more detailed information in “Terms of the Issue” on page 117.
COMMON TERMS FOR THE BONDS
Issuer Dredging Corporation of India Limited
Issue of Bonds Public issue of tax-free bonds of face value of ` 1,000 each in the nature of secured,
redeemable, non-convertible debentures having tax benefits under section 10(15)(iv)(h) of the
income tax act, 1961, as amended, aggregating up to ` 5,000 million* in the fiscal year 2013.
The Issue is being made under the provisions of SEBI Debt Regulations and CBDT
Notification by virtue of powers conferred upon it by item (h) of sub-clause (iv) clause (15)
of section 10 of the income tax act, 1961 (43 of 1961).
*In terms of CBDT Notification, besides the public issue, our Company may also raise Bonds
through private placement route in one or more tranches during the process of the present Issue,
not exceeding ` 1,250 million, i.e. upto 25% of the allocated limit for raising funds through tax
free Bonds during Fiscal Year 2013, at its discretion. Our Company shall ensure that Bonds
issued through public issue route and private placement route shall together not exceed ` 5,000
million. In case our Company raises funds through private placement during the process of the
present Issue, the limit for the Issue shall get reduced by such amount raised.
Face Value (`) ` 1,000
Issue Price (`) ` 1,000
Nature of Bonds Secured
Mode of Issue Public issue
Pay-in Date Application Date. Full amount with the Application Form, except ASBA Applications. See
“Issue Procedure – Payment Instructions” on page 148.
Who can apply Category I
(“Qualified
Institutional
Buyers”)
(“QIBs”)*
Category II
(“Domestic
Corporates”)*
Category III
(“High Networth
Individuals”)
(“HNIs”)
Category
IV(“Retail
Individual
Investors”)
(“RIIs”)
112
COMMON TERMS FOR THE BONDS
Public financial
institutions
specified in
Section 4A of the
Companies Act,
Scheduled
commercial
banks,
Mutual funds
registered with
SEBI,
Multilateral and
bilateral
development
financial
institutions,
State industrial
development
corporations,
Insurance
companies
registered with
the Insurance
Regulatory and
Development
Authority,
Provident funds
with a minimum
corpus of ` 250
million,
Pension funds
with a minimum
corpus of ` 250
million,
The National
Investment Fund
set up by
resolution F. No.
2/3/2005-DD-II
dated November
23, 2005 of the
GoI, published in
the Gazette of
India,
Insurance funds
set up and
managed by the
army, navy, or air
force of the Union
of India and
Insurance funds
set up and
managed by the
Department of
Posts, India.
Companies within
the meaning of
section 3 of the
Companies Act and
bodies corporate
registered under the
applicable laws in
India and
authorized to invest
in Bonds including
limited liability
partnership(s)
registered under the
Limited Liability
Partnership Act,
2008 and Major
Port Trusts under
the Major Port
Trusts Act, 1963
The following
investors
applying for an
amount
aggregating to
more than ` 10
lakhs in the
Issue
Resident
Individual
Investors
Hindu
Undivided
Families
applying
through the
Karta
The following
investors
applying for an
amount
aggregating up
to and including
` 10 lakhs in the
Issue
Resident
Individual
Investors
Hindu
Undivided
Families
through the
Karta
113
COMMON TERMS FOR THE BONDS
Credit Ratings Brickwork has, by its letter no. BWR/BNG/RL/2012-13/0528 dated February 19, 2013,
assigned a rating of “BWR AA+ (SO) (Outlook: Stable)” to the Bonds. Instrument with this
rating are considered to have high degree of safety regarding timely servicing of financial
obligations. Such instruments carry very low credit risk. CARE has, by its letter dated
February 23, 2013, assigned a rating of “CARE AA (Double A)” to the Bonds. Instruments
with this rating are considered to have high degree of safety regarding timely servicing of
financial obligations. Such instruments carry very low credit risk. These ratings are not a
recommendation to buy, sell or hold securities, and investors should take their own decision.
These ratings are subject to revision or withdrawal at any time by the assigning rating
agency(ies) and should be evaluated independently of any other ratings. For the rationale for
these ratings. For details, see “Annexure A -Credit Ratings”.
Security For details in connection with security created in favour of Debenture Trustee, please see
“Terms of Issue - Security” on page 117 of this Draft Prospectus.
Security Cover One time of the total outstanding Bonds
Nature of
Indebtedness and
Ranking/ Seniority
The claims of the Bondholders shall be superior to the claims of any unsecured creditors of
the Company and subject to applicable statutory and/or regulatory requirements, rank pari
passu inter se to the claims of other creditors of the Company having the same security.
Put/Call Option There is no put/call option for the Bonds
Listing BSE. For more information, see “Terms of the Issue – Listing” on page 129.
Debenture Trustee GDA Trusteeship Limited
Depositories Central Depository Services (India) Limited (“CDSL”) and National Securities Depository
Limited (“NSDL”)
Registrar Karvy Computershare Private Limited
Modes of
Payment/Settlement
Mode
1. Direct Credit;
2. National Electronic Clearing System (“NECS”);
3. Real Time Gross Settlement (“RTGS”);
4. National Electronic Fund Transfer (“NEFT”); and
5. Registered/Speed Post
For more information, see “Terms of the Issue – Manner & Modes of Payment” on page
124.
Issuance In dematerialised form and physical form, at the option of the Applicant**
Trading In dematerialised form only**
Market Lot / Trading
Lot
One Bond
Deemed Date of
Allotment
The Deemed Date of Allotment will be the date on which the Board of Directors is deemed
to have approved the Allotment of Bonds for the Issue or any such date as may be
determined by the Board of Directors. All benefits under the Bonds including payment of
coupon rate will accrue to the Bondholders from the Deemed Date of Allotment. Actual
Allotment may occur on a date other than the Deemed Date of Allotment.
Record Date The record date for payment of interest on the Bonds or the Maturity Amount will be 15
days prior to the date on which such amount is due and payable.
Lead Managers SBI Capital Markets Limited and A.K. Capital Services Limited.
Objects of the Issue
and Utilisation of
Proceeds
See “Objects of the Issue” on page 55.
Working Day
Convention/ Day
Count
A Working Day shall mean all days excluding Sundays or a public holiday in India or at any
other payment centre notified in terms of the Negotiable Instruments Act, 1881, except with
reference to Issue Period, Coupon Payment Date and Record Date, where working days
shall mean all days, excluding Saturdays, Sundays and public holiday in India or at any
other payment centre notified in terms of the Negotiable Instruments Act, 1881
Day Count Convention
Actual/actual, i.e., coupon rate will be computed on a 365 days-a-year basis on the principal
114
COMMON TERMS FOR THE BONDS
outstanding on the Bonds. Where the coupon period (start date to end date) includes
February 29, coupon rate will be computed on 366 days-a-year basis, on the principal
outstanding on the Bonds.
Effect of holidays on payments
If the date of payment of coupon rate or principal or redemption or any date specified does
not fall on a Working Day, the succeeding Working Day will be considered as the effective
date. Coupon rate and principal or other amounts, if any, will be paid on the succeeding
Working Day. In case the date of payment of coupon rate falls on a holiday, the payment
will be made on the next Working Day, without any interest for the period overdue. In case
the date of redemption falls on a holiday, the payment will be made on the next Working
Day along with interest for the period overdue.
Transaction
Documents
Documents/undertakings/agreements entered into or to be entered into by the Company
with Lead Managers and/or other intermediaries for the purpose of this Issue, including
but not limited to the following: -
Debenture Trustee Agreement Trust Agreement dated February 25, 2013
between the Debenture Trustee and the
Company on or before the Designated Date
Escrow Agreement Agreement to be entered into by the
Company, the Registrar to the Issue, the
Lead Managers and the Escrow Collection
Bank(s) for collection of the Application
Amounts and where applicable, refunds of
amounts collected from Applicants on the
terms and conditions thereof
Issue Agreement The agreement entered into on February
25, 2013, between the Company and the
Lead Managers
Consortium Agreement Consortium Agreement dated [●] between
the Company and the Consortium
Members for the Issue
Registrar MoU Memorandum of Understanding dated
February 25, 2013 entered into between the
Company and the Registrar to the Issue, in
relation to the responsibilities and
obligations of the Registrar to the Issue
pertaining to the Issue
Tripartite Agreements Tripartite agreement dated [●] between the
Company, CDSL and the Registrar to the
Issue and the tripartite agreement dated [●]
between the Company, NDSL and the
Registrar to the Issue
Issue Opening Date [●]
Issue Closing Date [●]
The Issue shall open for subscription from 10 a.m. to 5 p.m. during the period indicated
above with an option for early closure (subject to the Issue being open for a minimum of
three Working Days), as may be decided by the Board of Directors in accordance with
applicable law. In the event of early closure, the Company shall ensure that public notice of
such early closure is published on or before such early date of closure, through
advertisement(s) in a leading national daily newspaper.
Default Interest Rate The interest rate as detailed in the Debenture Trust Deed, at which the Company will pay
penalty / liquidated damages in case of event of default.
Redemption
Premium/Discount
Not applicable
115
COMMON TERMS FOR THE BONDS
Interest on
Application Money
See “Terms of the Issue-Interest on Application and Refund Money” on page 122.
Option to retain
oversubscription
Option to retain oversubscription upto ` [●] million such that the aggregate amount is ` [●]
million.
Step up/step down
Coupon Rate
Additional coupon rate of [●]% to be paid to original Allottees under Category IV Portion.
In case the Bonds held by the original Allottees under Category IV Portion are
sold/transferred (except in case of transfer of Bonds to legal heirs in the event of death of
the original Allottee), the coupon rate shall stand revised to the coupon rate applicable for
Allottees falling under Category I, II and III Portions.
Conditions
precedent/subsequent
to disbursement
Other than the conditions specified in the SEBI Debt Regulations, there are no conditions
precedent/subsequent to disbursement. See “Terms of the Issue - Utilisation of Issue
Proceeds” on page 129.
Event of Default See “Terms of the Issue” on page 117.
Roles and
Responsibilities of
Debenture Trustee
See “Terms of the Issue- Debenture Trustee” on page 128.
Discount at which
Bond is issued and
the effective yield as
a result of such
discount
Not applicable
Governing Law Laws of the Republic of India
Jurisdiction The courts of New Delhi will have exclusive jurisdiction for the purposes of the Issue. *With respect to the provisions of Section 372A(3) of Companies Act, it may be noted that the RBI has through its circular (Circular No.
DBOD.No.Ret.BC. 77/12.01.001/2012-13) dated January 29, 2013 revised the Bank Rate from 9.00% to 8.75% w.e.f. January 29, 2013. Coupon
rate on the Bonds shall be determined in pursuant of the Notification. Although the coupon rate offered on Bonds maybe lower than the prevailing bank rate, it may be noted that since these are tax-free bonds, the gross/pre-tax yield to the investors may be higher, depending upon the applicable
tax rates. Companies other than banking companies, insurance companies and other companies as mentioned in Section 372A(3) of the Companies
Act may however seek independent opinion from their legal counsels about the eligibility to make an application for the Bonds. **In terms of Regulation 4(2)(d) of the Debt Regulations, the Company will make public issue of the Bonds in the dematerialised form. However, in
terms of Section 8 (1) of the Depositories Act, the Company, at the request of the Investors who wish to hold the Bonds in physical form will fulfil
such request. However, trading in Bonds shall be compulsorily in dematerialized form.
SPECIFIC TERMS FOR BONDS
Series Series 1 Bonds
Tenor 10 (ten) years
Minimum Application 5 Bonds and in multiples of one Bond thereafter. The Bonds are being issued at
par and the full amount of the face value per Bond is payable on application.
In multiples of One Bond
Maturity / Redemption Date [●] years from the Deemed Date of Allotment
Redemption Amount (` /
Bond)
Repayment of the Face Value plus any interest that may have accrued at the
Redemption Date
Coupon Type Fixed Coupon Rate
Coupon Payment Date The date, which is the day falling one year from the Deemed Date of Allotment,
in case of the first coupon payment and the same date every year, until the
Redemption Date for subsequent interest payments.
Coupon Reset Process Not applicable
Frequency of Coupon
Payment
Annual
Coupon Rate (%) p.a. for
Category I, II, III and IV
[●] %
Additional Coupon Rate (%)
for Category IV*
[●] %
Aggregate Coupon Rate (%)
for Category IV
[●] %
Annualized Yield (%) for [●] %
116
Category I, II and III
Annualized Yield (%) for
Category IV*
[●] %
*In case the Bonds held by the original Allottees under Category IV Portion are sold/transferred (except in case of transfer of Bonds to legal heirs
in the event of death of the original Allottee), the coupon rate shall stand revised to the coupon rate applicable for Allottees falling under Category I, II and III Portions.
Minimum Subscription
In terms of the SEBI Debt Regulations, an issuer undertaking a public issue of debt securities may disclose the
minimum amount of subscription that it proposes to raise through the issue in the offer document. The Company
has decided not to stipulate any minimum subscription for this Issue.
Market Lot & Trading Lot
As per the SEBI Debt Regulations, since trading in the Bonds will be in dematerialised form only, the tradable lot is
one Bond (“Market Lot”). The Company has made depository arrangements with CDSL and NSDL for trading of the
Bonds in dematerialised form, pursuant to the tripartite agreement dated [●] between the Company, CDSL and the
Registrar to the Issue and the tripartite agreement dated [●] between the Company, NDSL and the Registrar to the
Issue (collectively, “Tripartite Agreements”).
Listing
For information, see “Terms of the Issue – Listing” on page 129.
117
TERMS OF THE ISSUE
GENERAL TERMS OF THE ISSUE
Authority for the Issue
Public issue of tax-free bonds of face value of ` 1,000 each in the nature of secured, redeemable, non-convertible
debentures having tax benefits under section 10(15)(iv)(h) of the income tax act, 1961, as amended, aggregating up to ` 5,000 million* in the fiscal year 2013.
The Issue is being made under the provisions of SEBI Debt Regulations and CBDT Notification by virtue of powers
conferred upon it by item (h) of sub-clause (iv) clause (15) of section 10 of the income tax act, 1961 (43 of 1961).
*In terms of CBDT Notification, besides the public issue, our Company may also raise Bonds through private placement
route in one or more tranches during the process of the present Issue, not exceeding ` 1,250 million, i.e. upto 25% of the
allocated limit for raising funds through tax free Bonds during Fiscal Year 2013, at its discretion. Our Company shall
ensure that Bonds issued through public issue route and private placement route shall together not exceed ` 5,000 million.
In case our Company raises funds through private placement during the process of the present Issue, the limit for the Issue
shall get reduced by such amount raised.
The Board, at the meetings held on November 10, 2012 approved the Issue of the Bonds in the nature of secured
redeemable non-convertible bonds, by public issue(s) and/or on private placements(s) basis in India to eligible
investors, in one or more tranches, in the aggregate amount of up to ` 5000 million during Fiscal 2013, as allocated in
the CBDT Notification.
Terms & Conditions of the Issue
The terms and conditions of Bonds being offered in the Issue are subject to the Companies Act, the SEBI Debt
Regulations, the Debt Listing Agreement, the CBDT Notification, the Prospectus, the Application Form, the Abridged
Prospectus and other terms and conditions as may be incorporated in the Debenture Trustee Agreement dated February
25, 2013 (“Debenture Trustee Agreement”) entered into between the Company and GDA Trusteeship Limited (in its
capacity as the “Debenture Trustee”, which expression will include its successor(s)) as trustee), as well as laws
applicable from time to time, including rules, regulations, guidelines, notifications and any statutory modifications or
re-enactments including those issued by GoI, SEBI, RBI, the Stock Exchanges and/or other authorities and other
documents that may be executed in respect of the Bonds.
For more information, see “Issue Structure” on page 111.
Face Value
The face value of each Bond is ` 1,000.
Security
The Bonds will be secured by
Land (at Visakhapatnam) ` 3.6 million
Security of five – Dredgers, viz. Dredgers – XV, XVI, XVII,
XVIII and Back Hoe ` 4,780 million
Assignment of Bank Guarantees received against advance paid by
the Company for the third Trailer Suction Hopper Dredger-
Dredge –XXI
` 500 million.
118
Total ` 5,283.6 million
Further, the bank guarantees as and when received against payment of advance to the builder will be further assigned
during the period to act as top up to cover the depreciation of the Dredgers. Once the New Dredger (Dr-XXI) is
delivered which is scheduled for January, 2014, the charge on all these assets will be withdrawn and security will then
be created against the new dredger. The Company shall further provide an asset cover of one time of the total
outstanding amount of Bonds, pursuant to the terms of the Debenture Trustee Agreement. It will be ensured that the
market value of the movable / immovable properties against which the Bond shall be secured shall cover 100% of
amount of the Bond throughout the tenure of the Bonds. The Bondholders are entitled to the benefit of the Debenture
Trustee Agreement and are bound by and are deemed to have notice of all provisions of the Debenture Trustee
Agreement.
Credit Rating
Brickwork has, by its letter no. BWR/BNG/RL/2012-13/0528 dated February 19, 2013, assigned a rating of “BWR
AA+ (SO) (Outlook: Stable)” to the Bonds. Instrument with this rating are considered to have high degree of safety
regarding timely servicing of financial obligations. Such instruments carry very low credit risk. CARE has, by its letter
dated February 23, 2013, assigned a rating of “CARE AA (Double A)” to the Bonds. Instruments with this rating are
considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry
very low credit risk. These ratings are not a recommendation to buy, sell or hold securities, and investors should take
their own decision. These ratings are subject to revision or withdrawal at any time by the assigning rating agency(ies)
and should be evaluated independently of any other ratings. For the rationale for these ratings, please see “Annexure A
-Credit Ratings”.
Issue Period
Issue Opens On [●]
Issue Closes On [●]
The Issue shall open for subscription from 10 a.m. to 5 p.m. during the period indicated above with an option for early
closure (subject to the Issue being open for a minimum of three Working Days) which may be extended up to 30
Working Days from the date of opening of the Issue, as may be decided by the Board of Directors. In the event of such
early closure or extension of the subscription list of the Issue, the Company shall ensure that public notice of such
early closure/extension is published on or before such early date of closure or the Issue Closing Date, as applicable,
through advertisement(s) in a leading national daily newspaper.
Applications Forms for the Issue will be accepted only between 10 a.m. and 5.00 p.m. (Indian Standard Time) or such
extended time as may be permitted by the Stock Exchanges during the Issue Period mentioned above, on all Working
Days, i.e., between Monday and Friday, both inclusive, barring public holidays: (i) by the Members of the Syndicate
or Trading Members of the Stock Exchange(s), as the case may be, at the centres mentioned in the Application Form
through the non-ASBA mode, or (ii) in case of ASBA Applications, (a) directly by Designated Branches of SCSBs or
(b) by the centres of the Members of the Syndicate or Trading Members of the Stock Exchange(s), as the case may be,
only at the specified cities (Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bengaluru, Hyderabad,
Pune, Vadodara and Surat) (“Specified Cities”), except that on the Issue Closing Date, Application Forms will be
accepted only between 10 a.m. and 3.00 p.m. (Indian Standard Time) and uploaded until 5.00 p.m (Indian Standard
Time) or such extended time as may be permitted by the Stock Exchanges (after taking into account the total number
of Applications received up to the closure of timings for acceptance of Application Forms as stated herein).
Due to limitation of time available for uploading Applications on the Issue Closing Date, Applicants are advised
to submit their Application Forms one day prior to the Issue Closing Date and, no later than 3.00 p.m (Indian
Standard Time) on the Issue Closing Date. Applicants are cautioned that in the event a large number of
Applications are received on the Issue Closing Date, there may be some Applications which are not uploaded
due to lack of sufficient time to upload. Such Applications that cannot be uploaded will not be considered for
allocation under the Issue.
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Application Forms will only be accepted on Working Days.
Neither the Company, nor the Members of the Syndicate or Trading Members of the Stock Exchanges shall be
liable for any failure in uploading Applications due to failure in any software/hardware system or otherwise.
MINIMUM APPLICATION
5 Bonds and in multiples of one Bond thereafter. The Bonds are being issued at par and the full amount of the face
value per Bond is payable on application.
ESCROW MECHANISM
Please refer “Issue Procedure – Escrow Mechanism for Applicants other than ASBA Applicants” and “Issue
Procedure – Payment into Escrow Account” on pages 148 and 149, respectively.
ALLOTMENT OF BONDS
Deemed Date of Allotment
The Deemed Date of Allotment will be the date on which, the Board of Directors approves the Allotment of Bonds for
the Issue. All benefits under the Bonds including payment of interest will accrue to the Bondholders from the Deemed
Date of Allotment. Actual Allotment may occur on a date other than the Deemed Date of Allotment.
Group of Applications and Allocation Ratio
For the purposes of the basis of allotment:
a) Applications received from Category I Applicants: Applications received from Applicants belonging to Category I
shall be grouped together (“QIB Portion”);
b) Applications received from Category II Applicants: Applications received from Applicants belonging to Category
II, shall be grouped together (“Domestic Corporate Portion”);
c) Applications received from Category III Applicants: Applications received from Applicants belonging to Category
III shall be grouped together (“High Networth Individual Portion”); and
d) Applications received from Category IV Applicants: Applications received from Applicants belonging to Category
IV shall be grouped together (“Retail Individual Investor Portion”).
Pursuant to the Notification, at least 40% of the Issue size shall be reserved for Retail Individual Investors.
Applications will be consolidated on the basis of PAN for classification into various categories.
For avoidance of doubt, the terms “QIB Portion”, “Domestic Corporate Portion”, “High Net Worth Individual
Portion” and “Retail Individual Investor Portion” are individually referred to as a “Portion” and collectively
referred to as “Portions”.
For the purposes of determining the number of Bonds available for allocation to each of the abovementioned Portions, the
Company shall have the discretion of determining the number of Bonds to be allotted over and above the Base Issue Size,
in case the Company opts to retain any oversubscription in the Issue up to ` [●] million. The aggregate value of Bonds
decided to be allotted over and above the Base Issue Size, (in case the Company opts to retain any oversubscription in the
Issue), and/or the aggregate value of Bonds up to the Base Issue Size shall be collectively termed as the “Overall Issue
Size”.
Allocation Ratio
QIB Portion Domestic Corporate High Networth Individual Retail Individual Investor
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Portion Portion Portion
[●]% of the Overall Issue
Size
[●]% of the Overall Issue
Size
[●]% of the Overall Issue
Size
[●]% of the Overall Issue
Size
Basis of Allotment
(a) Allotments in the first instance:
(i) Applicants belonging to the Category I, in the first instance, will be allocated Bonds up to [●]% of
Overall Issue Size on first come first serve basis which would be determined on the basis of the date
of upload of each Application into the electronic system of the Stock Exchanges;
(ii) Applicants belonging to the Category II, in the first instance, will be allocated Bonds up to
[●]% of Overall Issue Size on first come first serve basis which would be determined on the
basis of date of upload of each Application into the electronic system of the Stock Exchanges;
(iii) Applicants belonging to the Category III, in the first instance, will be allocated Bonds up to
[●]% of Overall Issue Size on first come first serve basis which would be determined on the
basis of date of upload of each Application in to the electronic system of the Stock Exchanges;
(iv) Applicants belonging to the Category IV, in the first instance, will be allocated Bonds up to
[●]% of Overall Issue Size on first come first serve basis which would be determined on the
basis of date of upload of each Application in to the electronic system of the Stock Exchanges;
Allotments, in consultation with the Designated Stock Exchange, shall be made on a first come first serve
basis, based on the date of upload of each Application into the electronic system of the Stock Exchanges, in
each Portion, subject to the Allocation Ratio.
(b) Under Subscription: If there is any under subscription in any Portion, priority in allotments will be given in
the following order on a first come first serve basis in each Portion, based on the date of upload of each
Application into the electronic system of the Stock Exchanges, in each Portion:
(i) Retail Individual Investor Portion
(ii) QIB Portion
(iii) Domestic Corporate Portion
(iv) High Networth Individual Portion
(c) For each Portion, all Applications uploaded into the electronic system of the Stock Exchanges in the
same day would be treated at par with each other. Allotment within a day would be on proportionate
basis, where Bonds applied for exceeds Bonds to be allotted for each Portion respectively.
(d) Allotments in case of oversubscription: In case of an oversubscription, allotments to the maximum extent, as
possible, will be made on a first come first serve basis and thereafter on a proportionate basis in each Portion,
determined based on the date of upload of each Application into the electronic system of the Stock Exchanges
i.e. full allotment of Bonds to the Applicants on a first come first serve basis up to the date falling 1 day prior
to the date of oversubscription and proportionate allotment of Bonds to the Applicants on the date of
oversubscription .
(e) Proportionate Allotments: For each Portion, on the date of oversubscription:
(i) Allotments to the Applicants shall be made in proportion to their respective Application size, rounded
off to the nearest integer.
(ii) If the process of rounding off to the nearest integer results in the actual allocation of Bonds being
higher than the Issue size, not all Applicants will be allotted the number of Bonds arrived at after such
rounding off. Rather, each Applicant whose Allotment size, prior to rounding off, had the highest
decimal point would be given preference.
