Dredging Corporation of India Ltd Management Discussions

Economy

Global economic review and outlook

The global economy exhibited resilience amidst the volatility in the global economic landscape, growing by 3.3% in CY 2024. The advanced economies recorded a growth rate of 1.8, while the Emerging Market and Developing Economies (EMDEs) expanded by 4.3 during the reported year. This growth in the global economy was primarily supported by the implementation of stringent monetary policies aimed at curbing the elevated inflation levels. Additionally, the expansion of energy supply also contributed to the overall economic momentum in CY 2024.

Looking ahead, the global GDP is anticipated to grow by 2.8% in CY 2025 and rise further to 3.0% in CY 2026. EDMEs are expected to outpace advanced economies, with projected growth rates of 3.7% and 3.9% in CY 2025 and CY 2026, respectively. In contrast, advanced economies are anticipated to grow at 1.4% in CY 2025 and 1.5% in CY 2026.1 Despite potential challenges from rising trade tensions, global economic activities are expected to be supported by a gradual decline in global inflation levels over the coming years.

Global GDP growth trend rate (in %)

Indias economic review and outlook

The Indian economy demonstrated resilience amidst a turbulent global economic landscape, marked by escalating trade tensions, persisting geopolitical uncertainties and trade conflicts. As one of the fastest growing economies, India recorded a robust GDP growth of 6.5% in FY 20252. This optimistic outlook is driven by vigorous infrastructure investments, strong capital expenditure from the private sector, and a growing financial services industry. With ongoing strategic reforms, India is in a strong position to maintain sustainable long-term economic growth and development. During the reporting year, private consumption remained strong, reflecting the sustained demand and strong consumer confidence in the economy. Government spending also played a pivotal role in supporting economic growth during the reporting year. Strategic and timely interventions by the Government of India further remained instrumental in bolstering this momentum. Infrastructure development has seen significant progress over the last few decades. The maritime sector, encompassing ports and inland water transport systems, has expanded, with cargo handling capacity rising steadily. India currently ranks 22nd globally in the international shipment category.3 The overall export increased by 6%, whereas the export of services grew by 11%, making India the seventh largest exporter of services during the reporting year. Additionally, the gross inward Foreign Direct Investment (FDI) grew by 12.4% in FY 2025 in comparison to the previous fiscal year. The Indian economy is projected to maintain its growth trajectory, with an expected growth of 6.5% in FY 20264. This rise is expected to be driven by reduced inflation levels and tax incentives announced in the Union Budget 2025-2026. As per IMF, India has surpassed Japan to become the worlds fourth-largest economy. India is now positioned to displace Germany to become the third-largest economy by FY 2028. Additionally, following RBIs recent rate cuts and supportive policy measures, Indias economy is poised to benefit from increased liquidity. This influx will allow for strategic deployment into credit or securities.

Indias real GDP growth (in %)

Industrys Outlook, Structure and Development

Global dredging industry

The global dredging industry has witnessed steady growth in recent years, reaching a market size of USD 12.84 billion in CY2024.5 This growth can be attributed to early port development, coastal protection initiatives, canal construction, mining, maintenance of rivers as well and waterways. Given its A regional dependencies, the overall global dredging industry remains fragmented, with the Asia-Pacific region emerging as one of the largest contributor to global dredging industry during the year.

Technological advancements have played a pivotal role in shaping global dredging landscape. The industry has seen the development of advanced equipment and modern dredging techniques, enhancing operational efficiency and productivity. Automation and remote-control systems have further contributed by improving safety standards and reducing dependence on manual labour. Additionally, the advancement of technology has led to the adoption of environmentally friendly dredging techniques and practices.

In continuation of this, during the recent years, the global industry witnessed a gradual shift towards sustainable dredging practices. This shift ensured the use of eco-friendly techniques and the development of innovative solutions to minimise impact on the environment.

Another notable trend during the year was the emphasis on product innovation. Leading companies focused on innovating advanced solutions in alignment with the evolving demand and trends, helping to strengthen their position in the industry.

In the coming years, the global dredging industry is anticipated to grow steadily at a CAGR of 4.6% from 2025-2029.6 This anticipated growth will be supported by increased government expenditure on infrastructure developments, rising interest in coastal tourism and expansion in global trade routes. The proliferation of coastal development projects is also expected to amplify the demand for dredging services, ultimately leading to an overall growth.