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(iii) In the event, there are more than one Applicant whose entitlement remain equal after the manner of
distribution referred to above, our Company will ensure that the basis of allotment is finalised by draw
of lots in a fair and equitable manner.
(f) Minimum allotment of 1 Bond and in multiples of 1 Bond thereafter would be made in case of each
valid Application, subject to Basis of Allotment as mentioned above
All decisions pertaining to the basis of allotment of Bonds pursuant to the Issue shall be taken by our Company in
consultation with the Lead Managers, and the Designated Stock Exchange and in compliance with the aforementioned
provisions of the Prospectus.
Additional/Multiple Applications
Please refer “Issue Procedure – Additional/Multiple Applications” on page 143.
Form of Allotment and Denomination
The Allotment of Bonds shall be in dematerialized form as well as physical form. In terms of Regulation 4 (2)(d) of
the SEBI Debt Regulations, the Company shall make public issue of Bonds in dematerialized form. However, in terms
of Section 8(1) of the Depositories Act, the Company, at the request of the Investors who wish to hold the Bonds in
physical form will fulfill such request. However, trading in Bonds shall be compulsorily in dematerialized form.
The Company shall take necessary steps to credit the Depository Participant account of the Applicant with the number
of Bonds Allotted. The Bondholders shall deal with the Bonds in accordance with the provisions of the Depositories
Act and/or rules as notified by the Depositories, from time to time.
In case of Bonds held in physical form, a single certificate will be issued to the Bondholder for the aggregate amount
(“Consolidated Certificate”) for each type of Bond. The applicant can also request for the issue of Bond certificates
in denomination of the Market Lot.
In respect of Consolidated Certificates on Allotment or on rematerialization of Bonds Allotted in dematerialized form,
we will, only on receipt of a request from the Bondholder, split such Consolidated Certificates into smaller
denominations subject to the minimum of Market Lot in accordance with applicable law. No fees would be charged
for splitting of Consolidated Certificates, but stamp duty payable, if any, would be borne by the Bondholder. The
request for splitting should be accompanied by the original Consolidated Certificate which would then be treated as
cancelled by us.
PAYMENT OF REFUNDS
Refunds for Applicants other than ASBA Applicants
Within 12 Working Days of the Issue Closing Date, the Registrar to the Issue will dispatch refund orders/issue
instructions for electronic refund, as applicable, of all amounts payable to unsuccessful Applicants (other than ASBA
Applicants) and also any excess amount paid on Application, after adjusting for allocation/Allotment of Bonds. In case
of Applicants who have applied for Allotment of Bonds in dematerialized form, the Registrar to the Issue will obtain
from the Depositories the Applicant’s bank account details, including the MICR code, on the basis of the DP ID and
Client ID provided by the Applicant in their Application Forms, for making refunds. In case of Applicants who have
applied for Allotment of Bonds in physical form, the bank details will be extracted from the Application Form or the
copy of the cheque. For Applicants who receive refunds through ECS, direct credit, RTGS or NEFT, the refund
instructions will be issued to the clearing system within 12 Working Days of the Issue Closing Date. A suitable
communication will be dispatched to the Applicants receiving refunds through these modes, giving details of the bank
where refunds will be credited with the amount and expected date of electronic credit of refund. Such communication
will be mailed to the addresses (in India) of Applicants, as per Demographic Details received from the Depositories or
the address details provided in the Application Form, in case of Applicants who have applied for Allotment of Bonds
in physical form. The Demographic Details would be used mailing of the physical refund orders, as applicable.
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Investors who have applied for Bonds in electronic form, are advised to immediately update their bank account details
as appearing on the records of their Depository Participant. Failure to do so could result in delays in credit of refund to
the investors at their sole risk and neither the Lead Managers nor the Company shall have any responsibility and
undertake any liability for such delays on part of the investors.
Mode of refunds for Applicants other than ASBA Applicants
Payment of refund, if any, for Applicants other than ASBA Applicants would be done through any of the following
modes:
1. Direct Credit – Applicants having bank accounts with the Refund Bank(s), as per Demographic Details received
from the Depositories, will be eligible to receive refunds through direct credit. Charges, if any, levied by the Refund
Bank(s) for the same would be borne by the Company.
2. NECS – Payment of refund would be done through NECS for applicants having an account at any of the centres
where such facility has been made available. This mode of payment of refunds would be subject to availability of
complete bank account details including the Magnetic Ink Character Recognition (“MICR”) code from the
Depositories.
3. RTGS – Applicants having a bank account at any of the centres where such facility has been made available and
whose refund amount exceeds ` 2 lakh, have the option to receive refund through RTGS provided the Demographic
Details downloaded from the Depositories contain the nine digit MICR code of the Applicant’s bank which can be
mapped with RBI data to obtain the corresponding Indian Financial System Code (“IFSC”). Charges, if any, levied by
the applicant‘s bank receiving the credit would be borne by the Applicant.
4. NEFT – Payment of refund will be undertaken through NEFT wherever the Applicant’s bank has been assigned the
IFSC which can be linked to an MICR code, if any, available to that particular bank branch. IFSC will be obtained
from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR
numbers. Wherever the Applicants have registered their nine digit MICR number and their bank account number while
opening and operating the beneficiary account, the same will be duly mapped with the IFSC of that particular bank
branch and the payment of refund will be made to the applicants through this method. The process flow in respect of
refunds by way of NEFT is at an evolving stage, hence use of NEFT is subject to operational feasibility, cost and
process efficiency. If NEFT is not operationally feasible, the payment of refunds would be made through any one of
the other modes as discussed in the sections.
5. For all other applicants, including those who have not updated their bank particulars with the MICR code, the
refund orders will be dispatched through speed/registered post only to Applicants that have provided details of a
registered address in India. Such refunds will be made by cheques, pay orders or demand drafts drawn on the relevant
Refund Bank and payable at par at places where Applications are received. Bank charges, if any, for cashing such
cheques, pay orders or demand drafts at other centres will be payable by the Applicants.
Mode of refunds for ASBA Applicants
In case of ASBA Applicants, the Registrar to the Issue will instruct the relevant SCSB to unblock funds in the relevant
ASBA Account for withdrawn, rejected or unsuccessful or partially successful ASBA Applications within 12 Working
Days of the Issue Closing Date.
INTEREST ON APPLICATION AND REFUND MONEY
Interest on application monies received which are used towards allotment of Bonds
We shall pay interest on the amount for which Bonds are allotted to the Applicants (except ASBA Applicants) subject
to deduction of income tax under the Income Tax Act, as applicable to the Allottee, from the date of realization of the
cheque(s)/demand draft(s) or three days from the date of upload of the Application on the electronic platform of the
Stock Exchanges whichever is later up to one day prior to the Deemed date of Allotment, at the rate of [●]% p.a for
Allottees under Category I, II and III Portions and Category IV Portion. We may enter into an arrangement with one or
more banks in one or more cities for direct credit of interest to the account of the Applicants. Alternatively, the interest
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warrant will be dispatched along with the Allotment Advice at the sole risk of the Applicant, to the sole/first
Applicant.
Interest on application monies received which are liable to be refunded
We shall pay interest on application money which is liable to be refunded to the Applicants (except ASBA Applicants)
in accordance with the SEBI Debt Regulations, or other applicable statutory and/or regulatory requirements, subject to
deduction of income tax under the Income Tax Act, as applicable, from the date of realization of the cheque(s)/demand
draft(s) or three days from the date of upload of the Application on the electronic platform of the Stock Exchanges
whichever is later up to one day prior to the Deemed Date of Allotment, at the rate of [●]% per annum. Such interest
shall be paid along with the monies liable to be refunded. Interest warrant will be dispatched/credited (in case of
electronic payment) along with the refund orders at the sole risk of the applicant, to the sole/first applicant.
Provided that, notwithstanding anything contained hereinabove, the Company shall not be liable to pay any interest on
application monies to the ASBA Applicants and on monies liable to be refunded in case of (a) invalid applications or
applications liable to be rejected, and/or (b) applications which are withdrawn by the applicant, and/or (c) refund
monies to the ASBA Applicants. For more information, see “Issue Procedure - Rejection of Application” on page
150.
REDEMPTION
The Company will redeem the Bonds on the Maturity Date.
Bonds held in electronic form:
No action is required on the part of Bondholders at the time of maturity of the Bonds.
Bonds held in physical form:
No action will ordinarily be required on the part of the Bondholder at the time of redemption, and the Maturity
Amount will be paid to those Bondholders whose names appear in the Register of Bondholders maintained by the
Company on the Record Date fixed for the purpose of redemption. However, the Company may require the Bond
Certificate(s), duly discharged by the sole holder or all the joint-holders (signed on the reverse of the Consolidated
Bond Certificate(s)) to be surrendered for redemption on Maturity Date and sent by the Bondholders by registered post
with acknowledgment due or by hand delivery to the Registrar to the Issue or the Company or to such persons at such
addresses as may be notified by the Company from time to time. Bondholders may be requested to surrender the Bond
Certificate(s) in the manner stated above, not more than three months and not less than one month prior to the Maturity
Date so as to facilitate timely payment.
PAYMENT OF INTEREST ON BONDS
Bonds shall carry interest at the coupon rate of [●]% p.a., payable annually from, and including, the Deemed Date of
Allotment up to, but excluding the Maturity Date, payable on the “Interest Payment Dates”, to the Bondholders as of
the relevant Record Date.
However, an additional interest rate of [●]% p.a. shall be payable to the original Allottees under Category IV for the
Bonds. In case the Bonds held by the original allottees under Category IV are sold/transferred (except in case of
transfer of Bonds to legal heir in the event of death of the original allottee), the coupon rate shall stand revised to the
coupon rate applicable for allottees falling under Categories I, II and III.
Applications will be consolidated on the basis of PAN for classification into various categories. Consequent to such
consolidation, if an Applicant falls into any category other than Category IV, such Applicant will not be entitiled to the
additional interest rate of [●]% p.a.
The coupon payment date shall be the date, which is the day falling one year from the Deemed Date of Allotment, in
case of the first coupon payment and the same date every year, until the Redemption Date for subsequent interest
payments.
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The last interest payment in each case will be made on the Maturity Date on a pro rata basis. In all events, the
Company shall ensure compliance with the FEMA (Borrowing or Lending in Rupees) Regulations, 2000, as amended
(“Borrowing in Rupees Regulations”), which, among other things, require that the rate of interest on the Bonds does
not exceed the prime lending rate of the State Bank of India as on the date on which the resolution approving the Issue
was passed in the Company’s general body meeting, plus 300 basis points.
Day Count Convention
Interest will be computed on a 365 days-a-year basis on the principal outstanding on the Bonds. Where the interest
period (start date to end date) includes February 29, interest will be computed on 366 days-a-year basis, on the
principal outstanding on the Bonds.
Effect of holidays on payments
If the date of payment of interest or principal or redemption or any date specified does not fall on a Working Day, the
succeeding Working Day will be considered as the effective date. Interest and principal or other amounts, if any, will
be paid on the succeeding Working Day. In case the date of payment of interest or principal falls on a holiday, the
payment will be made on the next Working Day, without any interest for the period overdue. In case the date of
redemption falls on a holiday, the payment will be made on the next Working Day along with interest for the period
overdue.
Manner & Modes of Payment
For Bonds held in electronic form:
Payment on the Bonds will be made to those Bondholders whose name appears first in the register of beneficial
owners maintained by the Depository, on the Record Date. The Company’s liability to Bondholders for payment or
otherwise will stand extinguished from the Maturity Date or on dispatch of the amounts payable by way of
principal and/or interest to the Bondholders. Further, the Company will not be liable to pay any interest,
income or compensation of any kind accruing subsequent to the Maturity Date.
For Bonds held in electronic form
The Bondholders’ respective bank account details will be obtained from the Depository for payments.
Applicants are therefore advised to immediately update their bank account details as appearing on the records
of their DP. Failure to do so could result in delays in credit of payments to applicants at their sole risk, and
neither the Company, the Members of the Syndicate, Trading Members of the Stock Exchange(s), Escrow
Collection Bank(s), SCSBs, Registrar to the Issue nor the Stock Exchanges will bear any responsibility or
liability for the same.
For Bonds held in physical form
The bank details will be obtained from the Registrar to the Issue for effecting payments.
Moreover, the Company, Lead Managers and Registrar to the Issue will not be responsible for any delay in
receipt of credit of interest, refund or Maturity Amount so long as the payment process has been initiated in
time.
All payments to be made by the Company to the Bondholders will be made through any of the following modes, in the
following order of preference:
(a) Direct Credit
Applicants having bank accounts with the Refund Bank(s), as per Demographic Details received from the
Depository, will be eligible to receive payments through direct credit. Charges, if any, levied by the Refund
Bank for the same would be borne by the Company.
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(b) NECS
Applicants having a bank account at any of the centres notified by RBI, as per Demographic Details received
from the Depository, will be eligible to receive payments through NECS. This mode of payment is subject to
availability of complete bank account details with the Depository, including the MICR code, bank account
number, bank name and bank branch. The corresponding IFSC will be obtained from the RBI website as at a
date prior to the date of payment, duly mapped with the relevant MICR code.
(c) RTGS
Applicants having a bank account with a bank branch which is RTGS enabled, as per the information
available on the website of RBI and as per records received from the Depository, will be eligible to receive
payments through RTGS in the event the payment amount exceeds ` 2 lakhs. This mode of payment is
subject to availability of complete bank account details with the Depository, including the MICR code, bank
account number, bank name and bank branch. Charges, if any, levied by the Refund Bank for the same would
be borne by the Company. Charges, if any, levied by the Applicant’s bank receiving the credit would be
borne by the Applicant. The corresponding IFSC will be obtained from the RBI website as at a date prior to
the date of payment, duly mapped with the relevant MICR code.
(d) NEFT
Applicants having a bank account with a bank branch which is NEFT enabled, as per records received from
the Depository, will be eligible to receive payments through NEFT. This mode of payment is subject to
availability of complete bank account details with the Depository, including the MICR code, bank account
number, bank name and bank branch. The corresponding IFSC will be obtained from the RBI website as at a
date prior to the date of payment, duly mapped with the relevant MICR code.
(e) DemandDraft/Cheque/Pay Order
For all other Applicants, including those who have not updated their bank particulars with the MICR code,
payment will be dispatched by post for value up to ` 1,500/- and through Registered/Speed Post for value of `
1,500/- and above, only to Applicants that have provided details of a registered address in India.
Printing of Bank Particulars on Interest Warrants
As a matter of precaution against possible fraudulent encashment of payment orders/warrants due to loss or
misplacement, the particulars of the Applicant’s bank account are mandatorily required to be given for printing on the
orders/warrants. In relation to Bonds applied for and held in dematerialised form, these particulars would be taken
directly from the Depositories. In case of Bonds held in physical form on account of rematerialisation, Applicants are
advised to submit their bank account details with the Company or the Registrar to the Issue at least seven days prior to
the Record Date, failing which the orders/warrants will be dispatched to the postal address (in India) of the
Bondholder as available in the register of beneficial owners maintained by the Depository. Bank account particulars
will be printed on the orders/warrants which can then be deposited only in the account specified.
Record Date
The record date for payment of interest on the Bonds or the Maturity Amount will be 15 days prior to the date on
which such amount is due and payable (“Record Date”). In case of redemption of Bonds, the trading in the Bonds
shall remain suspended between the Record Date and the date of redemption.
TRANSFER OF THE BONDS
The provisions relating to transfer and transmission and other related matters in respect of our shares contained in the
Companies Act and the Company’s Articles of Association will apply, mutatis mutandis (to the extent applicable to
debentures) to the Bonds.
Transfer of Bonds held in dematerialized form
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In respect of Bonds held in the dematerialized form, transfers of the Bonds may be effected, only through the
Depositories where such Bonds are held, in accordance with the Depositories Act and/or rules as notified by the
Depositories from time to time. The Bondholder shall give delivery instructions containing details of the prospective
purchaser's DP's account to his DP. If a prospective purchaser does not have a demat account, the Bondholder may
rematerialize his or her Bonds and transfer them in a manner as specified below.
Transfer of Bonds in physical form
The Bonds may be transferred by way of a duly executed transfer deed or other suitable instrument of transfer as may
be prescribed by the Company for the registration of transfer of Bonds. Purchasers of Bonds are advised to send the
Consolidated Bond Certificate to the Company or to such persons as may be notified by the Company from time to
time. If a purchaser of the Bonds in physical form intends to hold the Bonds in dematerialized form, the Bonds may be
dematerialized by the purchaser through his or her DP in accordance with the Depositories Act and/or rules as notified
by the Depositories from time to time.
The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date, failing
which the interest and/or Maturity Amount for the Bonds will be paid to the person whose name appears in the
register of debenture holders maintained by the Depositories. In such cases, any claims will be settled inter se
between the parties and no claim or action will be brought against the Company or the Registrar to the Issue.
TAXATION
For details, please see “Statement of Tax Benefits” on page 57.
BONDHOLDER NOT A SHAREHOLDER
The Bondholders will not be entitled to any of the rights and privileges available to equity and/or preference
shareholders of the Company.
Rights of Bondholders
Provided below is an indicative list of certain significant rights available to the Bondholders. The final rights of the
Bondholders will be as per the Debenture Trust Agreement.
(a) The Company will maintain at its Registered Office or such other place as permitted by law a register of
Bondholders (“Register of Bondholders”) containing such particulars as required by Section 152 of the
Companies Act. In terms of Section 152A of the Companies Act, the Register of Bondholders maintained by
a Depository for any Bond in dematerialised form under Section 11 of the Depositories Act, 1996
(“Depositories Act”) will be deemed to be a Register of Bondholders for this purpose.
(b) The Bonds will not, except as provided in the Companies Act, confer on Bondholders any rights or privileges
available to members of the Company including the right to receive notices or annual reports of, or to attend
and / or vote, at the Company’s general meeting(s). However, if any resolution affecting the rights of the
Bondholders is to be placed before the shareholders, such resolution will first be placed before the concerned
Bondholders for their consideration. In terms of Section 219(2) of the Companies Act, Bondholders will be
entitled to a copy of the balance sheet on a specific request made to the Company.
(c) The rights, privileges and conditions attached to the Bonds may be varied, modified and/or abrogated with
either (i) the consent in writing of the holders of at least three-fourths of the outstanding amount of the Bonds;
or (ii) the sanction of at least three-fourths of the Bondholders present and voting at a meeting of the
Bondholders (“Special Resolution”), provided that nothing in such consent or resolution will be operative
against the Company, where such consent or resolution modifies or varies the terms and conditions governing
the Bonds if modification, variation or abrogation is not acceptable to the Company.
(d) The Bondholder or, in case of joint-holders, the person whose name stands first in the register of beneficial
owners maintained by the Depository will be entitled to vote in respect of such Bonds, either by being present
in person or, where proxies are permitted, by proxy, at any meeting of the concerned Bondholders summoned
127
for such purpose and every such Bondholder will be entitled to one vote on a show of hands and, on a poll,
his or her voting rights will be in proportion to the outstanding nominal value of Bonds held by him or her on
every resolution placed before such meeting of the Bondholders.
(e) Bonds may be rolled over with the consent in writing of the holders of at least three-fourths of the outstanding
amount of the Bonds or with the sanction of a Special Resolution passed at a meeting of the Bondholders
convened with at least 21 days prior notice for such roll-over and in accordance with the SEBI Debt
Regulations. The Company will redeem the Bonds of all the Bondholders who have not given their positive
consent to the roll-over.
The above rights of Bondholders are merely indicative. The final rights of the Bondholders will be as per the terms of
the Prospectus and Debenture Trustee Agreement between the Company with the Debenture Trustee.
Joint-holders
Where two or more persons are holders of any Bond(s), they will be deemed to hold the same as joint holders with
benefits of survivorship subject to the Company’s Articles of Association and applicable law.
Nomination
In accordance with Section 109A of the Companies Act, the sole/first Bondholder, with other joint Bondholders (being
individuals), may nominate any one person (being an individual) who, in the event of death of the sole Bondholder or
all the joint Bondholders, as the case may be, will become entitled to the Bonds. A nominee entitled to the Bonds by
reason of the death of the original Bondholder(s) will become entitled to the same benefits to which he would be
entitled if he were the original Bondholder. Where the nominee is a minor, the Bondholder(s) may make a nomination
to appoint, in the prescribed manner, any person to become entitled to Bonds in the event of the Bondholder’s death
during minority. A nomination will stand rescinded on a sale/transfer/alienation of Bonds by the person nominating. A
buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the
prescribed form available on request at the Company’s Registered and Corporate Office or with the Registrar to the
Issue or at such other addresses as may be notified by the Company.
The Bondholders are advised to provide the specimen signature of the nominee to the Company to expedite the
transmission of the Bond(s) to the nominee in the event of demise of the Bondholders. The signature can be provided
in the Application Form or subsequently at the time of making fresh nominations. This facility of providing the
specimen signature of the nominee is purely optional.
In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of Section
109A of the Companies Act, will on the production of such evidence as may be required by the Board, elect either to
register himself or herself as holder of Bonds; or to make such transfer of the Bonds, as the deceased holder could
have made.
Further, the Board may at any time issue notice requiring any nominee to choose either to be registered himself or to
transfer the Bonds, and if the notice is not complied with within a period of 90 days, the Board may thereafter
withhold payment of all dividend, bonuses or other monies payable in respect of the Bonds, until the requirements of
the notice have been complied with.
In case of Application for allotment of Bonds in dematerialised form, there is no need to make a separate nomination
with the Company. Nominations registered with the respective DP of the Applicant will prevail. If Applicants want to
change their nomination, they are advised to inform their respective DP.
Events of Default
Subject to the terms of the Debenture Trustee Agreement, the Debenture Trustee at its discretion may, or if so
requested in writing by the holders of at least three-fourths of the outstanding amount of the Bonds or with the sanction
of a Special Resolution, passed at a meeting of the Bondholders, (subject to being indemnified and/or secured by the
Bondholders to its satisfaction), give notice to the Company specifying that the Bonds, in whole but not in part are and
have become due and repayable on such date as may be specified in such notice inter alia if any of the events listed
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below occurs. The description below is indicative and a complete list of events of default and its consequences is
specified in the Debenture Trustee Agreement:
(i) Default in any payment of the principal amount due in respect of Bonds and such failure continues for a
period of 30 days;
(ii) Default in any payment of any installment of interest in respect of the Bonds and such failure continues for a
period of 15 days;
(iii) Default in any payment of any other sum due in respect of the Bonds and such failure continues for a period
of 15 days;
(iv) The Company is (in the reasonable opinion of the Debenture Trustee or as notified by the Company to the
Debenture Trustee), or is deemed by a court of competent jurisdiction under applicable law to be, insolvent or
bankrupt or unable to pay a material part of its debts, or stops, suspends or threatens to stop or suspend
payment of all or a material part (in the reasonable opinion of the Debenture Trustee) of, or of a particular
type of, its debts;
(v) The Company does not perform or comply with one or more of its other material obligations in relation to the
Bonds and/or under the Debenture Trustee Agreement and/or Security Documents, which default is incapable
of remedy or, if in the reasonable opinion of the Debenture Trustee is capable of remedy, is not remedied
within 30 days of written notice of such default being provided to the Company by the Debenture Trustee; or
(vi) Any encumbrancer takes possession, or an administrative or other receiver or an administrator is appointed,
of the whole or (in the reasonable opinion of the Debenture Trustee) any substantial part of the property,
assets or revenues of the Company, and is not discharged within 45 days.
The amount(s) so payable by the Company on the occurrence of one or more Event(s) of Default shall be as detailed in
the Debenture Trustee Agreement. If an Event of Default occurs, which is continuing, the Debenture Trustee may,
with the consent of the Bondholders, obtained in accordance with the Debenture Trustee Agreement, and with prior
written notice to the Company, take action in terms of the Debenture Trustee Agreement.
Debenture Trustee
The Company has appointed GDA Trusteeship Limited to act as Debenture Trustee for the Bondholders. GDA
Trusteeship Limited has by its letter dated February 21, 2013 given its consent for its appointment as Debenture
Trustee to the Issue and for its name to be included in this Draft Prospectus and in all the subsequent periodical
communications sent to the holders of the Bonds issued, pursuant to this Issue pursuant to Regulation 4(4) of the Debt
Regulations.
The Company has entered into a Debenture Trustee Agreement with the Debenture Trustee, the terms of which will
govern the appointment and functioning of the Debenture Trustee and specified the powers, authorities and obligations
of the Debenture Trustee. Under the terms of the Debenture Trustee Agreement, the Company covenants with the
Debenture Trustee that it will pay the Bondholders the principal amount on the Bonds on the relevant Maturity Date and
also that it will pay the interest due on Bonds at the rate/on the date(s) specified under the Debenture Trustee
Agreement. The Debenture Trustee Agreement shall be provided to the Designated Stock Exchange within five
Working Days of its execution.
The Bondholders will, without further act or deed, be deemed to have irrevocably given their consent to the Debenture
Trustee or any of their agents or authorised officials to do all such acts, deeds, matters and things in respect of or
relating to the Bonds as the Debenture Trustee may in their absolute discretion deem necessary or require to be done in
the interest of the Bondholders. Any payment made by the Company to the Debenture Trustee on behalf of the
Bondholders will discharge the Company pro tanto to the Bondholders. All the rights and remedies of the Bondholders
will vest in and will be exercised by the Debenture Trustee without reference to the Bondholders. No Bondholder will
be entitled to proceed directly against the Company unless the Debenture Trustee, having become so bound to
proceed, failed to do so. The Debenture Trustee will protect the interest of the Bondholders in the event of default by
the Company in regard to timely payment of interest and repayment of principal and they will take necessary action at
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the Company’s cost.
Pre-Issue Advertisement
Subject to Section 66 of the Companies Act, the Company will, on or before the Issue Opening Date, publish a pre-
Issue advertisement in the form prescribed under the SEBI Debt Regulations, in one national daily newspaper with
wide circulation. Material updates, if any, between the date of filing of the Prospectus with the RoC and the date of
release of the statutory pre-Issue advertisement will be included in the statutory pre-Issue advertisement.
Impersonation
Attention of the Applicants is specifically drawn to sub-section (1) of Section 68 A of the Companies Act,
reproduced below:
“Any person who:
(a) makes in a fictitious name, an application to a company for acquiring or subscribing for, any shares therein,
or
(b) otherwise induces a company to allot, or register any transfer of shares, therein to him, or any other person
in a fictitious name,
shall be punishable with imprisonment for a term which may extend to five years.”
Listing
The Bonds will be listed on BSE, which will be the Designated Stock Exchange. The Company has obtained in-
principle approval for the Issue from BSE, by a letter dated [●].
If permissions to deal in and for an official quotation of the Bonds are not granted by the Designated Stock Exchange,
the Company will forthwith repay, without interest, all such moneys received from the Applicants pursuant to the
Prospectus. If such money is not repaid within eight days after the Company becomes liable to repay it, the Company
and every officer in default will on and from such expiry of eight days be liable to repay the money, with interest at the
rate of 15% p.a. as prescribed under Section 73 of the Companies Act. The Company will use best efforts to ensure
that all steps for the completion of the necessary formalities for listing at the Stock Exchanges are taken within 12
Working Days of the Issue Closing Date.
Utilisation of Issue Proceeds
The Issue proceeds will be utilised for augmenting the long-term resources of our Company for financing the capital
expenditure plan of our Company for carrying out its business activities.
In accordance with the SEBI Debt Regulations, the Company is required not to utilise the Issue proceeds for providing
loans to or acquisitions of shares of any person who is a part of the same group as the Company or who is under the
same management as the Company or any Subsidiary of the Company. Further, the Company is a public sector
enterprise and, as such, the Company does not have any identifiable ‘group’ companies or ‘companies under the same
management’. In addition, the Issue proceeds shall not be utilised towards full or part consideration for the purchase or
any acquisition, including by way of a lease, of any property.
Further, in accordance with the SEBI Debt Regulations and the Debt Listing Agreement as well as the Debenture
Trustee Agreement, the Issue proceeds will be kept in separate Escrow Account(s) and the Company will have access
to such funds only after creation of Security for the Bonds and/or as per applicable law.
For more information (including with respect to interim use of the Issue proceeds), see “Objects of the Issue” on page
55.
Monitoring & Reporting of Utilisation of Issue Proceeds
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In terms of the SEBI Debt Regulations, there is no requirement for appointment of a monitoring agency in relation to
the use of proceeds of the Issue. The Board shall monitor the utilisation of the proceeds of the Issue.
The end-use of the proceeds of the Issue, duly certified by the Statutory Auditors, will be reported in the Company’s
annual reports and other reports issued by the Company to relevant regulatory authorities, as applicable, including the
Stock Exchanges in relation to the Company’s reporting obligations under the Debt Listing Agreement.
Further, the Company confirms that funds raised by the Company from previous public issues and private placements
of bonds have been utilised for the Company’s business as stated in the respective offer documents, and as reported to
the Stock Exchanges in relation to the Company’s reporting obligations under the Debt Listing Agreement, as
applicable.
For more information (including with respect to interim use of the Issue proceeds), see “Objects of the Issue” on page
55.
Statement by the Board:
(i) All monies received pursuant to the Issue shall be transferred to a separate bank account other than the bank
account referred to in sub-section (3) of section 73 of the Companies Act;
(ii) Details of all monies utilised out of the Issue shall be disclosed under an appropriate separate head in the
Company’s Balance Sheet, indicating the purpose for which such monies were utilised; and
(iii) Details of all unutilised monies out of the Issue, if any, shall be disclosed under an appropriate separate head
in the Company’s Balance Sheet, indicating the form in which such unutilised monies have been invested.
Other Undertakings by the Company
The Company undertakes that:
(a) Complaints received in respect of the Issue will be attended to by the Company expeditiously and
satisfactorily;
(b) Necessary cooperation to the Credit Rating Agency(ies) will be extended in providing true and adequate
information until the obligations in respect of the Bonds are outstanding;
(c) The Company will take necessary steps for the purpose of getting the Bonds listed within the specified
time, i.e., within 12 Working Days of the Issue Closing Date;
(d) Funds required for dispatch of refund orders/Allotment Advice/Bond certificates will be made available
by the Company to the Registrar to the Issue;
(e) The Company will forward details of utilisation of the Issue Proceeds, duly certified by the Statutory
Auditor, to the Debenture Trustee at the end of each half year.
(f) The Company will provide a compliance certificate to the Debenture Trustee on an annual basis in respect
of compliance with the terms and conditions of the Issue of Bonds as contained in the Prospectus.
(g) The Company will disclose the complete name and address of the Debenture Trustee in its annual report.
Ranking of the Bonds
The Bonds will be secured by
Land (at Visakhapatnam) ` 3.6 million
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Security of five – Dredgers, viz. Dredgers – XV, XVI, XVII,
XVIII and Back Hoe ` 4,780 million
Assignment of Bank Guarantees received against advance paid by
the Company for the third Trailer Suction Hopper Dredger-
Dredge –XXI
` 500 million.
Total ` 5,283.6 million
Further, the bank guarantees as and when received against payment of advance to the builder will be further assigned
during the period to act as top up to cover the depreciation of the Dredgers. Once the New Dredger (Dr-XXI) is
delivered which is scheduled for January, 2014, the charge on all these assets will be withdrawn and security will then
be created against the new dredger. The Company shall further provide an asset cover of one time of the total
outstanding amount of Bonds, pursuant to the terms of the Debenture Trustee Agreement. It will be ensured that the
market value of the movable / immovable properties against which the Bond shall be secured shall cover 100% of
amount of the Bond throughout the tenure of the Bonds. The Bondholders are entitled to the benefit of the Debenture
Trustee Agreement and are bound by and are deemed to have notice of all provisions of the Debenture Trustee
Agreement.
Accordingly, the Bonds would constitute direct and secured obligations of the Company and will rank pari passu inter
se to the claims of other creditors of the Company having the same security and superior to the claims of any
unsecured creditors of the Company, now existing or in the future, subject to any obligations preferred under
applicable law.
DRR
Pursuant to Regulation 16 of the SEBI Debt Regulations and Section 117C of the Companies Act, any company that
intends to issue debentures is required to create a DRR to which adequate amounts will be credited out of the profits of
the company until redemption of the debentures. Further, the Ministry of Company Affairs (“MCA”) has, through
circular dated April 18, 2002, clarified that the amount to be credited as DRR will be carved out of the profits of the
issuer only if it has profit for a particular year and there is no requirement to create DRR if there is no profit in a
particular year.
The Company will credit adequate amounts to the DRR from its profits every year until the Maturity Date. The
amounts credited to the DRR will not be utilised by the Company for any purpose other than redemption of the Bonds.
Guarantee/Letter of Comfort
The Issue is not backed by a guarantee or letter of comfort or any other document and/or letter with similar intent.
Replacement of Bond Certificates
In case of Bonds in physical form, if a Bond certificate is mutilated or defaced then on production thereof to the
Company, the Company shall cancel such certificate and issue a new or duplicate certificate in lieu thereof, however,
they will be replaced only of the certificate numbers and the distinctive numbers are legible. If any Bond certificate is
lost, stolen or destroyed, then, on proof thereof to the satisfaction of the Company and on furnishing such indemnity as
the Company may deem adequate and on payment of any expenses incurred by the Company in connection with proof
of such destruction or theft or in connection with such indemnity the Company shall issue a new or duplicate Bond
certificate. A fee may be charged by the Company not exceeding such sum as may be prescribed by applicable law for
each new or duplicate Bond certificate issued hereunder except certificates in replacement of those which are old,
decrepit or worn out or defaced or where the pages for recording transfers have been fully utilised.
Put/Call Option
There is no put or call option for the Bonds.
Future Borrowings
The Company will be entitled at any time in the future during the term of the Bonds or thereafter to borrow or raise
loans or create encumbrances or avail of financial assistance in any form, and also to issue promissory notes or
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debentures or any other securities in any form, manner, ranking and denomination whatsoever and to any eligible
persons whatsoever, and to change its capital structure including through the issue of shares of any class, on such
terms and conditions as the Company may deem appropriate, without requiring the consent of, or intimation to, the
Bondholders or the Debenture Trustee in this connection.
Lien
The Company will have the right of set-off and lien, present as well as future on the moneys due and payable to the
Bondholder or deposits held in the account of the Bondholder, whether in single name or joint name, to the extent of all
outstanding dues by the Bondholder to the Company.
Lien on Pledge of Bonds
Subject to applicable laws, the Company, at its discretion, may note a lien on pledge of Bonds if such pledge of Bond
is accepted by any bank or institution for any loan provided to the Bondholder against pledge of such Bonds as part of
the funding.
Procedure for Rematerialisation of Bonds
Bondholders who wish to hold the Bonds in physical form may do so by submitting a request to their DP at any time
after Allotment in accordance with the applicable procedure stipulated by the DP, in accordance with the Depositories
Act and/or rules as notified by the Depositories from time to time. For further details, see “ Terms of the Issue - Form
of Allotment and Denomination” on page 121.
Sharing of Information
The Company may, at its option, use its own, as well as exchange, share or part with any financial or other information
about the Bondholders available with the Company, its Subsidiary(ies) and affiliates and other banks, financial
institutions, credit bureaus, agencies, statutory bodies, as may be required. Neither the Company nor its Subsidiaries
and affiliates nor its or their respective agents will be liable for use of the aforesaid information.
Notices
All notices to the Bondholders required to be given by the Company or the Debenture Trustee will be published in one
English language newspaper having wide circulation and/or, will be sent by post/courier to the Bondholders from time
to time, only to Applicants that have provided a registered address in India.
Jurisdiction
The Bonds, the Debenture Trustee Agreement and other relevant documents shall be governed by and construed in
accordance with the laws of India. The courts of Vishakapatnam will have exclusive jurisdiction for the purposes of
the Issue.
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ISSUE PROCEDURE
This section applies to all Applicants. ASBA Applicants and Applicants making Direct Online Applications using the
online payment facility of the Stock Exchanges should note that the ASBA and Direct Online Applications processes
involve application procedures which may be different from the procedures applicable to Applicants who apply for
Bonds through any of the other permitted channels and accordingly should carefully read the provisions applicable to
ASBA and Direct Online Applications, respectively.
All Applicants are required to make payment of the full Application Amount with the Application Form. ASBA
Applicants are required to ensure that the ASBA Account has sufficient credit balance such that an amount equivalent
to the full Application Amount can be blocked by the SCSBs.
ASBA Applicants may submit their ASBA Applications to the Members of the Syndicate or Trading Members of the
Stock Exchanges only in the Specified Cities or directly to the Designated Branches of SCSBs. Applicants other than
ASBA Applicants are required to submit their Applications to the Members of the Syndicate or Trading Members of
the Stock Exchanges or make Direct Online Applications using the online payment facility of the Stock Exchanges.
This section is based on SEBI Circular No. CIR./IMD/DF-1/20/2012 dated July 27, 2012 and is subject to the Stock
Exchanges putting in place the necessary systems and infrastructure for implementation of the abovementioned
circular, including the systems and infrastructure required in relation to Direct Online Applications through the
online platform and online payment facility to be offered by Stock Exchanges and accordingly is subject to any further
clarification, notification, modification, direction, instructions and/or correspondence that may be issued by the Stock
Exchanges and/or SEBI. The following Issue procedure may consequently undergo change between the date of the
Prospectus and the Issue Opening Date; Applicants are accordingly advised to carefully read the Prospectus and
Application Form in relation to any proposed investment. The Company, the Registrar to the Issue and the Lead
Managers shall not be liable for any amendment or modification or changes in applicable laws or regulations, which
may occur after the date thereof.
Trading Members of the Stock Exchanges who wish to collect and upload Applications in the Issue on the electronic
application platform provided by the Stock Exchanges will need to approach the respective Stock Exchanges and
follow the requisite procedures prescribed by the relevant Stock Exchange. The Members of the Syndicate, the
Company and the Registrar to the Issue shall not be responsible or liable for any errors or omissions on the part of
the Trading Members of the Stock Exchanges in connection with the responsibility of such Trading Members of the
Stock Exchanges in relation to collection and upload of Applications in the Issue on the online platform and online
payment facility to be provided by the Stock Exchanges. Further, the relevant Stock Exchanges shall be responsible
for addressing investor grievances arising from Applications through Trading Members registered with such Stock
Exchanges.
For purposes of the Issue, the term “Working Day” shall mean all days excluding Sundays or a public holiday in
India or at any other payment centre notified in terms of the Negotiable Instruments Act, 1881, except with reference
to Issue Period and Record Date, where working days shall mean all days, excluding Saturdays, Sundays and public
holiday in India or at any other payment centre notified in terms of the Negotiable Instruments Act, 1881.
Please note that as per Para 4 of SEBI Circular No. CIR/CFD/DIL/12/2012 dated September 13, 2012, for making
Applications by banks on own account using ASBA facility, SCSBs should have a separate account in own name with
any other SEBI registered SCSB/s. Such account shall be used solely for the purpose of making Application in public
issues and clear demarcated funds should be available in such account for ASBA applications.
PROCEDURE FOR APPLICATION
Availability of Abridged Prospectus and Application Forms
Physical copies of the Abridged Prospectus containing salient features of the Prospectus together with Application
Forms may be obtained from:
(a) The Company’s Registered and Corporate Office;
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(b) Offices of the Lead Managers;
(c) Trading Members of the Stock Exchanges; and
(d) Designated Branches of SCSBs.
Electronic Application Forms will be available on the websites of the Stock Exchanges and the SCSBs that permit
submission of ASBA Applications electronically. A unique application number (“UAN”) will be generated for every
Application Form downloaded from the websites of the Stock Exchanges. Hyperlinks to the websites of the Stock
Exchanges for this facility will be provided on the websites of the Lead Managers and the SCSBs. The Company may
also provide Application Forms for being downloaded and filled at such website as it may deem fit. In addition, online
beneficiary account portals may provide a facility of submitting Application Forms online to their account holders.
Trading Members of the Stock Exchanges can download Application Forms from the websites of the Stock Exchanges.
Further, Application Forms will be provided to Trading Members of the Stock Exchanges at their request.
On a request being made by any Applicant before the Issue Closing Date, physical copies of the Prospectus and
Application Form can be obtained from the Company’s Registered and Corporate Office, as well as offices of the Lead
Managers. Electronic copies of the Prospectus will be available on the websites of the Lead Managers, the Designated
Stock Exchange, SEBI and the SCSBs.
Who Can Apply
Category I (“Qualified
Institutional Buyers”)
(“QIBs”)*
Category II (“Domestic
Corporates”)*
Category III (“High
Networth Individuals”)
(“HNIs”)
Category IV(“Retail
Individual Investors”)
(“RIIs”)*
Public financial
institutions specified in
Section 4A of the
Companies Act,
Scheduled commercial
banks,
Mutual funds registered
with SEBI,
Multilateral and bilateral
development financial
institutions,
State industrial
development
corporations,
Insurance companies
registered with the
Insurance Regulatory and
Development Authority,
Provident funds with a
minimum corpus of ` 250 million,
Pension funds with a
minimum corpus of ` 250
million,
The National Investment
Fund set up by resolution
F. No. 2/3/2005-DD-II
dated November 23, 2005
of the GoI, published in
the Gazette of India,
Insurance funds set up
and managed by the
Companies within the
meaning of section 3 of
the Companies Act and
bodies corporate
registered under the
applicable laws in India
and authorized to invest
in Bonds including
limited liability
partnership(s) registered
under the Limited
Liability Partnership
Act, 2008 and Major
Port Trusts under the
Major Port Trusts Act,
1963
The following investors
applying for an amount
aggregating to more
than ` 10 lakhs in the
Issue
Resident Individual
Investors
Hindu Undivided
Families applying
through the Karta
The following investors
applying for an amount
aggregating up to and
including ` 10 lakhs in
the Issue
Resident Individual
Investors
Hindu Undivided
Families through the
Karta
135
Category I (“Qualified
Institutional Buyers”)
(“QIBs”)*
Category II (“Domestic
Corporates”)*
Category III (“High
Networth Individuals”)
(“HNIs”)
Category IV(“Retail
Individual Investors”)
(“RIIs”)*
army, navy, or air force
of the Union of India and
Insurance funds set up
and managed by the
Department of Posts,
India.
* With respect to the provisions of Section 372A(3) of Companies Act, it may be noted that the RBI has through its circular (Circular No.
DBOD.No.Ret.BC. 77/12.01.001/2012-13) dated January 29, 2013 revised the Bank Rate from 9.00% to 8.75% w.e.f. January 29, 2013. Coupon
rate on the Bonds shall be determined in pursuant of the Notification. Although the coupon rate offered on Bonds maybe lower than the prevailing bank rate, it may be noted that since these are tax-free bonds, the gross/pre-tax yield to the investors may be higher, depending upon the applicable
tax rates. Companies other than banking companies, insurance companies and other companies as mentioned in Section 372A(3) of the Companies
Act may however seek independent opinion from their legal counsels about the eligibility to make an application for the Bonds.
Participation of any of the aforementioned persons or entities is subject to the applicable statutory and/or
regulatory requirements in connection with the subscription to Indian securities in the nature of the Bonds by
such persons or entities. Applicants are advised to ensure that Applications made by them do not exceed the
investment limits under applicable statutory and or regulatory provisions. Applicants are advised to ensure
that they have obtained the necessary statutory and/or regulatory permissions/consents/approvals in connection
with applying for, subscribing to, or seeking Allotment of Bonds pursuant to the Issue.
The Lead Managers and their respective associates and affiliates are permitted to subscribe in the Issue.
Persons not eligible to Apply
The following persons and entities will not be eligible to participate in the Issue and any Applications from such
persons and entities are liable to be rejected:
Minors without a guardian name.
Foreign nationals (including NRIs, persons resident outside India, Foreign Institutional Investors, Qualified
Foreign Investors).
Venture Capital Funds and Foreign Venture Capital Investors.
Overseas corporate bodies (“OCBs”).
Co-operative Societies
Regional rural banks.
Societies.
Public/private charitable/religious trusts (other than Major port Trusts).
Scientific and/or industrial research organizations.
Partnership firms.
Persons ineligible to contract under applicable statutory/regulatory requirements.
Any other category of investors not mentioned in Categories I, II, III and IV above.
Based on information provided by the Depositories, the Company will have the right to accept Applications belonging
to an account for the benefit of a minor (under guardianship). In case of Applications for Allotment of Bonds in
dematerialised form, the Registrar to the Issue shall verify the foregoing on the basis of records provided by the
Depositories based on the DP ID and Client ID provided by the Applicants in the Application Form and uploaded to
the electronic system of the Stock Exchanges.
The concept of OCBs (meaning any company, partnership firm, society and other corporate body or overseas
trust irrevocably owned/held directly or indirectly to the extent of at least 60% by NRIs), which was in
existence until 2003, was withdrawn by the Foreign Exchange Management (Withdrawal of General Permission
to Overseas Corporate Bodies) Regulations, 2003. Accordingly, OCBs are not permitted to invest in the Issue.
The Bonds have not been and will not be registered, listed or otherwise qualified in any jurisdiction outside
India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in
136
compliance with the applicable laws of such jurisdiction. In particular, the Bonds have not been and will not be
registered under the Securities Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and
applicable state securities laws. The Company has not registered and does not intend to register under the U.S.
Investment Company Act in reliance on section 3(c)(7) thereof.
No offer to the public (as defined under Directive 20003/71/EC, together with any amendments and
implementing measures thereto, the “Prospectus Directive”) has been or will be made in respect of the Issue or
otherwise in respect of the Bonds, in any Member State of the European Economic Area which has
implemented the Prospectus Directive (a “Relevant Member State”) except for any such offer made under
exemptions available under the Prospectus Directive, provided that no such offer shall result in a requirement
to publish or supplement a prospectus pursuant to the Prospectus Directive, in respect of the Issue or otherwise
in respect of the Bonds.
Modes of Making Applications
Applicants may use any of the following facilities for making Applications:
(a) ASBA Applications through the Members of the Syndicate or Trading Members of the Stock Exchanges only in
the Specified Cities (“Syndicate ASBA”). See “ Issue Procedure- Submission of ASBA Applications” on page 139;
(b) ASBA Applications for Allotment only in dematerialized form through Designated Branches of SCSBs. See “Issue
Procedure - Submission of ASBA Applications” on page 139;
(c) Non-ASBA Applications through Members of the Syndicate or Trading Members of the Stock Exchanges at
centres mentioned in the Application Form. See “Issue Procedure - Submission of Non-ASBA Applications” on page
140; and
(d) Non-ASBA Applications for Allotment in physical form through the Members of the Syndicate or Trading
Members of the Stock Exchanges at centres mentioned in the Application Form. See “Issue Procedure - Submission
of Non- ASBA Applications for Allotment of the Bonds in physical form” on page 138.
Applications by certain categories of Applicants
Application by Major Port Trusts
In case of Applications by Major Port Trust authorised to invest in the Bonds, the Application Form must be
accompanied by certified true copies of: (i) resolution of the board of trustees authorising investments; and (ii)
approval from the Central Government to invest in the Bonds or such category of securities. Failing this, the
Company reserves the right to accept or reject any Applications in whole or in part, in either case, without
assigning any reason therefor.
Applications by Mutual Funds
No MF scheme may invest more than 15% of its NAV in debt instruments issued by a single company which are rated
not below investment grade by a credit rating agency authorised to carry out such activity. Such investment limit may
be extended to 20% of the NAV of the scheme with the prior approval of the board of trustees and the board of the
asset management company (“AMC”).
A separate Application can be made in respect of each scheme of an MF; such Applications will not be treated as
multiple Applications. Applications made by the AMCs or custodians of an MF must clearly indicate the name of the
scheme for which Application is being made. In case of Applications made by MFs, the Application Form must be
accompanied by certified true copies of their (i) SEBI registration certificate; (ii) trust deed (ii) resolution authorising
investment and containing operating instructions; and (iv) specimen signatures of authorised signatories. Failing this,
the Company reserves the right to accept or reject any Application in whole or in part, in either case, without
assigning any reason therefor.
137
Application by Alternative Investment Funds
Applications made by Alternative Investments Funds eligible to invest in accordance with the Securities and Exchange
Board of India (Alternative Investment Fund) Regulations, 2012, as amended (the “SEBI AIF Regulations”) for
Allotment of the Bonds must be accompanied by certified true copies of (i) SEBI registration certificate; (ii) a
resolution authorising investment and containing operating instructions; and (iii) specimen signatures of authorised
persons. Failing this, our Company reserves the right to accept or reject any Applications for Allotment of the Bonds
in whole or in part, in either case, without assigning any reason thereof. The Alternate Investment Funds shall at all
times comply with the requirements applicable to it under the SEBI AIF Regulations and the relevant notifications
issued by SEBI.
Application by Scheduled Commercial Banks
Scheduled commercial banks can apply in the Issue based on their own investment limits and approvals. The
Application Form must be accompanied by certified true copies of their (i) memorandum and articles of
association/charter of constitution; (ii) power of attorney; (iii) resolution authorising investments/containing operating
instructions; and (iv) specimen signatures of authorised signatories. Failing this, the Company reserves the right to
accept or reject any Application in whole or in part, in either case, without assigning any reason therefor.
Application by Insurance Companies
The Application Form must be accompanied by certified copies of their (i) certificate of registration issued by IRDA;
(ii) memorandum and articles of association; (ii) resolution authorising investment and containing operating
instructions; (iii) power of attorney; and (iv) specimen signatures of authorised signatories. Failing this, the
Company reserves the right to accept or reject any Application in whole or in part, in either case, without
assigning any reason therefor.
Applications by PFIs
In case of Applications by PFIs authorised to invest in the Bonds, the Application Form must be accompanied by
certified true copies of: (i) any Act/rules under which they are incorporated; (ii) board resolution authorising
investments; and (iii) specimen signature of authorised person. Failing this, the Company reserves the right to
accept or reject any Applications in whole or in part, in either case, without assigning any reason therefor.