Indian dredging industry

The maritime sector is considered as the backbone of trade and commerce in India. The maritime sector in India efficiently manages around 95% of Indias trade by volume and 70% by value. As the sixteenth largest maritime sector in the world, India holds a strong position in the global shipping lanes.7 In addition to this, approximately 7,517 km of coastline plays a strategic role to make major shipping routes accessible easily.8 Indias strong position in the maritime industry creates demand for port maintenance and expansion initiatives, creating the demand for dredging activities in India.

The Indian dredging sector primarily includes capital dredging and maintenance dredging. In recent years, there has been a growing focus on adopting sustainable dredging practices. A significant initiative in this direction is the Valorisation of Dredged Sediments, proposed by the Government of India. The initiative promotes the reuse of sediments as a raw material for civil engineering and other applications, contributing to sustainable development. Additionally, the adoption of advanced technologies has revolutionised the dredging operations in India. The deployment of modern dredgers equipped with GPS-guided systems, real-time monitoring and automation has improved operational precision and reduced functioning downtime.

In the coming years, the Indian dredging industry is well-positioned to benefit from both economic growth and strategic policy support by the Government of India to promote infrastructure development. The Union Budget 2025-26 allocated Rs 25,000 crore for the Maritime Development Fund. Furthermore, the Maritime India Vision, 2030 (MIV 2030) aims to transform major ports into transhipment hubs, expand port capacity and deepen port channels. These initiatives are anticipated to significantly boost the domestic dredging industry in the coming years.

Guidelines for dredging at Major ports by the Ministry of Shipping

According to the Dredging Guidelines, Major Ports that manage a Port-owned Dredging Company will directly offer dredging work to those companies. This can be undertaken on a nomination basis, after having the approval of the Board of Trustees/ Directors of the Port. Additionally, the nomination method includes adhering to the principle of competitive market price discovery for the same quality and conditions. The Ministry of Shipping also suggested that all the major ports must invite open competitive bids for capital and maintenance dredging works. In addition to this, the Ministry of Ports, Shipping and Waterways has the right to assign in the public interest or any contract for dredging work in any Major Port on a nomination basis to Ports owned dredging company, following due settlement process.

Growth drivers

Indias maritime sector

Indias strategic geographic location and rapidly advancing infrastructure place it in a strong position to drive economic growth through its maritime sector. Recognising the growth potential, the country is actively investing in the development of blue economy, emphasising sustainable ocean resource utilisation. Such developments are anticipated to boost demand for dredging activities, thereby propelling the Indian Dredging industry in the forthcoming years.

Government initiatives

The Sagarmala programme, spearheaded by the Ministry of Shipping, plays a pivotal role in positioning India as a global leader in maritime affairs. This programme aims to support modernisation and sustainable coastal development, further creating a need for dredging. With plans underway for Sagarmala 2.0, the Government of India reaffirms its commitment to transforming the Indian Maritime sector.

Expansion in port capacity

In the forthcoming years, India is expected to increase its port capacity to handle the rising volumes of Petroleum, Oil and Lubricants (POL) handling, as well as coal and containerised cargo. This expansion will necessitate extensive capital dredging to accommodate larger vessels and enhance port accessibility, thus contributing to the sustained growth of the domestic dredging industry.

Oil infrastructure

Indias oil demand is anticipated to rise by 6.7 million bpd by 2030, supported by surge in manufacturing activities. This will require robust infrastructure for oil and gas logistics, necessitating dredging for the construction and maintenance of related facilities, especially along coastal and inland waterways.

Cruise Bharat Mission9

Launched in FY 2025, the Cruise Bharat Mission aims to double Indias cruise tourism by 2029 and elevate the country as a premier global cruise destination. This initiative will require significant development and maintenance of waterways and port infrastructure, providing further momentum to the industry in the years ahead.

India ranks as the sixteenth-largest maritime country in the world Functional Major and Non-Major Ports in India

Sr. No.	State/UT	Non-Major Ports	Major Ports
1	Andhra Pradesh	15	1
2	Goa	5	1
3	Gujarat	48	1
4	Karnataka	13	1
5	Karnataka	17	1
6	Maharashtra	48	2
7	Odisha	14	1
8	Tamil Nadu	17	3
9	West Bengal	1	1
10	Andaman and Nicobar