Applications by Provident Funds and Pension Funds
In case of Applications by Indian provident funds and pension funds authorised to invest in the Bonds, the Application
Form must be accompanied by certified true copies of: (i) any Act/rules under which they are incorporated; (ii) power
of attorney, if any, in favour of one or more trustees thereof; (iii) board resolution authorising investments; (iv) such
other documents evidencing registration thereof under applicable statutory/regulatory requirements; (v) specimen
signature of authorised person; (vi) certified copy of the registered instrument for creation of such fund/trust; and (vii)
tax exemption certificate issued by income tax authorities, if exempt from income tax. Failing this, the Company
reserves the right to accept or reject any Application in whole or in part, in either case, without assigning any
reason therefor.
Applications by National Investment Fund
In case of Applications by National Investment Fund, the Application Form must be accompanied by certified true
copies of: (i) resolution authorising investment and containing operating instructions; and (ii) specimen signature of
authorised person. Failing this, the Company reserves the right to accept or reject any Application in whole or in
part, in either case, without assigning any reason therefor.
Applications by Limited Liability Partnerships
In case of Applications made by limited liability partnerships the Application Form must be accompanied by a
certified copy of certificate of registration issued under the Limited Liability Partnership Act, 2008. Failing this, the
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Company reserves the right to accept or reject any Applications in whole or in part, in either case, without
assigning any reason therefor.
Applications by Companies and Bodies Corporate
In case of Applications by companies and bodies corporate, the Application Form must be accompanied by certified
true copies of: (i) any Act/Rules under which they are incorporated; (ii) board resolution authorising investments; and
(iii) specimen signature of authorised person. Failing this, the Company reserves the right to accept or reject any
Applications in whole or in part, in either case, without assigning any reason therefor.
Applications under Power of Attorney
In case of Applications made pursuant to a power of attorney by Applicants in Category I and Category II, a certified
copy of the power of attorney or the relevant resolution or authority, as the case may be, with a certified copy of the
memorandum of association and articles of association and/or bye laws must be submitted with the Application Form.
In case of Applications made pursuant to a power of attorney by Applicants in Category III and Category IV, a certified
copy of the power of attorney must be submitted with the Application Form. Failing this, the Company reserves the
right to accept or reject any Application in whole or in part, in either case, without assigning any reason
therefor. The Company, in its absolute discretion, reserves the right to relax the above condition of attaching
the power of attorney with the Application Forms subject to such terms and conditions that the Company and
the Lead Managers may deem fit.
Brokers having online demat account portals may also provide a facility of submitting the Application Forms (ASBA
as well as non-ASBA Applications) online to their account holders. Under this facility, a broker receives an online
instruction through its portal from the Applicant for making an Application on his/ her behalf. Based on such
instruction, and a power of attorney granted by the Applicant to authorise the broker, the broker makes an Application
on behalf of the Applicant.
APPLICATION FOR ALLOTMENT OF BONDS IN PHYSICAL AND DEMATERIALISED FORM
Application for allotment in physical form
Submission of Non- ASBA Applications for Allotment of the Bonds in physical form
Applicants can also apply for Allotment of the Bonds in physical form by submitting duly filled in Application Forms to
the Members of the Syndicate or the Trading Members of the Stock Exchanges, with the accompanying account payee
cheques or demand drafts representing the full Application Amount and KYC documents as specified under “Issue
Procedure – Applications by certain Categories of Applicants” and “Issue Procedure - Additional instructions for
Applicants seeking Allotment of the Bonds in physical form” at pages 136 and 146, respectively. The Members of
the Syndicate and Trading Members of the Stock Exchanges shall, on submission of the Application Forms to them,
verify and check the KYC documents submitted by such Applicants and upload details of the Application on the online
platforms of Stock Exchanges, following which they shall acknowledge the uploading of the Application Form by
stamping the acknowledgment slip with the date and time and returning it to the Applicant.
On uploading of the Application details, the Members of the Syndicate and Trading Members of the Stock Exchanges
will submit the Application Forms, with the cheque/demand draft to the Escrow Collection Bank(s), which will realise
the cheque/demand draft, and send the Application Form and the KYC documents to the Registrar to the Issue, who
shall check the KYC documents submitted and match Application details as received from the online platforms of Stock
Exchanges with the Application Amount details received from the Escrow Collection Bank(s) for reconciliation of
funds received from the Escrow Collection Bank(s). In case of discrepancies between the two databases, the details
received from the online platforms of Stock Exchanges will prevail, except in relation to discrepancies between
Application Amounts. The Members of the Syndicate/Trading Members of the Stock Exchanges are requested to note
that all Applicants are required to be banked with only the designated branches of Escrow Collection Bank(s). On
Allotment, the Registrar to the Issue will dispatch Bond certificates/Allotment Advice to the successful Applicants to
their addresses as provided in the Application Form. If the KYC documents of an Applicant are not in order, the
Registrar to the Issue will withhold the dispatch of Bond certificates pending receipt of complete KYC
documents from such Applicant. In such circumstances, successful Applicants should provide complete KYC
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documents to the Registrar to the Issue at the earliest. In such an event, any delay by the Applicant to provide
complete KYC documents to the Registrar to the Issue will be at the Applicant’s sole risk and neither the
Company, the Registrar to the Issue, the Escrow Collection Bank(s), nor the Members of the Syndicate will be
liable to compensate the Applicants for any losses caused to them due to any such delay, or liable to pay any
interest on the Application Amounts for such period during which the Bond certificates are withheld by the
Registrar to the Issue. Further, the Company will not be liable for any delays in payment of interest on the
Bonds Allotted to such Applicants, and will not be liable to compensate such Applicants for any losses caused to
them due to any such delay, or liable to pay any interest for such delay in payment of interest on the Bonds.
For instructions pertaining to completing Application Form please see “Issue Procedure - General Instructions” and
“Issue Procedure - Additional Instructions for Applicants seeking allotment of Bonds in physical form” on pages 141
and 146, respectively.
Application for allotment in dematerialised form
Submission of ASBA Applications
Applicants may also apply for Bonds using the ASBA facility. ASBA Applications can be only by Applicants opting
for Allotment in dematerialised form. ASBA Applications can be submitted through either of the following modes:
a) Physically or electronically to the Designated Branches of SCSB with whom an Applicant’s ASBA Account is
maintained. In case of ASBA Application in physical mode, the ASBA Applicant will submit the Application Form at
the relevant Designated Branch of the SCSB. The Designated Branch will verify if sufficient funds equal to the
Application Amount are available in the ASBA Account, as mentioned in the ASBA Application, prior to uploading
such ASBA Application into the electronic system of the Stock Exchanges. If sufficient funds are not available in
the ASBA Account, the respective Designated Branch will reject such ASBA Application and will not upload
such ASBA Application in the electronic system of the Stock Exchanges. If sufficient funds are available in the
ASBA Account, the Designated Branch will block an amount equivalent to the Application Amount and upload details
of the ASBA Application in the electronic system of the Stock Exchanges. The Designated Branch of the SCSBs will
stamp the Application Form. In case of Application in the electronic mode, the ASBA Applicant will submit the
ASBA Application either through the internet banking facility available with the SCSB, or such other electronically
enabled mechanism for application and blocking funds in the ASBA Account held with SCSB, and accordingly
registering such ASBA Applications.
b) Physically through the Members of the Syndicate or Trading Members of the Stock Exchanges only at the Specified
Cities, i.e., Syndicate ASBA. ASBA Applications submitted to the Members of the Syndicate or Trading Members of
the Stock Exchanges at the Specified Cities will not be accepted if the SCSB where the ASBA Account, as specified in
the ASBA Application, is maintained has not named at least one branch at that Specified City for the Members of the
Syndicate or Trading Members of the Stock Exchanges, as the case may be, to deposit ASBA Applications. A list of
such branches is available at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries.
On receipt of the Application Form by the Members of the Syndicate or Trading Members of the Stock Exchanges, as
the case may be, an acknowledgement will be issued by giving the counter foil of the Application Form with the date
stamp to the ASBA Applicant as proof of having accepted the Application. Thereafter, the details of the Application
will be uploaded in the electronic system of the Stock Exchanges and the Application Form will be forwarded to the
relevant branch of the SCSB, in the relevant Specified City, named by such SCSB to accept such ASBA Applications
from the Members of the Syndicate or Trading Members of the Stock Exchanges, as the case may be. A list of such
branches is available at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries. On receipt of
the ASBA Application, the relevant branch of the SCSB will perform verification procedures and check if sufficient
funds equal to the Application Amount are available in the ASBA Account, as mentioned in the ASBA Form. If
sufficient funds are not available in the ASBA Account, the relevant ASBA Application is liable to be rejected. If sufficient funds are available in the ASBA Account, the relevant branch of the SCSB will block an amount
equivalent to the Application Amount mentioned in the ASBA Application. The Application Amount will remain
blocked in the ASBA Account until approval of the Basis of Allotment and consequent transfer of the amount against
the Allotted Bonds to the Public Issue Account(s), or until withdrawal/failure of the Issue or withdrawal/rejection of
the Application Form, as the case may be.
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ASBA Applicants must note that:
(a) Physical Application Forms will be available with the Designated Branches of SCSBs and with the Members of the
Syndicate at the Specified Cities; and electronic Application Forms will be available on the websites of the SCSBs and
the Stock Exchanges at least one day prior to the Issue Opening Date. Trading Members of the Stock Exchanges can
download Application Forms from the websites of the Stock Exchanges. Application Forms will also be provided to
Trading Members of the Stock Exchanges at their request. The Application Forms would be serially numbered.
Further, the SCSBs will ensure that the Abridged Prospectus is made available on their websites.
(b) The Designated Branches of SCSBs will accept ASBA Applications directly from ASBA Applicants only during
the Issue Period. The SCSB will not accept any ASBA Applications directly from ASBA Applicants after the closing
time of acceptance of Applications on the Issue Closing Date. However, in case of Syndicate ASBA, the relevant
branches of SCSBs at Specified Cities can accept ASBA Applications from the Members of the Syndicate or Trading
Members of the Stock Exchanges, as the case may be, after the closing time of acceptance of Applications on the Issue
Closing Date. For further information on the Issue programme, see “Terms of the Issue – Issue Period” on page 118.
(c) In case of Applications through Syndicate ASBA, the physical Application Form will bear the stamp of the
Members of the Syndicate or Trading Members of the Stock Exchanges, as the case may be; if not, the same will be
rejected. Application Forms submitted directly to the SCSBs should bear the stamp of the SCSBs, if not, the
same are liable to be rejected.
Please note that ASBA Applicants can make an Application for Allotment of Bonds in dematerialized form
only.
For instructions pertaining to completing Application Form please see “Issue Procedure- General Instructions” on
page 141.
Submission of Non-ASBA Applications (other than Direct Online Applications)
Applicants must use the Application Form, which will be serially numbered, bearing the stamp of the relevant Member
of the Syndicate or Trading Member of the Stock Exchanges, as the case may be, from whom such Application Form
is obtained. Such Application Form must be submitted to the relevant Member of the Syndicate or Trading Member of
the Stock Exchanges, as the case may be, with the cheque or bank draft for the Application Amount, before the closure
of the Issue Period. The Stock Exchanges may also provide Application Forms for being downloaded and filled.
Accordingly, Applicants may download Application Forms and submit the completed Application Forms together with
cheques/demand drafts to the Members of the Syndicate or Trading Member of the Stock Exchanges. On submission
of the completed Application Form, the relevant Members of the Syndicate or Trading Member of the Stock
Exchanges, as the case maybe, will upload the Application Form on the electronic system provided by the Stock
Exchanges, and once an Application Form has been uploaded, issue an acknowledgement of such upload by stamping
the acknowledgement slip attached to the Application Form with the relevant date and time and return the same to the
Applicant. Thereafter, the Application Form together with the cheque or bank draft will be forwarded to the Escrow
Collection Bank(s) for realisation and further processing.
The duly stamped acknowledgment slip will serve as a duplicate Application Form for the records of the Applicant.
The Applicant must preserve the acknowledgment slip and provide the same in connection with: (a) any
cancellation/withdrawal of their Application; (b) queries in connection with Allotment and/or refund(s) of Bonds;
and/or (c) all investor grievances/complaints in connection with the Issue.
Submission of Direct Online Applications
Applicants having operational beneficiary accounts can opt to submit Direct Online Applications through the online
platform and online payment facility offered by Stock Exchanges. Such Applicants must:
log on to the online platform of the Stock Exchange;
use and duly fill the Application Form available on the online platform of the Stock Exchange;
use the optional facility (if provided by the Stock Exchange to supply the details of the broker who referred the Issue
to the Applicant, if any;
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submit the above information online following the instructions stated therein; and
make the requisite payment for the Bonds applied for using the online payment facility.
Relevant “know your customer” details of such Applicants will be validated online from the Depositories, on the basis
of the DP ID and Client ID provided by them in the Application Form.
On successful submission of a Direct Online Application, the Applicant will receive a system-generated UAN and an
SMS or an e-mail confirmation on credit of the requisite Application Amount paid through the online payment facility
with the Direct Online Application. On Allotment, the Registrar to the Issue shall credit Bonds to the beneficiary
account of the Applicant and in case of refund, the refund amount shall be credited directly to the Applicant’s bank
account. Applicants applying through the Direct Online Application facility must preserve their UAN and quote their
UAN in: (a) any cancellation/withdrawal of their Application; (b) in queries in connection with Allotment of Bonds
and/or refund(s); and/or (c) in all investor grievances/complaints in connection with the Issue.
As per Circular No. CIR./IMD/DF-1/20/2012 dated July 27, 2012 issued by SEBI, the availability of the Direct
Online Applications facility is subject to the Stock Exchanges putting in place the necessary systems and
infrastructure, and accordingly the aforementioned disclosures are subject to any further clarifications,
notification, modification deletion, direction, instructions and/or correspondence that may be issued by the
Stock Exchanges and/or SEBI.
For instructions pertaining to completing Application Form please see “General Instructions” below.
INSTRUCTIONS FOR COMPLETING THE APPLICATION FORM
General Instructions
(a) Applications must be made only in the prescribed Application Form.
(b) Applications must be completed in block letters in English as per the instructions contained in the Prospectus,
Abridged Prospectus and Application Form.
(c) If the Application is submitted in joint names, the Application Form should contain only the name of the first
Bidder whose name should also appear as the first holder of the depository account held in joint names.
(d) Applications must be for a minimum of [●] Bonds and in multiples of one Bond thereafter.
(e) Thumb impressions and signatures other than in English/Hindi/Gujarati/Marathi or any of the other languages
specified in the Eighth Schedule to the Constitution of India must be attested by a Magistrate or Notary
Public or a Special Executive Magistrate under his official seal.
(f) Applicants should hold a valid PAN allotted under the Income Tax Act and mention it in the Application
Form.
(g) Applicants must tick the relevant box for the ‘Category of Investor’ provided in the Application Form.
(h) Applicants must tick the relevant box for the ‘Mode of Application’ provided in the Application Form,
choosing either ASBA or Non-ASBA mechanism.
(i) ASBA Applicants should correctly mention the ASBA Account number and ensure that funds equal to the
Application Amount are available in the ASBA Account.
(j) Applications should be made by the Karta in case of HUFs. Applicants are required to ensure that the PAN
details of the HUF are mentioned and not those of the Karta.
(k) No separate receipts will be issued for the Application Amount payable on submission of the
Application Form. However, the Lead Managers, Lead Brokers, Trading Members of the Stock Exchanges
or the Designated Branches of the SCSBs, as the case may be, will acknowledge the receipt of the
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Application Forms by stamping the date and returning to the Applicants an acknowledgement slip which will
serve as the duplicate of the Application Form for the records of the Applicant.
The Company, the Members of the Syndicate, Trading Members of the Stock Exchanges, Designated Branches
of SCSBs, and the Registrar to the Issue will not be liable for errors in data entry due to submission of
incomplete or illegible Application Forms.
The Company shall Allot Series 1 Bonds to all valid Applications where the Applicants have not indicated their choice
of the relevant Series in the Application Form.
Applicant’s Beneficiary Account and Bank Account Details
Applicants applying for Allotment in dematerialised form must mention their DP ID and Client ID in the Application
Form, and ensure that the name provided in the Application Form is exactly the same as the name in which the
Beneficiary Account is held. In case the Application Form for Allotment in dematerialised form is submitted in joint
names, it should be ensured that the Beneficiary Account is held in the same joint names and in the same sequence in
which they appear in the Application Form. In case the DP ID, Client ID and PAN mentioned in the Application
Form for Allotment in dematerialised form and entered into the electronic system of the Stock Exchanges do
not match with the DP ID, Client ID and PAN available in the Depository database or in case PAN is not
available in the Depository database, the Application Form for Allotment in dematerialised form is liable to be
rejected. Further, Application Forms submitted by Applicants applying for Allotment in dematerialised form,
whose beneficiary accounts are inactive, will be rejected.
On the basis of the DP ID and Client ID provided by the Applicant in the Application Form for Allotment in
dematerialised form and entered into the electronic system of the Stock Exchanges, the Registrar to the Issue will
obtain from the Depositories the Demographic Details of the Applicant including PAN, address, bank account details
for printing on refund orders/sending refunds through electronic mode, Magnetic Ink Character Recognition (“MICR”)
Code and occupation. These Demographic Details would be used for giving Allotment Advice and refunds (including
through physical refund warrants, direct credit, NECS, NEFT and RTGS), if any, to the Applicants. Hence, Applicants
are advised to immediately update their Demographic Details as appearing on the records of the DP and ensure that
they are true and correct, and carefully fill in their Beneficiary Account details in the Application Form. Failure to do
so could result in delays in dispatch/credit of refunds to Applicants and delivery of Allotment Advice at the
Applicants’ sole risk, and neither the Company, the Members of the Syndicate, Trading Members of the Stock
Exchanges, Escrow Collection Bank(s), SCSBs, Registrar to the Issue nor the Stock Exchanges will bear any
responsibility or liability for the same.
The Demographic Details would be used for correspondence with the Applicants including mailing of Allotment
Advice and printing of bank particulars on refund orders or for refunds through electronic transfer of funds, as
applicable. Allotment Advice and physical refund orders would be mailed at the address (in India) of the Applicant as
per Demographic Details received from the Depositories. Delivery of refund orders/ Allotment Advice may be delayed
if the same once sent to the address obtained from the Depositories are returned undelivered. In such event, the address
and other details provided by the Applicant (other than ASBA Applicants and Applicants using Direct Online
Applications through the online payment facility of the Stock Exchanges) in the Application Form would be used only
to ensure dispatch of refund orders. In case of refunds through electronic modes detailed in the Draft Prospectus,
refunds may be delayed if bank particulars obtained from the DP are incorrect. Any such delay will be at such
Applicants’ sole risk and neither the Company, the Members of the Syndicate, Trading Members of the Stock
Exchanges, Escrow Collection Bank(s), SCSBs, Registrar to the Issue nor the Stock Exchanges will be liable to
compensate the Applicant for any losses caused to the Applicant due to any such delay, or to pay any interest
for such delay.
In case of Applications made under power of attorney, the Company in its absolute discretion, reserves the right to
permit the holder of the power of attorney to request the Registrar to the Issue that for the purpose of printing
particulars on the refund order and mailing of refund orders/ Allotment Advice, the demographic details obtained from
the Depository of the Applicant will be used. By signing the Application Form, the Applicant would be deemed to
have authorised the Depositories to provide to the Registrar to the Issue, on request, the required Demographic Details
available on their records. The Demographic Details provided by the Applicant in the Application Form would not be
used for any purpose by the Registrar to the Issue except in relation to the Issue.
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With effect from [●], the beneficiary accounts of Applicants for whom PAN details have not been verified shall be
suspended for credit and no credit of Bonds pursuant to the Issue will be made into the accounts of such Applicants.
Application Form submitted by Applicants whose beneficiary accounts are inactive shall be rejected. Furthermore, in
case no corresponding record is available with the Depositories, which match three parameters, namely, DP ID, Client
ID and PAN, then such Applications are liable to be rejected.
PAN
Any Application Form without the PAN (or submitting the GIR number instead of the PAN) is liable to be
rejected, irrespective of the amount of transaction. In accordance with SEBI circular dated April 27, 2007, the PAN
would be the sole identification number for the participants transacting in the Indian securities market, irrespective of
the amount of transaction. Further, with effect from August 16, 2010, beneficiary accounts of Applicants for whom
PAN details have not been verified have been suspended for credit and no credit of Bonds pursuant to the Issue will be
made into the accounts of such Applicants. Therefore, the Applicant (in the case of Applications made in joint names,
the first Applicant) should mention the PAN allotted under the Income Tax Act in the Application Form. However,
Applications on behalf of the Central or State Government officials and officials appointed by the courts in terms of
SEBI circular dated June 30, 2008 and Applicants residing in the state of Sikkim may be exempt from the requirement
to specify their PAN for transacting in the Indian securities market in terms of SEBI circular dated July 20, 2006.
However, the exemption for the Central or State Government and the officials appointed by the courts and for
Applicants residing in the State of Sikkim is subject to the DPs verifying the veracity of such claims by collecting
sufficient documentary evidence in support of their claims. At the time of ascertaining the validity of these
Applications, the Registrar to the Issue will check under the Depository records for the appropriate description under
the PAN field, i.e., either Sikkim category or exempt category.
Joint Applications
Applications by Applicants applying for Allotment in dematerialised form can be in single or joint names. If the
Application Form is submitted in joint names, the Application Form should contain only the name of the first Bidder
whose name should also appear as the first holder of the depository account held in joint names. In case of
Applications in joint names for Allotment of Bonds, the names of the Applicants should be the same and appearing in
the same order as on the records of the DP. In case of Applications in joint names, any payments will be made out in
favour of the first Applicant and any communications will be addressed to the first Applicant.
Additional/Multiple Applications
For purposes of Allotment of Bonds in the Issue, Applications will be grouped based on the PAN, i.e., Applications
under the same PAN will be grouped together and treated as one Application. Two or more Applications will be
deemed to be multiple Applications if the sole or first applicant is one and the same.
An Applicant is allowed to make one or more Applications for the Series 1 Bonds subject to a minimum Application
size of ` [●] and in multiples of ` [●] thereafter, for each Application. Any Application for an amount below the
aforesaid minimum Application size will be deemed as an invalid application and shall be rejected. However,
multiple Applications by the same individual Applicant aggregating to a value exceeding ` 10,00,000 shall deem such
individual Applicant to be a Category III Applicant and all such Applications shall be grouped in the Category III
Portion, for the purpose of determining the basis of Allotment to such Applicant. Applications made by any person in
individual capacity and in capacity as a Karta of an HUF and/or as second or third Applicant in case of Applications
made in joint names will not be treated as a multiple Application. Moreover, a separate Application can be made in
respect of each scheme of an MF; such Applications will not be treated as multiple Applications.
Dos:
1. Check if you are eligible to apply as per the terms of the Prospectus, Abridged Prospectus and applicable law.
2. Read all the instructions carefully and complete the Application Form in the prescribed form
3. Ensure that you have obtained all necessary approvals from the relevant statutory and/or regulatory
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authorities to apply for, subscribe to and/or seek Allotment of Bonds pursuant to the Issue.
4. If the Application Form is submitted in joint names, the Application Form should contain only the name of
the first Bidder whose name should also appear as the first holder of the depository account held in joint
names.
5. Ensure that signatures other than in the languages specified in the Eighth Schedule to the Constitution of
India are attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.
6. In case of an HUF applying through its Karta, the Applicant is required to specify the name of an Applicant
in the Application Form as “XYZ Hindu Undivided Family applying through PQR”, where PQR is the name
of the Karta.
7. Ensure that the Application Forms (for non-ASBA Applicants) are submitted at the collection centres
provided in the Application Forms, bearing the stamp of a Member of the Syndicate or a Trading Members
of the Stock Exchange, as the case may be.
8. Ensure that the DP ID, Client ID and PAN mentioned in the Application Form are correct and match the
details available in the Depository’s database, and that the beneficiary account is activated for
Allotment/trading of Bonds in dematerialised form.
9. Ensure that you have been given a transaction registration slip (“TRS”) and an acknowledgment as proof of
having accepted the Application Form.
10. Ensure that the name(s) provided in the Application Form is exactly the same as the name(s) in which the
beneficiary account is held with the DP. In case the Application Form is submitted in joint names, ensure that
the beneficiary account is also held in same joint names and such names are in the same sequence in which
they appear in the Application Form.
11. Except in the case of ASBA Applications and Direct Online Applications using the online payment facility
offered through the Stock Exchanges, Applicants are requested to write their names and Application serial
number on the reverse of the instruments by which the payments are made.
12. Tick the relevant box for the ‘Category of Investor’ provided in the Application Form.
13. Tick the relevant box for the ‘Mode of Application’ provided in the Application Form, choosing either ASBA
or Non-ASBA mechanism.
14. Tick the series of Bonds in the Application Form that you wish to apply for.
15. Ensure that you have obtained all necessary approvals from the relevant statutory and/or regulatory
authorities to apply for, subscribe to and/or seek Allotment of the Bonds.
16. Ensure that the Application Forms are submitted to a Member of the Syndicate or Trading Member of a Stock
Exchange, as the case may be, for Applications other than ASBA Applications/Direct Online Applications,
before the closure of Application hours on the Issue Closing Date. For information on the Issue programme,
see “Terms of the Issue – Issue Period” on page 118.
17. In case of revision of an Application during the Issue Period, ensure that you have first withdrawn your
original Application and then submit a fresh Application.
18. Ensure what the Demographic Details including PAN are updated, true and correct in all respects.
Don’ts:
1. Do not apply if you are not competent to contract under the Indian Contract Act, 1872 or if you are otherwise
ineligible to acquire Bonds under applicable law or your relevant constitutional documents or otherwise.
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2. Do not apply such that the number of Bonds applied for exceeds the Issue size (including retention of
oversubscription), and/or investment limit applicable to you under applicable laws or regulations.
3. Do not make an Application for lower than the minimum Application size.
4. Do not send Application Forms by post; instead submit the same to a Member of the Syndicate, Trading
Member of a Stock Exchange or Designated Branch of an SCSB, as the case may be. Applicants other than
ASBA Applicants should not submit the Application Form directly to the Escrow Collection Bank(s).
5. Do not submit incorrect details of the DP ID, Client ID and PAN or provide details for a beneficiary account
which is suspended or for which details cannot be verified by the Registrar to the Issue. Do not submit the
GIR number instead of the PAN.
6. Do not pay the Application Amount in cash, by money order or by postal order or by stockinvest.
7. Do not submit the Application Forms without the full Application Amount for the number of Bonds applied
for.
8. Do not submit Applications on plain paper or on incomplete or illegible Application Forms.
9. Do not submit an Application in case you are not eligible to acquire Bonds under applicable law or your
relevant constitutional documents or otherwise.
10. Do not submit an Application that does not comply with the securities law of your respective jurisdiction.
11. Do not submit an Application to the Escrow Collection Bank(s), unless such Escrow Collection Bank is a
Designated Branch of a SCSB where the ASBA Account is maintained, in case of ASBA Application.
Additional Instructions Specific to ASBA Applicants
Dos:
1. Check if you are eligible to Apply under ASBA;
2. Ensure that you tick the ASBA option in the Application Form and provide correct details of your ASBA
Account including bank account number/bank name and branch;
3. Ensure that your Application Form is submitted either at a Designated Branch of a SCSB where the ASBA
Account is maintained or with the Members of the Syndicate or Trading Members of the Stock Exchanges at
the Specified Cities, and not directly to the Escrow Collection Bank(s) (assuming that such bank is not an
SCSB) or to the Company or the Registrar to the Issue;
4. Before submitting physical Application Form with the Member of the Syndicate at the Specified Cities ensure
that the SCSB, whose name has been filled in the Application Form, has a branch in that centre.
5. In case of ASBA Applications through Syndicate ASBA, before submitting the physical Application Form to
a Member of the Syndicate, at the Specified Cities or Trading Member of the Stock Exchanges, ensure that
the SCSB where the ASBA Account, as specified in the Application Form, is maintained has named at least
one branch in that specified city for the Members of the Syndicate or Trading Members of the Stock
Exchanges, as the case may be, to deposit Application Forms (A list of such branches is available at
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries);
6. Ensure that the Application Form is signed by the ASBA Account holder in case the ASBA Applicant is not
the account holder; and
7. Ensure that the ASBA Account holder has funds equal to the Application Amount in the ASBA Account
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before submitting the Application Form.
8. Ensure that you have correctly ticked, provided or checked the authorisation box in the Application Form, or
otherwise have provided an authorisation to the SCSB via the electronic mode, for blocking funds in the
ASBA Account equivalent to the Application Amount mentioned in the Application Form; and
9. Ensure that you have received an acknowledgement from the Designated Branch or the Member of the
Syndicate or Trading Member of the Stock Exchanges, as the case maybe for submission of the Application
Form.
Don'ts:
1. Do not submit the Application Amount in any mode other than through blocking of Application Amount in
the ASBA Accounts;
2. Do not submit the Application Form to the Members of the Syndicate or Trading Members of the Stock
Exchanges, as the case may be, at a location other than the Specified Cities.
3. Do not send your physical Application Form by post; instead submit the same to a Designated Branch of an
SCSB or Member of the Syndicate or Trading Members of the Stock Exchanges, as the case may be, at the
Specified Cities; and
4. Do not submit more than five Application Forms per ASBA Account.
ASBA Applications submitted to the Members of the Syndicate or Trading Members of the Stock Exchanges at
the Specified Cities will not be accepted if the SCSB where the ASBA Account, as specified in the Application
Form, is maintained has not named at least one branch at that specified city for the Members of the Syndicate
or Trading Members of the Stock Exchanges, as the case may be, to deposit such Application Forms. A list of
such branches is available at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries. See
“Rejection of Applications” on page 150 for information on rejection of Applications.
For further instructions, Applicants are advised to read the Prospectus, Abridged Prospectus and Application Form.
ADDITIONAL INSTRUCTIONS FOR APPLICANTS SEEKING ALLOTMENT OF BONDS IN
PHYSICAL FORM
Any Applicant who subscribes to the Bonds in physical form shall undertake the following steps:
Complete the Application Form in all respects, by providing all the information including PAN and
Demographic Details. However, do not provide DP details in the Application Form. The requirement for
providing DP details shall be mandatory only for Applicants who wish to subscribe to the Bonds in
dematerialised form.
Provide the following documents with the Application Form:
(a) Self-attested copy of the PAN card
(b) Proof of identification in case of Applications by or on behalf of the Central or State Government
and the officials appointed by the courts and by Applicants residing in the State of Sikkim. Any of
the following documents shall be considered as a verifiable proof of residence:
valid passport issued by the GoI; or
voter’s identity card issued by the GoI; or
valid driving license issued by any transport authority of the Republic of India; or
Government ID card; or
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Defence ID card; or
ration card issued by the GoI
(c) Self-attested copy of proof of residence. Any of the following documents shall be considered as a
verifiable proof of residence:
ration card issued by the GoI; or
valid driving license issued by any transport authority of the Republic of India; or
electricity bill (not older than three months); or
landline telephone bill (not older than three months); or
valid passport issued by the GoI; or
voter’s identity card issued by the GoI; or
passbook or latest bank statement issued by a bank operating in India; or
registered leave and license agreement or agreement for sale or rent agreement or flat
maintenance bill.
AADHAR letter, issued by Unique Identification Authority of India, GoI.
(d) Self-attested copy of a cancelled cheque of the bank account to which the amounts pertaining to
payment of refunds, interest and redemption, as applicable, should be credited. In the absence of
such cancelled cheque, the Company reserves the right to reject the Application or to
consider the bank details given on the Application Form at its sole discretion. In such case
the Company, the Lead Managers and the Registrar to the Issue shall not be liable for any
delays/errors in payment of refund and/or interest.
The Applicant shall be responsible for providing the above information accurately. Delays or failure in credit of the
payments due to inaccurate details shall be at the sole risk of the Applicants and neither the Lead Managers nor the
Company shall have any responsibility and undertake any liability for the same. Applications for Allotment of the
Bonds in physical form, which are not accompanied with the abovestated documents, may be rejected at the sole
discretion of the Company.
In relation to the issuance of the Bonds in physical form, note the following:
1. An Applicant has the option to seek Allotment of Bonds in either dematerialised or physical mode. However,
an Applicant can seek Allotment of Bonds in physical mode only if the Applicant does not have a
beneficiary account. No partial Application for the Bonds shall be permitted; any such partial
Application is liable to be rejected.
2. Any Applicant who provides Depository Participant details in the Application Form shall be Allotted
the Bonds in dematerialised form only, irrespective of whether such applicant has provided the details
required for Allotment in physical form. Such Applicant shall not be Allotted Bonds in physical form.
3. In case of Bonds issued in physical form, the Company will issue one certificate to the holders of the Bonds
for the aggregate amount of the Bonds for the Series 1 Bonds that are applied for (each such certificate, a
“Consolidated Bond Certificate”).
4. The Company shall dispatch the Consolidated Bond Certificate to the (Indian) address of the Applicant
provided in the Application Form, within the time and in the manner stipulated under Section 113 of the
Companies Act read with the Company’s Articles of Association.
All terms and conditions disclosed in relation to the Bonds held in physical form pursuant to rematerialisation shall be
applicable mutatis mutandis to the Bonds issued in physical form.
The Applicant shall be responsible for providing the above information and KYC documents accurately. Delay
or failure in credit of payments or receipt of Allotment Advice or Bond certificates due to inaccurate or
incomplete details shall be at the sole risk of the Applicants and the Lead Managers, the Company and the
Registrar to the Issue shall have no responsibility and undertake no liability in this relation. In case of
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Applications for Allotment of Bonds in physical form, which are not accompanied with the aforestated
documents, Allotment of Bonds in physical form may be held in abeyance by the Registrar to the Issue, pending
receipt of KYC documents.
PAYMENT INSTRUCTIONS
The entire Application Amount is payable at the time of submitting the Application Form. In case of ASBA
Applicants, the entire Application Amount will be blocked in the ASBA Account. In case of Allotment of a lesser
number of Bonds than applied for, the Company will refund the excess amount paid on Application to the Applicant
(or the excess amount shall be unblocked in the ASBA Account, as the case may be).
Payment mechanism for ASBA Applicants
ASBA Applicants are required to specify the ASBA Account number in the Application Form. ASBA Applications
submitted to the Members of the Syndicate or Trading Members of the Stock Exchanges at the Specified Cities will be
uploaded onto the electronic system of the Stock Exchanges and deposited with the relevant branch of the SCSB at the
specified city named by such SCSB to accept such ASBA Applications from the Members of the Syndicate or Trading
Members of the Stock Exchanges, as the case may be (A list of such branches is available at
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries). The relevant branch of the SCSB will
perform verification procedures and block an amount in the ASBA Account equal to the Application Amount specified
in the ASBA Application.
For ASBA Applications submitted directly to the SCSBs, the relevant SCSB will block an amount in the ASBA
Account equal to the Application Amount specified in the ASBA Application, before entering the ASBA Application
into the electronic system. SCSBs may provide the electronic mode of Application either through an internet enabled
application and banking facility or such other secured, electronically enabled mechanism for application and blocking
of funds in the ASBA Account. For ASBA Applications, the SCSBs, will block Application Amount only against/in a
funded deposit account and ensure that clear demarcated funds are available for ASBA Applications and no lien shall
be marked against credit limits/overdraft facility of account holders for ASBA Application, in accordance with SEBI
circular CIR/CFD/DIL/12/2012 dated September 13, 2012
ASBA Applicants should ensure that they have funds equal to the Application Amount in the ASBA Account
before submitting the ASBA Application to the Members of the Syndicate or Trading Members of the Stock
Exchanges, as the case may be, at the Specified Cities or to the Designated Branches of SCSBs. An ASBA
Application where the corresponding ASBA Account does not have sufficient funds equal to the Application
Amount at the time of blocking the ASBA Account is liable to be rejected.
The Application Amount will remain blocked in the ASBA Account until approval of the Basis of Allotment and
consequent transfer of the amount to the Public Issue Account(s), or until withdrawal/failure of the Issue or until
withdrawal/rejection of the Application Form, as the case may be. Once the Basis of Allotment is approved, the
Registrar to the Issue will send an appropriate request to the controlling branch of the SCSB for unblocking the
relevant ASBA Accounts and for transferring the amount pertaining to Bonds allocable to the successful ASBA
Applicants to the Public Issue Account(s). In case of withdrawal/failure of the Issue/refund, the blocked amount will
be unblocked on receipt of such information from the Registrar to the Issue.
Escrow Mechanism for Applicants other than ASBA Applicants
The Company will open Escrow Account(s) with each of the Escrow Collection Bank(s) in whose favour the
Applicants (other than ASBA Applicants) will make out the cheque or demand draft in respect of their Application.
Cheques or demand drafts received for the full Application Amount from Applicants/payments received through the
online payment facility offered by Stock Exchanges would be deposited in the Escrow Account(s). All cheques/bank
drafts accompanying the Application should be crossed “A/c Payee only” and made payable to “[●]”.
Application Amounts paid through the online payment facility of the Stock Exchanges will also be deposited in the
Escrow Account(s).
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The Escrow Collection Bank(s) will maintain the monies in the Escrow Account(s) until documents for creation of
security for the Bonds are executed. The Escrow Collection Bank(s) will not exercise any lien whatsoever over the
monies deposited therein and will hold the monies therein in trust for the Applicants. On the Designated Date, the
Escrow Collection Bank(s) will transfer the funds represented by Allotment of Bonds (other than in respect of
Allotment to successful ASBA Applicants) from the Escrow Account(s), as per the terms of the Escrow Agreement,
into the Public Issue Account(s)), provided that the Company will have access to such funds only after receipt of final
listing and trading approvals from the BSE and execution of the Debenture Trustee Agreement and Security
Documents. The balance amount after transfer to the Public Issue Account(s) will be transferred to the Refund
Account. Payments of refund to the relevant Applicants will be made from the Refund Account as per the terms of the
Escrow Agreement and the Prospectus.
Payment into Escrow Account
Each Applicant will draw a cheque or demand draft or remit the funds electronically through the mechanisms for the
Application Amount as per the following terms:
(a) All Applicants would be required to pay the full Application Amount for the number of Bonds applied for, at
the time of the submission of the Application Form.
(b) The Applicants will, with the submission of the Application Form, draw a cheque/demand draft for the full
Application Amount in favour of the Escrow Account and submit the same to Escrow Collection Bank(s). If
the payment is not made favouring the Escrow Account with the Application Form, the Application is
liable to be rejected. Application Forms accompanied by cash, stock invest, money order or postal
order will not be accepted.
(c) The cheque/demand draft for payment into the Escrow Account should be drawn in favour of “[●]”.
(d) Payments should be made by cheque or demand draft drawn on any bank (including a cooperative bank)
which is situated at and is a member of or sub-member of the bankers’ clearing house located at the centre
where the Application Form is submitted. Outstation cheques, post-dated cheques and cheques/bank
drafts drawn on banks not participating in the clearing process will not be accepted and Applications
accompanied by such cheques or bank drafts are liable to be rejected. Cash/stockinvest/money
orders/postal orders will not be accepted. Cheques without the nine digit MICR code are liable to be
rejected.
(e) Applicants are advised to provide the number of the Application Form on the reverse of the cheque or bank
draft to avoid misuse of instruments submitted with the Application Form.
(f) The monies deposited in the Escrow Accounts will be held for the benefit of the Applicants (other than
ASBA Applicants) till the Designated Date.
(g) On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow Accounts as
per the terms of the Escrow Agreement into the Public Issue Account(s) with the Bankers to the Issue and the
refund amount shall be transferred to the Refund Account.
Payment by cash/stockinvest/money order
Payment through cash/stockinvest/money order will not be accepted in the Issue.
Online Applications
The Company may decide to offer an online Application facility for the Bonds, as and when permitted by applicable
laws, subject to the terms and conditions prescribed.
SUBMISSION OF DULY COMPLETED APPLICATION FORMS
Mode of Submission of Application Forms To whom the Application Form has to be submitted
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Mode of Submission of Application Forms To whom the Application Form has to be submitted
ASBA Applications (i) If using physical Application Form, (a) to the
Members of the Syndicate or Trading Members of the
Stock Exchanges only at the Specified Cities (“Syndicate
ASBA”), or (b) to the Designated Branches of SCSBs
where the ASBA Account is maintained; or
(ii) If using electronic Application Form, to the SCSBs,
electronically through internet banking facility, if
available.
Non-ASBA Applications (other than Direct Online
Applications)
The Members of the Syndicate or Trading Members of
the Stock Exchanges.
Note: Applications for Allotment in physical form can be
made only by using non-ASBA Applications (other than
Direct Online Applications).
No separate receipts will be issued for the Application Amount payable on submission of Application Form. However, the Lead Managers/Lead Brokers/Trading Members of Stock Exchanges will acknowledge the receipt of the
Application Forms by stamping the date and returning to the Applicants an acknowledgement slip which will serve as
a duplicate Application Form for the records of the Applicant.
Syndicate ASBA Applicants must ensure that their ASBA Applications are submitted to the Members of the Syndicate
or Trading Members of the Stock Exchanges only at the Specified Cities. ASBA Applications submitted to the
Members of the Syndicate or Trading Members of the Stock Exchanges at the Specified Cities will not be accepted if
the SCSB where the ASBA Account, as specified in the ASBA Application, is maintained has not named at least one
branch at that Specified City for the Members of the Syndicate or Trading Members of the Stock Exchanges, as the
case may be, to deposit ASBA Applications. A list of such branches is available at
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries. For information on the Issue
programme and timings for submission of Application Forms, see “Terms of the Issue – Issue Period” on page 118.
Applicants other than ASBA Applicants are advised not to submit Application Forms directly to Escrow
Collection Bank(s); and the same are liable to be rejected and the Applicants will not be entitled to any
compensation whatsoever.
Submission of ASBA Applications
Please refer “– Submission of ASBA Applications” on page 139.
Submission of Non-ASBA Applications (other than Direct Online Applications)
Please refer “– Submission of Non-ASBA Applications(other than Direct Online Applications” on page 140.
Submission of Non- ASBA Applications for Allotment of the Bonds in physical form
Please refer “– Submission of Non-ASBA Applications for Allotment of Bonds in the physical form” on page 138.
REJECTION OF APPLICATIONS
The Company reserves its full, unqualified and absolute right to accept or reject any Application in whole or in part
and in either case without assigning any reason thereof. Applications would be liable to be rejected on one or more
technical grounds, including but not restricted to the following:
Applications where a registered address in India is not provided for the Applicant.
Applications by persons who are not eligible to acquire Bonds of the Company in terms of applicable laws,
rules, regulations, guidelines and approvals, including Applications by persons not competent to contract
under the Indian Contract Act, 1872 (including a minor without a guardian name) and Applications by OCBs.
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In case of partnership firms, Bonds may be registered in the names of the individual partners and no firm as
such will be entitled to apply. However, a limited liability partnership firm can apply in its own name.
In case of Applications under power of attorney or by corporates, trusts, societies, etc., relevant documents
are not submitted.
Applications accompanied by Stockinvest/money order/postal order/cash.
Applications for an amount below the minimum Application size.
Applications for amounts greater than the maximum permissible amounts prescribed by the regulations and
applicable law.
Applications without payment of the entire Application Amount. However, the Company may Allot Bonds up
to the value of Application Amounts paid, if such Application Amounts exceed the minimum Application
size prescribed hereunder.
Application Amount paid not tallying with the number of Bonds applied for. However, the Company may
Allot Bonds up to the value of Application Amounts paid, if such Application Amounts exceed the minimum
Application size prescribed hereunder.
Applications for a number of Bonds which is not in a multiple of one.
Submission of more than five ASBA Applications per ASBA Account.
PAN not mentioned in the Application Form, except for Applications by or on behalf of the Central or State
Government and the officials appointed by the courts and by Applicants residing in the State of Sikkim,
provided such claims have been verified by the DPs.
GIR number furnished instead of PAN.
DP ID, Client ID and bank account not mentioned in the Application Form, in case of Allotment in
dematerialised form.
ASBA Applications not having details of the ASBA Account to be blocked.
Authorisation to the SCSB for blocking funds in the ASBA Account not provided.
Signature of sole and/or joint Applicants missing. In case of joint Applicants, the Application Forms not
being signed by each of the joint Applicants (in the same sequence as they appear in the records of the
Depository).
ASBA Application Forms not signed by the ASBA Account holder, if the ASBA Account holder is different
from the Applicant.
Application Forms submitted to the Members of the Syndicate or Trading Members of the Stock Exchanges
does not bear the stamp of the relevant Member of the Syndicate or Trading Member of the Stock Exchanges,
as the case may be. ASBA Applications submitted directly to the Designated Branches of SCSBs does not
bear the stamp of the SCSB and/or the Designated Branch and/or Member of the Syndicate or Trading
Members of the Stock Exchanges, as the case may be.
In case of Allotment in dematerialised form, no corresponding record is available with the Depositories that
matches three parameters, namely, DP ID, Client ID and PAN or if PAN is not available in the Depository
database.
With respect to ASBA Applications, inadequate funds in the ASBA Account to enable the SCSB to block the
Application Amount specified in the ASBA Application Form at the time of blocking such Application
Amount in the ASBA Account or no confirmation is received from the SCSB for blocking of funds.
With respect to non-ASBA Applicants, Applications where clear funds are not available in Applicants
Accounts as per final certificates from Escrow Collection Bank(s).
Applications by persons debarred from accessing capital markets, by SEBI or any other regulatory authority.
Applications not uploaded on the terminals of the Stock Exchanges.
Applications uploaded after the expiry of the allocated time on the Issue Closing Date, unless extended by the
Stock Exchanges, as applicable.
Applications by Applicants whose beneficiary accounts have been ‘suspended for credit’ pursuant to the
circular issued by SEBI on July 29, 2010 bearing number CIR/MRD/DP/22/2010.
Where PAN details in the Application Form and as entered into the electronic systems of the Stock
Exchanges, are not as per the records of the Depositories.
ASBA Applications submitted to the Members of the Syndicate or Trading Members of the Stock Exchanges
at locations other than the Specified Cities or at a Designated Branch of a SCSB where the ASBA Account is
not maintained, and ASBA Applications submitted directly to an Escrow Collection Bank (assuming that
such bank is not a SCSB), to the Company or the Registrar to the Issue.
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Application Forms not delivered by the Applicant within the time prescribed as per the Application Form,
Prospectus and as per the instructions in the Application Form, and the Prospectus.
Application Form accompanied with more than one cheque.
Date of Birth for first/sole Applicant for persons applying for Allotment of Bonds in physical form not
mentioned in the Application Form;
ASBA Applications submitted to the Members of the Syndicate or Trading Members of the Stock Exchanges at
the Specified Cities will not be accepted if the SCSB where the ASBA Account, as specified in the ASBA Form,
is maintained has not named at least one branch at that Specified City for the Members of the Syndicate or
Trading Members of the Stock Exchanges, as the case may be, to deposit ASBA Applications (A list of such
branches is available at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries) .
For information on certain procedures to be carried out by the Registrar to the Issue for finalisation of the Basis of
Allotment, see “Issue Procedure - Information for Applicants” on page 154. For information on payment of refunds,
see “Terms of the Issue - Payment of Refunds” on page 121.
ELECTRONIC REGISTRATION OF APPLICATIONS
(a) The Members of the Syndicate, Trading Members of the Stock Exchanges and Designated Branches of SCSBs, as
the case may be, will register Applications using the online facilities of the Stock Exchanges. There will be at least one
online connection in each city where Applications are being accepted. Direct Online Applications will be registered by
Applicants using the online platform offered by the Stock Exchanges. The Company, the Members of the
Syndicate, Trading Members of the Stock Exchanges, Escrow Collection Bank(s) and the Registrar to the Issue
are not responsible for any acts, mistakes or errors or omission and commissions in relation to: (i) Applications
accepted by the SCSBs, (ii) Applications uploaded by the SCSBs, (iii) Applications accepted but not uploaded
within the time permitted by the Stock Exchanges by the SCSBs, (iv) Applications accepted and uploaded by
the SCSBs without blocking funds in the ASBA Accounts, (v) Applications accepted by the Trading Members of
the Stock Exchanges, or (v) any Online Direct Applications.
(b) In case of apparent data entry error by the Lead Managers, Members of the Syndicate, Trading Members of the
Stock Exchanges, Escrow Collection Bank(s) or Designated Branches of SCSBs, as the case may be, in entering the
Application Form number in their respective schedules other things remaining unchanged, the Application Form may
be considered as valid and such exceptions may be recorded in minutes of the meeting submitted to the Designated
Stock Exchange.
(c) The Stock Exchanges will offer an electronic facility for registering Applications, which will be available during
the Issue Period on the terminals of the Consortium Members/Lead Brokers and sub-Brokers, Trading Members of the
Stock Exchanges and the SCSBs. The Members of the Syndicate and Trading Members of the Stock Exchanges can
also set up facilities for offline electronic registration of Applications subject to the condition that they will
subsequently upload the offline data file into the online facilities for Applications on a regular basis, and before the
expiry of the allocated time on the Issue Closing Date. On the Issue Closing Date, the Members of the Syndicate,
Trading Members of the Stock Exchanges and Designated Branches of SCSBs will upload Applications until such
time as may be permitted by the Stock Exchanges. This information will be available with the Members of the
Syndicate, Trading Members of the Stock Exchanges and Designated Branches of SCSBs on a regular basis. A high
inflow of Applications on the Issue Closing Date may lead to some Applications received on such day not being
uploaded; such Applications will not be considered for allocation. Applicants are therefore advised to submit
their Applications well in advance of the closing time of acceptance of Applications on the Issue Closing Date. For further information on the Issue programme, see “Terms of the Issue – Issue Period” on page 118.
(d) At the time of registering each Application, other than ASBA Applications and Direct Online Applications, the
members of the Syndicate or Trading Members of the Stock Exchanges will enter the requisite details of the
Applicants in the online system including:
Application Form number
PAN of the sole/first Applicant
Investor category and sub-category
DP ID
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Client ID
Series of Bonds applied for
Number of Bonds Applied for in each Series of Bond
Price per Bond
Application amount
Cheque number
(e) With respect to ASBA Applications submitted directly to the SCSBs at the time of registering each Application,
the Designated Branches will enter the requisite details of the Applicants in the online system including:
Application Form number
PAN of the sole/first Applicant
Investor category and sub-category
DP ID
Client ID
Series of Bonds applied for
Number of Bonds Applied for in each Series of Bond
Price per Bond
Bank code for the SCSB where the ASBA Account is maintained
Bank account number
Application amount
(f) With respect to ASBA Applications submitted to the Members of the Syndicate or Trading Members of the Stock
Exchanges at the Specified Cities, at the time of registering each Application, the requisite details of the Applicants
will be entered in the online system including:
Application Form number
PAN of the sole/first Applicant
Investor category and sub-category
DP ID
Client ID
Series of Bonds applied for
Number of Bonds Applied for in each Series of Bond
Price per Bond
Bank code for the SCSB where the ASBA Account is maintained
Location of Specified City
Bank account number
Application amount
(g) A system generated acknowledgement slip will be issued to the Applicant as a proof of the registration of each
Application. It is the Applicant’s responsibility to obtain the acknowledgement slip stamped with date and time
from the Members of the Syndicate, Trading Members of the Stock Exchanges and Designated Branches of the
SCSBs, as the case may be. Registration of the Application by the Members of the Syndicate, Trading Members
of the Stock Exchanges and Designated Branches of SCSBs, as the case may be, does not guarantee that Bonds
will be allocated/Allotted by the Company. The acknowledgement slip will be non-negotiable and by itself will
not create any obligation of any kind.
(h) Applications can be rejected on the technical grounds listed on page 150 or if all required information is not
provided or the Application Form is incomplete in any respect.
(i) The permission granted by the Stock Exchanges to use their network and software of the online system should not
in any way be deemed or construed to mean that the compliance with various statutory and other requirements by the
Company and/or the Lead Managers are cleared or approved by the Stock Exchanges; nor does it in any manner
warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other
requirements nor does it take any responsibility for the financial or other soundness of the Company, the management
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or any scheme or project of the Company; nor does it in any manner warrant, certify or endorse the correctness or
completeness of any of the contents of the Draft Prospectus; nor does it warrant that the Bonds will be listed or will
continue to be listed on the Stock Exchanges.
(j) Only Applications that are uploaded on the online system of the Stock Exchanges will be considered for
allocation/Allotment. The Members of the Syndicate, Trading Members of the Stock Exchanges and Designated
Branches of SCSBs will capture all data relevant for the purposes of finalising the Basis of Allotment while uploading
Application data in the electronic systems of the Stock Exchanges. In order that the data so captured does not match
with the Depository details, the Members of the Syndicate, Trading Members of the Stock Exchanges and Designated
Branches of SCSBs will have up to one Working Day after the Issue Closing Date to modify/verify certain selected
fields uploaded in the online system during the Issue Period after which the data will be sent to the Registrar to the
Issue for reconciliation with the data available with the NSDL and CDSL.
BASIS OF ALLOTMENT
Please refer “Terms of the Issue – Basis of Allotment” on page 120.
PAYMENT OF REFUNDS
Please refer “Terms of the Issue – Payment of Refunds” on page 121.
ALLOTMENT OF BONDS AND ISSUANCE OF ALLOTMENT ADVICE
The Company reserves, in its absolute and unqualified discretion and without assigning any reason therefor,
the right to reject any Application in whole or in part. The unutilised portion of the Application Amount(s) will be
refunded to the Applicant by an account payee cheque/demand draft. In case the cheque payable at par facility is not
available, the Company reserves the right to adopt any other suitable mode of payment.
The Company will use best efforts to ensure that all steps for completion of the necessary formalities for Allotment,
listing and commencement of trading at the Stock Exchanges where the Bonds are proposed to be listed are taken
within 12 Working Days of the Issue Closing Date. The Company will ensure dispatch of Allotment Advice/refund
orders within 12 Working Days of the Issue Closing Date and/or issue instructions for credit of Bonds to the respective
beneficiary accounts with DPs for successful Applicants who have been Allotted Bonds in dematerialised form within
12 Working Days of the Issue Closing Date. Allotment Advice for successful Applicants who have been Allotted
Bonds in dematerialised form will be mailed to their addresses (in India) as per the Demographic Details received
from the Depositories.
The Company will credit the Allotted Bonds to the respective beneficiary accounts/dispatch the Allotment
Advice/refund orders, as the case may be, by speed/registered post at the Applicant’s sole risk within 12 Working
Days of the Issue Closing Date. The Company and every officer in default will be liable to pay interest at 15% p.a. for
delay beyond eight days from the time the Company becomes liable to repay any amount on account of refund, as
prescribed under Section 73 of the Companies Act.
The Company will provide adequate funds required for dispatch of refund orders and Allotment Advice, as applicable,
to the Registrar to the Issue.
OTHER INFORMATION
Information for Applicants
In case of ASBA Applications submitted to the SCSBs, in terms of SEBI circular dated April 22, 2010, the Registrar
to the Issue will reconcile the compiled data received from the Stock Exchanges and all SCSBs, and match the same
with the Depository database for correctness of DP ID, Client ID and PAN. The Registrar to the Issue will undertake
technical rejections based on the electronic details and the Depository database. In case of any discrepancy between
the electronic data and the Depository records, the Company, in consultation with the Designated Stock Exchange, the
Lead Managers and the Registrar to the Issue, reserves the right to proceed as per the Depository records for such
ASBA Applications or treat such ASBA Applications as rejected. Please note that as per Para 4 of SEBI Circular No.
155
CIR/CFD/DIL/12/2012 dated September 13, 2012, for making applications by banks on own account using ASBA
facility, SCSBs should have a separate account in own name with any other SEBI registered SCSB/s. Such account
shall be used solely for the purpose of making application in public issues and clear demarcated funds should be
available in such account for ASBA applications.
In case of ASBA Applicants submitted to the Members of the Syndicate and Trading Members of the Stock Exchanges
at the Specified Cities, the Basis of Allotment will be based on the validation by the Registrar to the Issue of the
electronic details with the Depository records, and the complete reconciliation of the final certificates received from
the SCSBs with the electronic details in terms of SEBI circular dated April 29, 2011. The Registrar to the Issue will
undertake technical rejections based on the electronic details and the Depository database. In case of any discrepancy
between the electronic data and the Depository records, the Company, in consultation with the Designated Stock
Exchange, the Lead Managers and the Registrar to the Issue, reserves the right to proceed as per the Depository
records or treat such ASBA Application as rejected.
In case of non-ASBA Applications and Direct Online Applications, the Basis of Allotment will be based on the
validation by the Registrar to the Issue of the electronic details with the Depository records, and the complete
reconciliation of the final certificates received from the Escrow Collection Bank(s) with the electronic details in terms
of SEBI circular dated April 22, 2010 and SEBI circular dated April 29, 2011. The Registrar to the Issue will
undertake technical rejections based on the electronic details and the Depository database. In case of any discrepancy
between the electronic data and the Depository records, the Company, in consultation with the Designated Stock
Exchange, the Lead Managers, the Registrar to the Issue, reserves the right to proceed as per the Depository records or
treat such Applications as rejected.
Based on the information provided by the Depositories, the Company will have the right to accept Applications
belonging to an account for the benefit of a minor (under guardianship). In case of Applications for a higher number of
Bonds than specified for that category of Applicant, only the maximum amount permissible for such category of
Applicant will be considered for Allotment.
Withdrawal of Applications during the Issue Period
Withdrawal of ASBA Applications
ASBA Applicants may withdraw their ASBA Applications during the Issue Period by submitting a request to a
Member of the Syndicate, Trading Member of the Stock Exchanges or a Designated Branch of an SCSB, as the case
may be, through whom the ASBA Application had been placed. In case of ASBA Applications submitted to the
Members of the Syndicate or Trading Members of the Stock Exchanges at the Specified Cities, on receipt of the
request for withdrawal from the ASBA Applicant, the relevant Member of the Syndicate or Trading Member of the
Stock Exchanges, as the case may be, will do the requisite, including deletion of details of the withdrawn ASBA
Application Form from the electronic system of the Stock Exchanges. In case of ASBA Applications submitted
directly to the Designated Branch of the SCSB, on receipt of the request for withdrawal from the ASBA Applicant, the
relevant Designated Branch will do the requisite, including deletion of details of the withdrawn ASBA Application
Form from the electronic system of the Stock Exchanges and unblocking funds in the ASBA Account directly.
Withdrawal of Non-ASBA Applications (other than Direct Online Applications)
Non-ASBA Applicants can withdraw their Applications during the Issue Period by submitting a request for the same
to the Member of the Syndicate or Trading Member of the Stock Exchanges, as the case may be, through whom the
Application had been made. On receipt of the request for withdrawal from the Applicant, the relevant Member of the
Syndicate or Trading Member of the Stock Exchanges, as the case may be, will do the requisite, including deletion of
details of the withdrawn ASBA Application Form from the electronic system of the Stock Exchanges.
Withdrawal of Applications after the Issue Period
In case an Applicant wishes to withdraw the Application after the Issue Closing Date, the same can be done by
submitting a withdrawal request to the Registrar to the Issue prior to the finalisation of Allotment. The Registrar to the
Issue will delete the withdrawn Application from the electronic file provide by the Stock Exchanges and issue
instruction to the SCSB for unblocking the ASBA Account (in case of ASBA Applications).
156
Revision of Applications
Applicants may revise/modify their Application details during the Issue Period, as allowed/permitted by the Stock
Exchanges, by submitting a written request to a Member of the Syndicate/Trading Member of the Stock
Exchanges/Designated Branch of an SCSB, as the case may be. However, for the purpose of Allotment, the date of
original upload of the Application will be considered in case of such revision/modification. Revision of Applications is
not permitted after the expiry of the time for acceptance of Application Forms on the Issue Closing Date.
Depository Arrangements for Applicants Applying for Allotment in Dematerialised Form
The Company has made depository arrangements with NSDL and CDSL for issue and holding of the Bonds in
dematerialised form. Tripartite Agreements have been executed between the Company, the Registrar to the Issue and
both the Depositories. As per the Depositories Act, Bonds issued by us can be held in a dematerialised form. In this
context:
i. The Company has entered into Tripartite Agreements dated [●] with the Registrar to the Issue and NSDL and dated
[●] with the Registrar to the Issue and CDSL, respectively for offering depository option to the Applicants.
ii. An Applicant must have at least one beneficiary account with any of the DPs of NSDL or CDSL prior to making the
Application.
iii. The Applicant must necessarily provide the DP ID and Client ID details in the Application Form.
iv. Bonds Allotted to an Applicant in the electronic form will be credited directly to the Applicant’s respective
beneficiary account(s) with the DP.
v. Applications can be in single or joint names (not exceeding two names). If the Application Form is submitted in
joint names, the Application Form should contain only the name of the first Bidder whose name should also appear as
the first holder of the depository account held in joint names..
vi. Non-transferable Allotment Advice/refund orders will be directly sent to the Applicant by the Registrar to the Issue.
vii. It may be noted that Bonds in electronic form can be traded only on Stock Exchanges having electronic
connectivity with NSDL or CDSL. BSE has connectivity with NSDL and CDSL.
viii. Interest or other benefits with respect to Bonds held in dematerialised form will be paid to those Bondholders
whose names appear on the list of beneficial owners provided by the Depositories to us as on Record Date. In case of
those Bonds for which the beneficial owner is not identified by the Depository as on the Record Date/book closure
date, the Company would keep in abeyance the payment of interest or other benefits, until such time that the beneficial
owner is identified by the Depository and conveyed to the Company, whereon the interest or benefits will be paid to
the beneficiaries, as identified, within a period of 30 days.
ix. Trading of the Bonds on the floor of the Stock Exchanges will be in dematerialised form only.
See “Issue Procedure - Instructions for completing the application form” on page 141.
The Bonds will cease to trade from the Record Date prior to the Maturity Date.
Trading of Bonds on the floor of the Stock Exchanges will be in dematerialised form only in multiples of one
Bond.
Allottees will have the option to re-materialise the Bonds Allotted in the Issue as per the Companies Act and the
Depositories Act.
Interest in case of Delay
157
The Company undertakes to pay interest in connection with any delay in Allotment, dematerialised credit and refunds,
beyond the time limits prescribed under applicable statutory and/or regulatory requirements, at such rates as stipulated
under applicable statutory and/or regulatory requirements.
Impersonation
Please refer “Terms of the Issue – Impersonation” on page 129.
Pre-closure
The Company, in consultation with the Lead Managers, reserves the right to close the Issue at any time prior to the
Issue Closing Date. In the event of such early closure or extension of the subscription list of the Issue, the Company
shall ensure that public notice of such early closure/extension is published on or before such early date of closure or
the Issue Closing Date, as applicable, through advertisement(s) in a leading national daily newspaper.The Company
will Allot Bonds with respect to the Applications received at/until the time of such pre-closure in accordance with the
Basis of Allotment as described in “Terms of the Issue- Basis of Allotment” on page 120.
Filing of the Prospectus with the RoC
A copy of the Prospectus will be filed with the RoC, in accordance with Sections 56 and 60 of the Companies Act.
Communications
Communications in connection with Applications made in the Issue should be addressed to the Registrar to the Issue,
quoting all relevant details including the full name of the sole/first Applicant, Application Form number, Applicant’s
DP ID, Client ID and PAN, number of Bonds applied for, date of the Application Form, name and address of the
Member of the Syndicate, Trading Member of the Stock Exchanges or Designated Branch of the SCSB, as the case
may be, where the Application was submitted, and cheque/draft number and issuing bank thereof, or with respect to
ASBA Applications, the ASBA Account number in which an amount equivalent to the Application Amount was
blocked.
Applicants may contact the Compliance Officer and Company Secretary and/or the Registrar to the Issue in case of
any pre-Issue or post-Issue related problems such as non-receipt of Allotment Advice, refunds, interest on Application
Amount or credit of Bonds in the respective beneficiary accounts, as the case may be.
Grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the relevant
SCSB. Grievances relating to Direct Online Applications may be addressed to the Registrar to the Issue, with a copy to
the relevant Stock Exchange.
158
SECTION VIII : LEGAL AND OTHER INFORMATION
PENDING PROCEEDINGS AND STATUTORY DEFAULTS
Except as described below, there are no outstanding litigations, suits or criminal or civil prosecutions, arbitration
proceedings or tax liabilities against us, that would have a material adverse effect on our business and there are no
defaults, non-payment or overdue of statutory dues, institutional/bank dues as of the date of this Draft Prospectus.
No criminal prosecution has been launched against our Directors for alleged offences under the enactments specified
in Part I of Schedule XIII to the Companies Act. Further, neither our Company nor persons in control of our Company
have been restrained, prohibited or debarred by SEBI from accessing the securities market or dealing in securities
and no such order or direction is in force.
Details of the legal proceedings involving the Company disclosed as follows have been restricted to those claims
wherein the amount involved is more than 1 % (one percent) of the networth of our Company that is ` 139.12 million
or higher as at December 31, 2012. Provided below in a consolidated manner are all significant proceedings within the
materiality threshold as aforementioned.
I. Legal proceedings filed against our Company
A. Arbitration Proceedings
1. Mercator Lines Limited, (“Mercator”) has filed a claim before the Arbitral Tribunal under the Arbitration and
Conciliation Act, 1996 against our Company claiming to declare the purported imposition of liquidated
damages by our Company on account of delay in respect of dredging operations required to be done by the
Mercator under the agreement dated September 23, 2009 entered between the Mercator and our Company
(“Agreement”), invocation of the performance guarantee by our Company and termination of the Agreement
by our Company vide its letter dated June 18, 2009 as wrongful, null and void, non established and non binding
on the Mercator and to award the Mercator amount aggregating to ` 375.55 million along with interest at the
rate of 18% per annum. Our Company has filed counter statement denying all the allegations made by the
Mercator in the claim statement and has filed a counter claim against the Mercator before the Arbitral Tribunal
to direct the Mercator to pay a sum of ` 454.57 million along with interest at the rate of 18% per annum on
account of cost incurred by our Company due to non-fulfilment of contractual obligations as required under the
Agreement by the Mercator. The matter is pending settlement.
2. Mercator Lines Limited (“Mercator”) and our Company have sought for arbitration in connection with alleged
dues of ` 589.84 million payable by our Company to Mercator under the Charterparty dated October 12, 2007
executed between our Company and Mercator (“Charterparty”) for deployment of dredger in Indian Sub-
Continent and Persian Gulf. Pursuant to Charterparty, Mercator had chartered Dredger TSHD “BANWARI
PREM” to our Company for a period of 365 days from November 22, 2007 and the same was extended for a
further period of 365 days with effect from November 22, 2008. The said Charterparty was terminated on May
2, 2009. Mercator and our Company have appointed arbitrators to settle the matter who are yet to appoint the
presiding arbitrator.
3. Mercator Lines Limited (“Mercator”) and our Company have sought for arbitration in connection with alleged
dues of ` 454.43 million payable by our Company to Mercator under the Charterparty dated August 23, 2007
executed between our Company and Mercator (“Charterparty”) for deployment of dredger in Indian Sub-
Continent and Persian Gulf. Pursuant to Charterparty, Mercator had chartered Dredger TSHD “TRILOKI
PREM” to our Company for a period of 365 days from October 12, 2007 and the same was extended for a
further period of 365 days with effect from October 11, 2008. Mercator and our Company have appointed
arbitrators to settle the matter who are yet to appoint the presiding arbitrator.
B. Civil Proceedings
1. Mazgaon Dock Limited (“MDL”) has filed writ petition vide W.P. No. (L) 2529 of 2012 before the High Court
of Judicature at Bombay seeking stay on encashment of bank guarantee dated December 21, 2010 by our
159
Company issued by Canara Bank on behalf of MDL for an amount aggregating to ` 273.70 million. MDL and
our Company had entered into a ship building contract dated October 24, 2005 for designing, building,
launching, equip, complete, sell and deliver of DCI DR-XVIII by MDL to our Company. On the grounds of
defects in the said dredger and delay in repair of the same, our Company invoked the performance bank
guarantee issued by Canara Bank. The Honourable High Court of Bombay vide its order dated October 15,
2012 granted an ad-interim stay on encashment of bank guarantee and directed the parties to take steps to
amicably setlle the matter. The matter is pending hearing and final disposal.
II. Legal proceedings filed by our Company A. Arbitration Proceedings
1. Our Company has requested the Secretary to the GoI, MoS vide its letter no. DCI/Legal/SSCP/Arbitration/2012
dated June 6, 2012 to nominate an officer not below the rank of the Joint Secretary to act as a sole arbitrator
under clause 22 of the agreement dated March 2, 2007 entered between our Company and Sethusamudram
Corporation Limited (“SCL”). Our Company has requested for appointment of sole arbitrator in connection
with payment of outstanding dues amounting to ` 4,264.10 million pertaining to environmental monitoring
costs and foreign exchange variation claims payable by SCL to our Company in respect of dredging work done
by our Company in Palk Strait and Adams Bridge Areas under Sethusamudram Ship Channel Project.
2. Our Company has vide letter dated June 4, 2012 to the Deputy Conservator, Mormugao Port Trust (“MPT”),
Goa has sought for arbitration under clause 17 of the agreement dated May 21, 2011 between MPT and our
Company (“Agreement”). Our Company has requested for payment of the outstanding dues amounting to ` 740 million along with interest @ 14% payable by MPT to our Company in connection with the capital and
maintenance dredging done by our Company at Mormugao port of all areas pursuant to the terms of the
Agreement.
160
OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue
At the meeting of the Board of Directors of our Company, held on November 10, 2012, the Directors approved the
issue of Bonds to the public upto an amount not exceeding ` 5,000 million in one or more tranches. This Issue is being
made pursuant to the above mentioned resolution passed by the Board of Directors of our Company.
As per the terms of the CBDT Notification, the aggregate volume of the issue of Bonds (having benefits under Section
10(15)(iv)(h) of the Income Tax Act) by our Company during the Fiscal 2013 shall not exceed ` 50,000 lakhs.
Prohibition by SEBI
Our Company and/or our Promoter have not been restrained, prohibited or debarred by SEBI from accessing the
securities market or dealing in securities and no such order or direction is in force.
Disclaimer Clause of the BSE
[●]
Listing
An application will be made to the BSE for permission to deal in and for an official quotation of our Bonds. BSE has
been appointed as the Designated Stock Exchange.
If permissions to deal in and for an official quotation of our Bonds are not granted by BSE, our Company will
forthwith repay, without interest, all moneys received from the applicants in pursuance of this Draft Prospectus.
Consents
Consents in writing of: (a) the Directors; (b) our Company Secretary and Compliance Officer; (c) Bankers to our
Company; (d) Bankers to the Issue and Refund Banker*; (e) Lead Managers; (f) the Registrar to the Issue; (g) Lead
Brokers to the Issue; (h) Tax Expert (i) Legal Advisors to the Issue; (j) Credit Rating Agencies; and (k) the Debenture
Trustee to act in their respective capacities, have been obtained and the same will be filed along with a copy of the
Prospectus with the ROC.
* will be obtained at the time of filing of the Prospectus with the RoC.
The consents of the Statutory Auditor of our Company, namely M/s. G.R. Kumar and Co. for inclusion of (a) their
name as the Statutory Auditor, (b) examination report on Summary Financial Information of our Company in the form
and context in which they appear in this Draft Prospectus, have been obtained and the same will be filed along with a
copy of this Draft Prospectus with the Designated Stock Exchange.
Expert Opinion
Except the letters dated February 19, 2013 issued by Brickwork and January 7, 2013 and February 23, 2013 issued by
CARE, in respect of the credit rating of the Issue, and the audit report dated February 21, 2013 and statement of tax
benefits dated February 21, 2013 issued by G. R. Kumar & Co., Statutory Auditors of our Company, our Company
has not obtained any expert opinions.
Common form of Transfer
The Issuer undertakes that there shall be a common form of transfer for the Bonds and the provisions of the
Companies Act and all applicable laws shall be duly complied with in respect of all transfer of debentures and
registration thereof.
Minimum Subscription
161
In terms of the SEBI Debt Regulations, an issuer undertaking a public issue of debt securities may disclose the
minimum amount of subscription that it proposes to raise through the issue in the offer document. The Company
has decided not to stipulate any minimum subscription for this Issue.
Filing of the Draft Prospectus
The Draft Prospectus has been filed with BSE in terms of Regulation 7 of the Debt Regulations for dissemination on
their website.
Debenture Redemption Reserve
Section 117C of the Act states that any company that intends to issue debentures must create a DRR to which adequate
amounts shall be credited out of the profits of the company until the redemption of the debentures. The Ministry of
Corporate Affairs has, through its circular dated April 18, 2002, (“Circular”), specified that the quantum of DRR to
be created before the redemption liability actually arises in normal circumstances should be ‘adequate’ to pay the
value of the debentures plus accrued interest, (if not already paid), till the debentures are redeemed and cancelled. The
amounts credited to DRR shall not be utilized by the company except for the redemption of the Bonds.
Issue Related Expenses*
The following are the estimated Issue expenses, proposed to be met from the Issue proceeds:
Particulars Amount (` in million) Percentage of net
proceeds (Issue proceeds
less Issue expenses) of the
Issue (in %)
Percentage of total
expenses of the Issue (in
%)
Fees payable to Intermediaries
To the advisors [●] [●] [●] To the Registrar to the
Issue [●] [●] [●]
To the Debenture Trustee [●] [●] [●] To the SCSBs [●] [●] [●] Printing & Stationary [●] [●] [●] For advertising and
marketing [●] [●] [●]
Lead Managers Fees,
Brokerage and Selling
Commission*
[●] [●] [●]
Other Miscellaneous
Expenses [●] [●] [●]
Total [●] [●] [●] *As per the CBDT Notification, the Issue expenses will not exceed 0.5% of the Issue size and Brokerage and Selling Commission shall be limited to
the following ceilings, Category I – 0.05%, Category II – 0.1%, Category III – 0.15% and Category IV – 0.75%.
Underwriting
The Issue will not be underwritten.
Details regarding the public issue during the last three years by our Company and other listed companies under
the same management within the meaning of section 370(1B) of the Companies Act:
No company as falling under the same management within the meaning of Section 370(1B) of the Companies Act is a
listed Company. Our Company has not made any public or rights or composite issue of capital during the last three
years.
162
Public / Rights Issues
Our Company has not made any public or rights issuances in the last five years.
Other than as specifically disclosed in this Draft Prospectus, our Company has not issued any securities for
consideration other than cash.
Stock Market Data
Our Company’s Equity Shares are currently listed on the NSE, BSE, DSE and the CSE.
Dividend
Details of the dividend declared and payable by our Company to the shareholders in the last ten Fiscals are as
mentioned below:
Fiscal Year Face Value per
Equity share
Rs. Per share
Paid Up
Capital (Rs.
Millions)
Dividend rate Dividend Amount in(
Rs.Millions).
2011-12 10 280 Nil Nil
2010-11 10 280 Nil Nil
2009-10 10 280 30% 84
2008-09 10 280 50% 140
2007-08 10 280 150% (including 75%
interim Dividend)
420
2006-07 10 280 150% (including 60%
interim Dividend)
420
2005-06 10 280 150% (including 60%
interim Dividend)
420
2004-05 10 280 120% (including 40%
Interim Dividend)
420
2003-04 10 280 120% 336
2002-03 10 280 100% 280
The amounts paid as dividend in the past are not indicative of our dividend policy.
Revaluation of assets
Our Company has not revalued its assets in the last five years.
Mechanism for redressal of investor grievances
The MoU between the Registrar to the Issue and our Company will provide for retention of records with the Registrar
to the Issue for a period of least seven years from the date of the listing of the Bonds under the Issue, within a
reasonable time (not exceeding seven Business Days) of the Lead Managers making a request for such
information/confirmation.which will enable the investors to approach the Registrar to the Issue for redressal of their
grievances.
All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such as name,
address of the applicant, number of Bonds applied for, amount paid on application and the bank branch or collection
centre where the application was submitted. The contact details of Registrar to the Issue are as follows:
Karvy Computershare Private Limited
Plot No. 17 to 24
Vithal Rao Nagar, Madhapur
163
Hyderabad- 500 081
Andhra Pradesh, India
Tel.: 040-4465 5000
Fax : 040-2343 1551
Email: [email protected]
Investor Grievance Email: [email protected]
Website: www.karisma.karvy.com
Contact Person: Mr. M Murali Krishna
Compliance Officer: Mr. P A Varghese
SEBI Registration No.: INR000000221
We estimate that the average time required by us or the Registrar to the Issue for the redressal of routine investor
grievances will be 7 (seven) business days from the date of receipt of the complaint. In case of non-routine complaints
and complaints where external agencies are involved, we will seek to redress these complaints as expeditiously as
possible.
Mr. K. Aswini Sreekanth has been appointed as the Compliance Officer of our Company for this Issue.
The contact details of Compliance officer of our Company are as follows:
Dredging Corporation of India Limited
“Dredge House”, Port Area
Visakhapatnam - 530035
Tel. No.: +91 (891) 2566537
Fax:+91 (891) 2529846
E-mail: [email protected]
Changes in our Statutory Auditors during the last three years
Name of the Auditors and
Address
Date of Appointment/
Resignation
Auditor since Remarks
G.R.Kumar & Co.
Chartered Accountants
9 Merrylife, Doctors' Colony
Peda Waltair
Visakhapatnam - 530 017
Andhra Pradesh, India
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / Coy / Central
Government, Dredco (1) /
83 dated July 27, 2012 for
the year 2012-13
2011 - 2012
Nil
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / COY /
Central Government,
Dredco (1) / 87 dated
August 18, 2011 for the
year 2011-12.
Rao & Narayan
Chartered Accountants
Srinivasa Apartments
Flat No. 6 Raj Bhavan Road
Somajiguda
Hyderabad – 500082
Andhra Pradesh, India
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / COY /
Central Government,
Dredco (1) / 28 dated July
12, 2010 for the year 2010-
11
2008 - 2009 to 2010 -
2011
Nil
164
Name of the Auditors and
Address
Date of Appointment/
Resignation
Auditor since Remarks
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / COY /
Central Government,
Dredco (1) / 17 DT August
12, 2009 for the year 2009-
10
Appointed vide letter from
Office of Comptroller and
Auditor General of India
No. CA / V / COY /
Central Government,
Dredco (1) dated July 31,
2008 for the year 2008-09
165
REGULATIONS AND POLICIES
The GoI has over the years formulated various guidelines and regulations for the administrative functioning of PSUs
and policies for the development of the Indian dredging industry.
Ministry of Shipping, Government of India
The MoS encompasses within its fold shipping and ports sectors which include shipbuilding and ship-repair, major
ports, national waterways, and inland water transport. The MoS has been entrusted with the responsibility of
formulating policies and programmes on these subjects and their implementation. We are a public sector undertaking
under the aegis of the MoS.
The MoS formulates guidelines, orders, etc. from time to time with regard to the dredging industry, viz. Guidelines for
processing the security clearance of bidders in respect of port projects including dredging projects issued on December
19, 2012, amongst others.
The Directorate General of Shipping, deals with implementation of shipping policy and legislation so as to ensure the
safety of life and ships at sea, prevention of marine pollution, promotion of maritime education and training in
coordination with the International Maritime Organization, regulation of employment, and welfare of seamen,
development of coastal shipping , augmentation of shipping tonnage, examination and certification of merchant navy
officers, supervision and control of the allied offices under its administrative jurisdiction.
Status as a Mini – Ratna – Category –I public sector enterprise
We have been declared as a ‘Mini Ratna- Category –I public sector enterprise’ on November 8, 1999 by the erstwhile
Ministy of Surface Transport, GOI, (now MoS) as per the DPE Guidelines dated October 9, 1997. In accordance with
the DPE Guidelines, public sector enterprises which have made profits in the last 3 years continuously and the pre- tax
profit had been ` 30 crores or more in at least one of the three years and have had a positive networth, could be
declared as Mini Ratna Category – I enterprise. We fulfill all these conditions. Accordingly, we are eligible for
enhanced delegated powers provide they have not defaulted in the repayment of loans / interest payment on any loans
due to the Government, and will not be depending upon budgetary support or Government guarantees. Further, we
have been empowered with enhanced autonomy with regard to capital expenditure, establishment of joint ventures,
overseas offices, and technology alliances.
MoU with GOI
We have signed Memorandum of Understanding with the Government for the year 2012-13.
Dredging Policy Guidelines
The current MoS guidelines of 2007 have been periodically extended and the latest extension is effective from
November 10, 2010 till such time that a revised policy is issued.
The existing dredging policy guidelines issued by MoS are as under:
a. All major ports shall invite open competitive bids for dredging works and Indian companies owning Indian flag
dredgers, including our Company shall have the right of first refusal if the rate is within 10% of the lowest valid
offer. This would apply to both maintenance and capital dredging works with sole exception of the maintenance
dredging requirement of Kolkata Port for which separate instructions shall apply.
b. If more than one company owning Indian flag dredger participates in the tender, the right of first refusal will go to
that Indian company which has quoted the lowest rate and is within 10% of the lowest valid offer.
c. All major ports may strictly adhere to the guidelines issued by the CVC from time to time for processing the
tenders in a transparent manner. Ports may ensure that a pre-qualification criteria is fixed in advance and should
not be very stringent to restrict entry of certain potential Indian bidders. The pre-qualification conditions should be
166
exhaustive, yet specific. The prescribed conditions should be clearly specified in the bid documents to ensure fair
competition and transparency. Detailed instructions in this regard will be issued separately.
d. The Government of India through MoS reserves the right to assign, in public interest, any contract for dredging
work in any of the major ports to DCI on nomination.
e. Guidelines issued by DG (Shipping), Mumbai from time to time in terms of the relevant provisions of Merchant
Shipping Act, 1958 shall be applicable.
Maritime Agenda (2010 – 2020) (the “Agenda”)
A Maritime Policy was attempted at the national level sometime in 2004, but it could not be finalized. MoS prepared
the Agenda for the decade, 2010 - 2020 in January, 2011 to create, build and sustain the maritime infrastructural needs
of the country for the next decade. The Agenda aims to navigate and steer the Indian maritime sector realistically into
the premier maritime nations of the world.
The MoS formulated the Agenda which is the perspective plan of the MoS for this decade. The Agenda identifies the
priority areas for Government intervention and is a road map for creation and upgradation of infrastructure in the ports
and also for augmentation of Indian tonnage in the shipping sector. The Agenda states that shipping lines have been
representing time and again that port charges at Indian Ports are very high as compared to other comparable
International Ports. As a matter of fact, vessel related charges are perhaps higher than some of the International Ports
whereas cargo related charges are much lower in some Indian Ports in comparison to ports abroad. The Agenda says
that if vessel- related charges alone are taken, the reasons for higher charges are mainly two: (1) higher cost of
dredging in certain ports, requiring perennial dredging and (2) lack of subsidy on the part of the Government. In many
parts of the world, some part of dredging (at least Capital) is funded by provincial Governments or federal
governments. If the same approach is adopted by Central Government or State Governments, the vessel related
charges also could be brought to the reasonable levels. The Agenda states that Major Ports in India have drawn up
some ambitious expansion plans during the next decade including several dredging major dredging projects by some
ports, thereby intending to create substantial additional capacity. The dredging projects are mainly for deepening of
channels, enhancing the available draft at berths or for construction of more berths.
Ports need to develop the capacity to receive bigger ships, for which capital dredging to achieve the desired level of
draft and maintenance dredging to retain that level, have to be undertaken. In most of the maritime nations, dredging in
the channels, both capital as well as maintenance is taken up with budgetary support from the either the national
Government or local Governments. Financial support for dredging is necessary for reducing the port charges. The
channels leading to the Major Ports could be declared as National or State Channels. If considered necessary, each
Port may be asked to remit certain dredging contribution to the concerned Government in proportion of the quantum of
traffic handled by the port. A policy on this is likely to be prepared in 2011-12.
One of the most important features of modern and more efficient ports is to have a deep drafted channel to
accommodate and navigate longer vessels. Towards this objective, ports are required to undertake capital and
maintenance dredging in the channel on a regular basis. Presently, most of the dredging requirements of major ports
particularly maintenance dredging are met by us. As per present Dredging Policy, Indian dredging companies have the
right of first refusal if their offer falls within 10% of the lowest technically qualifies bid. The Agenda has identified the
major ones for consideration and decision/action by all concerned. The important items in the Agenda are a new policy
on dredging and strengthening our capacity through new acquisition of dredgers.
Report of the Working Group for Port Sector for the Twelfth Five Year Plan ( 2012-2017)
As per Report of the Working Group for Port Sector for the Twelfth Five Year Plan (2012-2017) dated October, 2011
by the Ministry of Shipping, Government of India, one of its terms of reference is to formulate dredging plan along
with sources of financing to accommodate larger ships in major ports. Sub- Groups were constituted to consider and
make recommendations relating to development of Ports in the Twelfth Plan period, including a Sub- group whose
terms of reference included, inter alia, to assess dredging requirements of Major and Minor Ports and prepare a road
map/ Dredging plan for all Major Ports during the Twelfth Plan, and to suggest measures to optimize the use of
dredging fleet owned by our Company and port authorities.
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Certificates and Licences under Merchant Shipping Act, 1958 and relevant rules and regulations
Under the provisions of Part XIV of the Merchant Shipping Act, 1958(the “M. S. Act’) entitled 'Control of Indian
ships and ships engaged in Coasting Trade', the provisions of Section 406 of the M.S. Act deal with Indian ships and
chartered ships to be licensed and provisions of Section 407 deal with licensing of foreign ships for coasting trade in
India. The licences have to be granted by the Director-General of Shipping (“D.G. Shipping”) for a specified period
or voyage. Accordingly, a licence for coasting trade is required from the DG Shipping for dredging along the Indian
coast, and such a licence is for a specified period or voyage or for a whole or any part of the coasting trade of
India.Further, to dredge and ply dredgers other than the Indian coasts, a license is required from the DG Shipping.
Pursuant to maritime laws and international conventions or protocols to which India is a signatory each dredger is
required to keep onboard the following certificates as mandated by the M.S. Act, and other relevant rules and
regulations:
Certificate of Surveyor
Certificate of Indian Registry
Certificate of Insurance or other financial security issued by the Director General of Shipping under the Merchant
Shipping (Form of Certificate of Insurance for Civil Liability for Oil Pollution Damage) Rules, 1985.
Safety Equipment Certificate
Safety Convention Certificate
Safety Management Certificate
Radio Telegraphy and Telephony Certificate
Certificate of Load Line Convention Ships
Load Line Certificate
International Load Line Certificate
International Derating or Derating Exemption Certificate
International Oil Pollution Prevention Certificate
Ship Station License issued by Ministry of Communications relating to Maritime Mobile /Aeromobile Station
License
Certificate of Class issued by the Indian Register of Shipping
Safety Convention Certificate
Builder’s Certificate
Certificate of Inspection
In addition, certain categories of floating staff manning dredgers such as the Master, Dredge Master, Chief Officer on
the deck side and the Chief Engineer, Second and other watchkeeping engineers on the engine side of each dredger
require to hold dredging related certificates in accordance with the provisions of the M. S. Act and rules issued
thereunder by DG Shipping.
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We comply with various merchant shipping statutes, rules and regulations along with the MS Act viz. The Merchant
Shipping (Load Line) Rules, 1979, Merchant Shipping (Safety Convention Certificates) Rules, 1968, Merchant
Shipping Examination of Dredged Masters & Dredged Mates, Rules 1985, Merchant Shipping (Tonnage
Measurement) Rules, 1987, etc. Majority of our dredgers hold valid International Ship Security Certificates.
GoI Policy For PSUs
The GoI formed the Bureau of Public Enterprises (“BPE”) in 1965 to provide policy and overall guidance to PSUs,
which was later constituted as an independent administrative unit within the Ministry of Finance, Department of
Expenditure in 1969. As a result of the re-organization of the Ministries/Departments of the Central Government in
September 1985, BPE was transferred from Ministry of Finance to the Ministry of Industry.
In May 1990, BPE came to be known as the Department of Public Enterprises (“DPE”) in the Ministry of Heavy
Industries and Public Enterprises. The DPE acts as a nodal agency for all PSUs and assists in policy formulation
pertaining to the role of PSUs in the economy. The DPE collects, evaluates and maintains information on several areas
in respect of PSUs.
The DPE has prescribed guidelines for PSUs relating to the following areas:
Employees Stock Option Scheme
Financial Policies
Personnel Policies
Wage Policies
Disinvestment Policies
Memorandum of Understanding related Policies
Price Preference
Accountability
Board of Directors (including composition of the Board)
Revisions in pay scales, allowances and perquisites of the functional Directors and senior management
Voluntary Retirement Scheme
Provisions relating to Dearness Allowance available to employees
Reservations in PSUs for employment of SCs/STs/OCBs
Miscellaneous matters
Further, ‘Government Companies’ as defined under the Companies Act are exempt, by way of notifications issued by
the Central Government from time to time from compliance with several provisions of the Companies Act.
Disinvestment Policy of GoI
In 1992, the Government disinvested 1.44% of its share holding in our company and again in 2003-04, the
Government disinvested a further 20% of its shareholding in our company. The current equity holding of the
Government in our Company is 78.56%.
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The policy of the GoI on disinvestment by the Department of Disinvestment, Ministry of Finance, has evolved over
the last decade as set out in the various policy statements.
The salient features of the Policy are as follows, (i) Citizens have every right to own part of the shares of Public Sector
Undertakings, (ii) Public Sector Undertakings are the wealth of the Nation and this wealth should rest in the hands of
the people, (iii) While pursuing disinvestment, Government has to retain majority shareholding, i.e. at least 51% and
management control of the Public Sector Undertakings.
The Disinvestment Commission till date has given its recommendation for the disinvestment of 90 PSUs which
disinvestments are at various stages of implementation.
Industrial Policy Statement of July 24, 1991
An industrial policy was formulated in 1991 (the “Industrial Policy”) in order to implement the economic reforms
initiated by the GoI.
The Industrial Policy statement of July 24, 1991 stated that the Government would divest part of its holdings in
selected PSEs, but did not place any cap on the extent of disinvestment. Nor did it restrict disinvestment in favour of
any particular class of investors. The objective for disinvestments was stated to be to provide further market discipline
to the performance of public enterprises.
The other objectives of the Industrial Policy of the Government are to achieve optimal utilisation of human resources,
to maintain a sustained growth in productivity, to enhance gainful employment, to achieve optimal utilisation of
human resources, to attain international competitiveness and to transform India into a major partner and player in the
global arena. The Industrial Policy focus is on deregulating Indian industry, allowing the industry freedom and
flexibility in responding to market forces and providing a policy regime that facilitates and fosters growth of Indian
industry.
Disinvestment Commission Recommendations: February 1997- October 1999
Pursuant to the above policy of the Government, a Disinvestment Commission was set up in 1996. By August 1999, it
made recommendations for disinvestment of 58 PSEs. The recommendations indicated a shift from public offerings to
strategic / trade sales with transfer of management.
Strategic & Non-strategic Classification
On March 16, 1999, the Government classified the PSES into strategic and non-strategic areas for the purpose of
disinvestment.
It was decided that the Strategic PSES would be those in the areas of:
Arms and ammunitions and the allied items of defence equipment, defence air-crafts and warships;
Atomic energy (except in the areas related to the generation of nuclear power and applications of radiation
and radioisotopes to agriculture, medicine and non-strategic industries);
Railway transport.
All other PSES were to be considered non-strategic. For the non-strategic PSES, it was decided that the reduction of
Government stake to 26% would not be automatic and the manner and pace of doing so would be worked out on a
case-to-case basis. A decision in regard to the percentage of disinvestment i.e., Government stake going down to less
than 51% or to 26%, would be taken on the following considerations:
Whether the industrial sector requires the presence of the public sector as a countervailing force to prevent
concentration of power in private hands, and
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Whether the industrial sector requires a proper regulatory mechanism to protect the consumer interests before
PSES are privatised.
The Ministry of Disinvestment set up in December 1999 and has been assigned the following functions:
To manage all matters relating to disinvestment of GoI equity from PSUs;
To take decisions on the recommendations of the Disinvestment Commission on the modalities of
disinvestment, including restructuring; and
To implement disinvestment decisions, including appointment of advisers, pricing of shares and other terms
and conditions of disinvestment.
Foreign Investment Regulations
The GoI has since amended the Industrial Policy 1991 from time to time in order to enable foreign direct investment in
various sectors of the Indian industry in a phased manner, gradually allowing higher levels of foreign participation in
Indian companies. At present foreign direct investment of up to 100% is permitted in projects for construction and
maintenance of ports and harbors. When required, the government bodies responsible for granting foreign investment
approvals are the FIPB and the RBI.
The PSU sector was opened to investment by non-residents in fiscal 1992 when the first phase of disinvestment of
PSUs was initiated by the GoI.
Fiscal Regulations
In accordance with the I.T. Act any income earned by way of profits by a company incorporated in India is subject to
tax levied on it in accordance with the tax rate declared as part of the annual budget passed by the Parliament.
Our Company like other companies in the shipping sector avails of certain benefits available to shipping companies
under the I.T. Act. For details of the tax benefits see ‘Statement of tax Benefits’.
Further the import of dredgers and/or their spare parts involves the levy and payment of customs duty in accordance
with prevalent rates prescribed in the Customs and Excise Act, 1962 and the Central Excise Act, 1944 and rules and
notifications issued thereunder from time to time.
Environmental Regulations
The Environment Protection Act, 1996, the Water (Prevention and Control of Pollution) Act 1974 and the Air
(Prevention and Control of Pollution) Act, 1981 require new development projects to obtain prior permission from the
Ministry of Environment and Forests, GoI and also for companies to obtain consents from local state pollution control
boards prior to making emissions and /or discharging effluents into the environment or carrying out development
related activities in ecologically sensitive areas identified as coastal regulatory zones.
Obtaining environment clearances relating to a dredging project is the responsibility of the customer. However, during
the execution of certain dredging projects and as a contractual obligation pursuant to the request of a customer,
dredging companies may undertake to obtain or prepare environment studies for the period of contract.
Dredgers are required to obtain and renew certain environmental safety certificates such as a certificate stating that the
safety management system of a ship complies with the requirements of the International Safety Management Code for
Safe Operation of Ships and for Pollution Prevention; Certificates, International Derating or Derating Exemption
Certificate, International Oil Pollution Prevention Certificate.
We are certified for Environmental Management System (ISO 14001:2004) by IRQS. The first EMS Surveillance
Audit was carried out successfully in March, 2012.
International Conventions and Protocols
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Dredging companies being in the maritime sector are required to comply with the provisions of the certain
international maritime conventions and/or protocols relating to the environment protection and ships plying on the
seas. Some of the international IMO and ILO conventions ratified by India amongst others are set out below by way of
illustration.
International Maritime Organisation
1. International Management Code for the Safe Operations of Ships and for Pollution Prevention, 1998 (ISM
Code), as amended upto 2010
2. International Ship and Port Facility Security Code (to be implemented from July 2004)
3. International Convention for the Safety of Life at Sea 1974 as modified by the Protocol of 1978
4. Convention of the International Regulations for Preventing Collisions at Sea, 1972 as amended
5. International Convention for the Prevention of Pollution from Ships, 1973 as modified by the Protocol of
1978.
6. Convention on Facilitation of International Maritime Traffic 1965
7. International Convention of Load Lines, 1966
8. International Convention on Tonnage Measurement of Ships, 1969
9. International Convention on Civil Liability for Oil Pollution Damage, 1969 as modified by the Protocol of
1976
10. International Convention on the Establishment of an International Fund for Compensation for Oil Pollution
Damage by the Protocol of 1992
11. Convention Agreement on the International Maritime Satellite Organization, 1978
12. International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, 1978
13. International Convention on Salvage , 1989
14. Convention on the Prevention of Marine Pollution by Dumping of Wastes and other Matters, (LC),1972 and
the 1996 London Protocol.
15. International Convention relating to intervention on the high seas in Cases of Oil Pollution Damage, 1969
16. International Convention on the Establishment of an International Fund for Oil Pollution Damage, 1971.
International Labour Organization
1. Seamen’s Articles of Agreement Convention, 1926
2. Merchant Shipping (Minimum Standards) Convention, 1976
3. Maritime Labour Convention, 2006
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SUMMARY OF KEY PROVISIONS OF ARTICLES OF ASSOCIATION
Pursuant to Schedule II of the Companies Act the main provisions of the AOA relating to the issue and allotment of
debentures and matters incidental thereto. Please note that the each provision herein below is numbered as per the
corresponding article number in the AOA. All defined terms used in this section have the meaning given to them in the
AOA. Any reference to the term “Article” hereunder means the corresponding article contained in the AOA. Table A
of Schedule I to the Companies Act is applicable to our Company by virtue of Article 1 of our Articles of Association.
Main Provisions of the Articles of Association including applicable provisions Table A of Schedule 1 of the Act.
SHARE CAPITAL AND VARIATION OF RIGHTS
Article 3(1) - “If at any time the share capital is divided into different classes of shares, the rights attached to any class
(unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of
Sections 106 and 107, and whether or not the company is being wound-up, be varied with the consent in writing of the
holders of three-fourths of the issued shares of that class, or with the sanction of a special resolution passed at a
separate meeting of the holders of the shares of that class.”
Articles 3(2)- “To every such separate meeting, the provisions of these regulations relating to general meetings shall
mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by
proxy one-third of the issued shares of the class in question.”
Article 4- “The rights conferred upon the holders of the shares of any class issued with preferred or other right shall
not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.”
INCREASE IN CAPITAL OF THE COMPANY
Article 5- The Company, in general meeting may, from time to time increase the capital by the creation of new shares,
such increase to be of such aggregate amount and to be divided into shares of such respective amounts as resolution
shall prescribe. The new shares shall be issued upon such terms and conditions and such rights and privileges annexed
thereto, as the resolution shall prescribe and in particular, such shares may be issued with a preferential or qualified
right to dividends and in the distribution of the assets of the Company and with a right of voting at a general meeting
of the company in conformity with section 87 and 88 of the act. Whenever capital of the company has been increased
under the provisions of this Article, the Board shall comply with the provisions of Section 97 of the Act. Except so far
as otherwise provided, any new capital raised and the share issued in that regard shall be subject to all conditions to
which the existing capital and the shares are subject to.
VOTE OF MEMBERS
Article 16 (a)- “The President may, so long as he is member of the Company within the meaning of the Act authorize
from time to time such persons, whether a member of the Company or not as he thinks fit to act as his representative at
any General Meeting of the Company or at any meeting of any class of members of the Company”.
Article 16 (b) - “The President may, if he is a creditor (including a holder of debentures) of the Company within the
meaning of the Act authorize from time to time such person as he thinks fit to act as his representative at any meeting
of any creditors of the Company held in pursuance of the Act of any rules made therein or in pursuance of the
provisions contained in any debenture or trust deed, as the case may be.”
Article 16 (c)- “The President may, from time to time, revoked or cancel any authorization made in sub-clause (a) or
subclause (b) of this Article and made any fresh authorization or authorizations.”
Article 16 (d)- “The production at the meeting of the Company or at the meeting of any creditors of the Company of
an order made executed in the name of the President authenticated as provided by the Constitution of India in respect
of such authorization, revocation or cancellation as aforesaid shall be accepted by the Company as sufficient
and conclusive evidence thereof.”
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Article 16 (e)- “Any person authorized by the President to represent him as aforesaid may, if so authorized by the
order of the President appoint another person [whether a member or not], as a proxy or substituted authority, whether
special or general, to represent the President as aforesaid.”
Article 16 (f)- “Any person authorized or appointed as aforesaid shall be entitled to exercise the same rights or powers
including the right to vote by proxy, on behalf of the President.”
Article 17 - “Upon a show of hands, every member present in person shall have one vote and upon poll, the voting
rights of member, shall be laid down as in Section 87 of the Act. Votes on behalf of the President shall be given as
provided in Art 16.”
Article 56 - “Subject to any rights or restrictions for the time being attached to any class or classes of shares,—(a) on a
show of hands, every member present in person shall have one vote ; and (b) on a poll, the voting rights of members
shall be as laid down in Section 87.”
Article 57- “In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall
be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by
the order in which the names stand in the register of members. ”
Article 59- “No member shall be entitled to vote at any general meeting unless all calls or other sums presently
payable by him in respect of shares in the company have been paid.”
TRANSFER AND TRANSMISSION OF SHARES
Article 10- “Subject to the provisions of Section 111 of the Act, the Board may, at its own absolute and controlled
discretion and without assigning any reason, decline to register or acknowledge any Transfer of shares, whether fully
paid or not (notwithstanding that the proposed Transferee be already a member), but in such cases it shall,
within one month from the date on which the instrument of Transfer was lodged with the company, send to the
Transferee and the Transferor notice of the refusal to register such transfer, provided that registration of a transfer shall
not be refused on the ground of the Transferor being either alone or jointly with any other person or persons indebted
to the company on any account whatsoever except a lien on the shares.
In the case of death of any one or more of the persons named in the Register as the joint holders of any share,
the survivor or the survivors shall be the only persons recognised by the Company as having any title to interest in
such share, but nothing herein, contained shall be taken to release the estate of a deceased jointholder from any
liability on shares held by him jointly with any person.”
Article 10A- “Upon show of hands every member present shall have one vote and upon poll the voting rights of the
members shall be laid down as in Section 87 of the Act. Votes on behalf of the President shall be given as provided in
Article 16.”
TRANSFER OF SHARES - Provisions of Table A
Article 19- “(1) The instrument of transfer of any share in the company shall be executed by or on behalf of both the
transferor and transferee.
(2) The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the
register of members in respect thereof.”
Article 20- “Subject to the provisions of Section 108, the shares in the company shall be transferred in the Share
Transfer Form.”
Article 21- “The Board may, subject to the right of appeal conferred by Section 111, decline to register: -
(a) the transfer of a share, not being a fully paid share, to a person of whom they do not approve; or
(b) any transfer of shares on which the company has a lien.”
Article 22- “The Board may also decline to recognize any instrument of transfer unless -
(a) a fee of two rupees is paid to the company in respect thereof;
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(b) the instrument of transfer is accompanied by the certificate of the shares to which it relates, and such other
evidence as the Board may reasonably require to show the right of the transferor to make the transfer; and
(c) the instrument of transfer is in respect of only one class of shares.”
Article 23- “Subject to the provisions of Section 154, the registration of transfers may be suspended at such times and
for such periods as the Board may from time to time determine:
Provided that such registration shall not be suspended for more than thirty days at any one time or for more than forty-
five days in the aggregate in any year.”
Article 24- “The company shall be entitled to charge a fee not exceeding two rupees on the registration of every
probate, letters of administration, certificate of death or marriage, power of attorney, or other instrument.”
TRANSMISSION OF SHARES - Provisions of Table A
Article 26- “(1) Any person becoming entitled to a share in consequence of the death or insolvency of a member may,
upon such evidence being produced as may from time to time properly be required by the Board and subject as
hereinafter provided, elect, either: -
(a) to be registered himself as holder of the share; or
(b) to make such transfer of the share as the deceased or insolvent member could have made.
(2) The Board shall, in either case, have the same right to decline or suspend registration, as it would have had, if the
deceased or insolvent member had transferred the share before his death or insolvency.”
Article 27- “(1) If the person so becoming entitled shall elect to be registered as holder of the share himself, he shall
deliver or send to the company a notice in writing signed by him stating that he so elects.
(2) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing a transfer of the
share.
(3) All the limitations, restrictions and provisions of these regulations relating to the right to transfer and the
registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or
insolvency of the member had not occurred and the notice or transfer were a transfer signed by that member.”
Article 28- “A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled
to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share,
except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to
exercise any right conferred by membership in relation to meetings of the company:
Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself
or to transfer the share, and if the notice is not complied with within ninety days, the Board may thereafter withhold
payment of all dividends, bonuses or other monies payable in respect of the share, until the requirements of the notice
have been complied with.”
BOARD OF DIRECTORS
Article 19- “(a) The Chairman of the Board of Directors and the Government representatives, including atleast one
Finance representative, shall be appointed by the President of India. Other Members of the Board of Directors shall be
appointed or reappointed by the President of India in consultation with the Chairman of the Board of Directors. The
Directors shall be appointed for such period and shall be paid such remuneration as the President of India may, from
time to time, determine.
(b) The President of India at his discretion may appoint the same person or two different persons as the Chairman of
the Board of Directors and the Managing Director of the Company for such period and on such terms and conditions
as he may think fit and may revoke such appointment. The Chairman and the Managing Director appointed shall be
entitled to hold office until the expiry of their respective tenures unless either or both is/are removed earlier by the
President of India and any vacancy arising either by death, removal, resignation or otherwise may be filled by fresh
appointment by the President of India.
(c) The President of India may from time to time remove any Director from Office before the expiry of the period
referred to in Article 19(a) and may appoint another in his place. The President of India may also fill up any vacancy
caused by the death, resignation, retirement or otherwise of a Director.”
MANAGEMENT OF BUSINESS
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Article 26- “Notwithstanding anything contained in these articles, the Chairman shall reserve for the consideration of
the President the following matters relating to the working of the Company, namely:
a) Calling up unpaid capital or increase in the authorized capital of the Company or issuing of any unissued shares
forming part of the original authorized capital and fixing the terms and conditions on which the capital is to be raised.
c) Appointment of any foreign national.
d) Disposal of any property having an original book value of Rs. 25 lakhs and above.
e) Formation of subsidiary companies.
f) Any proposal for action relating to reduction of capital.
g) Implementation of the Company’s five year plans and annual plans of development and capital budget.
h) Agreements involving any foreign collaboration or consultancy proposed to be entered into by the company.
i) Appointments of persons who have already attained the age of 58 years to post carrying a monthly salary of Rs.
5700 and above.
j) Voluntary winding up of the company.
k) Any important matter relating to the Company’s establishment.
l) Any other matter which in his opinion involves an important issue of general policy.
m) Entering into partnership and/or arrangement for sharing profit.
n) Taking or otherwise acquiring and holding share in any other Company.
o) Division of Capital into different classes of shares.
p) Promotion of a new company.
No action shall be taken by the company, in respect of any matter reserved for consideration of the President as
aforesaid until his approval to the same has been obtained.”
PRESIDENT’S RIGHTS TO ISSUE DIRECTIVE
Article 28- “Notwithstanding anything contained in these Articles, the President may, from time to time, issue such
directives or instructions as may be considered necessary in regard to the finances, conduct of business and affairs of
the Company. The Company shall give immediate effect to the directions or instructions so issued.
In particular, the President shall have the powers:
(i) To give directions to the Company as to the exercise and performance of its functions in matters involving national
security or substantial public interest.
(ii) To call for such reports, accounts and other information with respect to property and activities of the company, as
may be required from time to time.”
Article 29- “The Company shall, whenever its Revenue Budget for any financial year shows an element of deficit
which is proposed to be met by obtaining funds from the Government, submit the same to the President for approval.”
DIVIDENDS AND RESERVES – Provisions of Table A
Article 85- “The company in general meeting may declare dividends, but no dividend shall exceed the amount
recommended by the Board.”
Article 86- “The Board may from time to time pay to the members such interim dividends as appear to it to be
justified by the profits of the company.”
Article 87- “(1) The Board may, before recommending any dividend, set aside out of the profits of the company such
sums as it thinks proper as a reserve or reserves which shall, at the discretion of the Board, be applicable for any
purpose to which the profits of the company may be properly applied, including provision for meeting contingencies
or for equalizing dividends; and pending such application, may, at the like discretion, either be employed in the
business of the company or be invested in such investments (other than shares of the company) as the Board may,
from time to time, think fit.
(2) The Board may also carry forward any profits which it may think prudent not to divide, without setting them aside
as a reserve.”
Article 88- “(1) Subject to the rights of persons, if any, entitled to shares with special rights as to dividends, all
dividends shall be declared and paid according to the amounts paid or credited as paid on the shares in respect
whereof the dividend is paid, but if and so long as nothing is paid upon any of the shares in the company, dividends
may be declared and paid according to the amounts of the shares.
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(2) No amount paid or credited as paid on a share in advance of calls shall be treated for the purposes of this regulation
as paid on the share.
(3) All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares
during any portion or portions of the period in respect of which the dividend is paid; but if any share is issued on terms
providing that it shall rank for dividend as from a particular date such share shall rank for dividend accordingly.”
Article 89- “The Board may deduct from any dividend payable to any member all sums of money if any, presently
payable by him to the company on account of calls or otherwise in relation to the shares of the company.”
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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts which are or may be deemed material have been entered or are to be entered into by the
Company. These contracts and also the documents for inspection referred to hereunder, may be inspected at the
Registered Office of the Company situated at Core-2,1st Floor, 'Scope Minar', Plot No.2A & 2B, Laxmi Nagar Dist.
Centre, Delhi-110091, India from 10.00 AM to 5 P.M on any business days from the date of this Draft Prospectus until
the date of closure of the Issue.
A. Material Contracts
1. Engagement Letter dated November 12, 2012 received from the Company appointing the Lead
Managers.
2. Issue Agreement dated February 25, 2013between the Company and the Lead Managers.
3. Memorandum of Understanding February 25, 2013with the Registrar to the Issue.
4. Debenture Trustee Agreement dated February 25, 2013 executed between the Company and the
Debenture Trustee.
5. Escrow agreement dated [●] executed by the Company, the Registrar, the Escrow Collection Bank(s)
and the Lead Managers.
B. Material Documents
1. Certificate of Incorporation of the Company dated March 29, 1976, issued by Registrar of
Companies, N.C.T. of Delhi and Haryana.
2. Memorandum and Articles of Association of the Company.
3. Credit rating letter dated February 19, 2013 from Brickwork and January 7, 2013 and February 23,
2013 from CARE granting credit ratings to the Bonds.
4. Copy of the Board Resolution dated November 10, 2012, approving the Issue.
5. Resolution passed by the shareholders of the Company at the Annual General Meeting held on
September 28, 2012 approving the increase in the overall borrowing limit of Company.
6. Consents of the Directors, Lead Managers to the Issue, Debenture Trustee, Lead Brokers, Credit
Rating Agencies for the Issue,Legal Advisor to the Issue, Bankers to the Issue, Bankers to the
Company and the Registrar to the Issue, to include their names in this Draft Prospectus.
7. The consents of the Statutory Auditor of our Company, namely M/s. G.R. Kumar & Co. for
inclusion of (a) their name as the Statutory Auditor, (b) examination reports on Summary Financial
Information of our Company in the form and context in which they appear in this Draft Prospectus,
have been obtained and the same will be filed along with a copy of this Draft Prospectus with the
Designated Stock Exchange.
8. The examination report of the Statutory Auditor dated February 21, 2012 in relation to the Summary
Financial Information of our Company included herein.
9. Statement of Tax Benefits and certificate thereon dated February 21, 2012, issued by M/s. G.R. Kumar
& Co, Chartered Accountants, included herein.
10. Notification No. 46/2012 F. No. 178/60/2012-(ITA.1) dated November 6, 2012 issued by the CBDT.
11. Annual Reports of the Company for the last five Financial Years 2007 - 08 to 2011 - 12.
12. Due Diligence certificate dated [●] filed by the Lead Managers with SEBI.
13. Tripartite Agreement dated [●] between us, the Registrar to the Issue and NSDL and dated [●]
between us, the Registrar to the Issue and CDSL.
14. In-principle listing application dated [●] filed with the BSE.
15. In-principle approval dated [●] for the Issue issued by BSE.
16. Approval received from the Ministry of Corporate Affairs in connection with exemption from the
applicability of the provisions of Section 58A of the Companies Act and rule 2(b)(x) of Companies
(Acceptance of Deposit) Rules, 1975 for the purposes of the Issue, vide letter no. 07/01/2013-CL-VI
dated February 18, 2013.
178
DECLARATION
We, the Directors of the Dredging Corporation of India Limited, certify that all applicable legal requirements in
connection with the Issue, including all the relevant provisions of the Companies Act, 1956, the SEBI Debt
Regulations and the guidelines issued by the Government of India, or the guidelines issued by the Securities and
Exchange Board of India, established under Section 3 of the Securities and Exchange Board of India Act, 1992 and
any other competent authority in this behalf, have been duly complied with and no statement made in this Draft
Prospectus is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act,
1992 or the rules made or guidelines/regulations issued thereunder, as the case may be.
We further certify that this Draft Prospectus does not omit disclosure of any material fact which may make the
statements made therein, in light of circumstances under which they were made, misleading and that all statements in
this Draft Prospectus are true and correct.
On behalf of the Board of Directors of DREDGING CORPORATION OF INDIA LIMITED:
_________________________
CAPT. D.K. MOHANTY
(Managing Director and Chief Executive Officer)
____________________________
MR. P.V. RAMANA MURTHY
Director (Finance)
_______________________
MR. P.JAYAPAL Director(Operations and technical)
_______________________
MR. M.C. JAUHARI
Part - time Official Director
_____________________
MR. BALACHANDRAN SRINIVASAN
Independent Director
_______________________
DR. S. NARASIMHA RAO Independent Director
_______________________
MR. VINAI KUMAR AGARWAL
Independent Director
Place: New Delhi
Date: February 25, 2013
ANNEXURE A – CREDIT RATINGS
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Rating Rationale Brickwork Ratings assigns ‘BWR AA+ (SO)’ Rating for Dredging
Corporation of India Ltd.’s proposed tax-free Bonds Issue of ` 500 Crore
(Rupees Five Hundred Crore only) with a tenor of 10 years
Brickwork Ratings (BWR) has assigned the rating of BWR AA+ (SO) [pronounced BWR
Double A Plus (Structured Obligation)] Rating with a Stable outlook for Dredging
Corporation of India Ltd.’s (‘DCIL’ or ‘the Company’) proposed tax-free bonds issue of `
500 Crore (Rupees Five hundred Crore only) with a tenor of 10 years. The Bonds issue is
backed by Letter of Comfort from the Ministry of Shipping (MoS), Government of India
(GoI). BWR AA+ (SO) stands for an instrument that is considered to have high degree
of safety regarding timely servicing of financial obligations. Such instruments carry
very low credit risk.
The Rating, inter alia, factors the GoI’s ownership of DCIL and necessary support
extended for the Company’s expansion projects and presently in form of the Letter of
Comfort given by the Ministry of Shipping(GoI) for the said Tax-free Bonds; DCIL’s
experienced and professionally qualified management, established track record of
operations, comfortable financial profile and the current fleet size. However, the Rating
is constrained by declining trend of revenues, increasing competition from global players
as well as new domestic players, ageing fleet and the volatility in fuel prices.
Background
Dredging Corporation of India Ltd (DCIL) is a Public Sector Undertaking under the
administrative control of the Ministry of Shipping, Government of India. The Company
was incorporated in the year 1976 with the objective of providing integrated dredging
services to the major and non-major ports, Indian Navy and other maritime
organizations in the country. Headquartered in Vishakhapatnam, DCIL is one of the
leading players in dredging and maritime development.
The major ports in India have envisaged ambitious expansion plans to create additional
capacity during the period 2010-2020. As a result, the capacity of all major ports is
projected to increase to 1400 million tonnes from the existing capacity of about 600
million tonnes. This is expected to require dredging works estimated at about ` 8,500
Crore during the said period.
To meet this additional demand for dredging works, apart from on-going projects, DCIL
has undertaken capital acquisition program towards revamping its fleet. As part of its
program, DCIL has placed orders for acquisition of three Netherlands based IHC
BLR Issue Rating: BWR AA+ (SO) Outlook : Stable
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Merwede built Trailer Suction Hopper Dredgers (TSHD) of 5500 Cu.M1 capacity each.
The dredgers will be put to commercial operation during December, 2012 – February,
2014. DCIL proposes to part-finance procurement of the third TSHD from the proceeds
of tax-free bonds issue of ` 500 Crore. The bonds will be issued for a tenor of 10 years.
Management
DCIL is under the administrative control of the Ministry of Shipping, GoI which holds
78.56% its share capital. The Chairman & Managing Director (CMD) and the other Board
members are appointed by the Government of India. The Company’s Board comprises of
Seven Directors of which four are Non-Executive Directors. The overall management of
the company comprises of qualified and experienced persons. The day-to-day business
operations of the Company are overseen by the CMD, Capt. D.K. Mohanty under the
supervision and control of the Board of Directors. Capt. Mohanty was appointed as the
CMD of DCIL on 30th November 2011 and has an experience of over 30 years in the
shipping and port related sectors.
Operations
DCIL, a Mini Ratna – Category 1 PSE, is engaged in providing capital and maintenance
dredging services and allied services to the country’s major and non-major ports and
maritime organizations. Apart from domestic operations, DCIL has also executed
dredging assignments for international clients like Taichung Harbor (Taiwan) in 2002,
land reclamation work in Bahrain in 2005, 2006 and capital dredging work in Belgium
in 2006. Currently, the Company has an order book of about ` 650 Crore. These
dredging contracts are being executed in the ports of Haldia, Kolkata, Paradip, Ennore,
Kandla, Cochin etc. Maintenance dredging works account for major part (about 90%) of
Company’s order book, the balance comprising capital dredging, beach nourishment and
land reclamation works. Presently, DCIL is also executing capital dredging projects at
Ennore Port.
The existing dredging capacity of DCIL is about 50 mln Cu.M comprising of 11 TSHDs,
three Cutter Suction Dredgers (CSDs) and one Back-Hoe Dredger (BHD). Out of the 11
TSHDs, three are more than 30 years old and four are aged in the range of 15-30 years.
Two out the three CSDs are more than 30 years old; the third was acquired in FY10. The
BHD was added to the fleet in FY11. The capacity utilization during FY12 was reported at
90% of the available capacity. The Company has undertaken capacity enhancement
projects with the support of MoS since FY10. Existing capacity is projected to increase to
80 mln Cu.M. Given the potential order book, timely implementation of expansion
projects by DCIL would be critical to enable the Company address diverse segments and
1 Cubic Meters
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customer base. This is expected to boost the top line. Further, steps taken by the
Company to improve efficiency would help improve overall profitability.
Financial Performance
The financial profile of the Company is marked by modest profitability and comfortable
debt metrics as reflected by low gearing. During FY12, DCIL’s revenues from operations
showed a decline of 2.96% from ` 507.14 Crore in FY11 to ` 491.66 Crore in FY12. While
the revenues from dredging services, which are predominantly from maintenance
dredging works, showed marginal growth of 2.2% during FY12, substantially lower other
operating income, which declined by about 53% during the year, led to the decline in the
revenues from operations. The other operating income comprised of sale proceeds from
disposal of spares, waste oil, stores and settlement of bills from suppliers.
DCIL’s operating revenues have been consistently declining during 2009-2012.
Operational revenues which stood at ` 685.22 Crore in FY09 declined to ` 491.22 Crore
in FY12. The revenues of FY09 were mainly on account of capital dredging project of
Sethusamudram Channel awarded to DCIL by the Government of India. Subsequently,
the Supreme Court of India passed an order to suspend execution of the project which
impacted DCIL’s revenues.
Operating profit of the company fell by 7% y-o-y from ` 99.64 Crore in FY11 to ` 92.61
Crore in FY12 owing to the growing costs pertaining to repairs and maintenance and
employee expenses. The Company has however done well to bring down the fuel and
lubricant costs which represented about 33% of FY12 operating revenues from about
39% in FY11. Fuel costs are susceptible to the volatility of the fuel prices in the market.
Further, increase in Depreciation expenses caused the Net Profit declining to ` 13.18
Crore in FY12 from ` 39.51 Crore in FY11. In line with the fall in net profit, the ROCE also
fell to 1.2% in FY12 from 3.3% in FY11.
The company’s balance sheet expanded by 14% in FY12 owing to the accretion of profits
and inclusion of long term debt in the Company’s books used for capacity expansion. The
total debt as of March 2012 stood at ` 260.90 Crore as compared to only ` 1.20 Crore at
the end of March 2011. The Company has significant contingent liabilities mainly
comprising of contracts to be executed. Contingent liabilities which stood at ` 1423.69
Crore in FY11 declined to ` 1143.09 Crore in FY12. Despite the addition of the long term
debt, the Company’s capital structure was comfortable with adjusted debt-equity ratio2
of 0.27 times in FY12.
2 Includes part of contingent liabilities
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For the Half-year ended September 30, 2012, the Company reported Income from
operations of ` 274.85 Crore and a Net profit of ` 5.90 Crore. The Company’s total
borrowings increased to ` 457.43 Crore.
Industry Outlook
India’s coastline of approximately 7,500 kilometers has 13 major ports and 176 non-
major ports under the Government of India (GOI), State Governments and private ports.
Around 75% of the trade volumes in India are handled by major ports. The country
depends on ports for sustained economic growth, for expanding its export trade, and also
for ensuring timely availability of raw material across industries. The government,
through its policies, has invited private sector participation in areas like leasing out of
existing assets and the construction and operation of container terminals, cargo berths
and other warehousing and storage facilities in major ports. Non-major ports, which are
governed by their respective state governments, are also seeing more private
investments. In terms of the Maritime Agenda for 2010-2020 unveiled in January 2011,
the capacities of all non-major ports are projected to rise from the existing level of about
600 million tonnes to about 1,400 million tonnes in 2020 requiring dredging projects
with estimated value of ` 8,500 Crore till the year 2020.
DCIL faces competition from Indian arms of top global dredging companies including
Van-Oord Dredging, Boskalis India Ltd, Jan de Nul, Dredging International, Jaisu
Shipping Company etc. DCIL’s positioning on account of reliability and cost-
effectiveness, timely scheduling of capex plans and its ability to secure major works
through competitive bidding will be critical to turnaround declining trend of its topline.
Rating Outlook
Going forward, timely implementation of expansion projects while ensuring operating
efficiency, sustainability of profit margins in the current competitive environment given
the entry of global players would be the key rating sensitivities.
Analyst Contact Relationship Contact
Phone Media Contact
1-860-425-2742 [email protected]
Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.
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Annexure I: Abridged Balance Sheet of DCIL (Rs. crore)
S.No Particulars 2011-12 2010-11
A EQUITY AND LIABILITIES 1 Net Worth 1,382 1,369
1.1 Share Capital 28 28
1.2 Reserves & Surplus 1,354 1,341
2 Non-current liabilities 266 7
2.1 Long-term borrowings 260 0
2.2 Other long term liabilities 1 2
2.3 Long-term provisions 5 5
2.4 Deferred tax liability (net) 0 0
3 Current Liabilities 236 271
3.1 Short-term borrowings 1 1
3.2 Trade payables 31 85
3.3 Other current liabilities 199 183
3.4 Short-term provisions 5 1
TOTAL EQUITY AND LIABILITIES 1,884 1,646
B ASSETS 4 Non-current assets 1,079 701
4.1 Fixed assets 582 487
4.2 Goodwill on Consolidation - -
4.3 Non-current investments 30 30
4.4 Long-term loans and advances 468 183
5 Current assets 804 946
5.1 Inventories 98 92
5.2 Sundry debtors 389 382
5.3 Cash and bank balances 78 235
5.4 Other current assets 226 174
5.5 Loans and advances 14 62
TOTAL ASSETS 1,884 1,646
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Annexure II: Abridged P&L of DCIL (Rs. Crore)
Particulars FY2012 FY2011
Revenues Core Dredging Services 468 458
Other Operating Income 23 49
Total Revenues 492 507
Expenses Repairs & Maintenance (vessels) 64 23
Fuel and lubricants 161 199
Employee expenses 93 67
Spares & stores, Insurance 55 52
Other expenditure 27 65
Total Expenditure 399 408
EBITDA 93 100
Finance Costs / Interest 0 0
Profit Before Depreciation & Tax 106 115
Depreciation & Amortization 88 70
Add: Other Income 13 16
Profit Before Tax 18 45
Tax 4 5
Profit After Tax 13 40
Annexure III: Key Ratios of DCIL
Ratios FY2012 FY2011
Debt -Equity 0.27 0.10
Interest Coverage N.M N.M
DSCR N.M N.M
Tangible Net Worth (Rs. Crore) 1,382 1,369
Profitability Margin 2.70% 7.80%
ROCE 1.00% 3.00%
Net cash Accruals to Total debt 39% Very High
Current Ratio 3.41 3.50 N.M: Not meaningful
ANNEXURE B - CONSENT FROM THE DEBENTURE TRUSTEE
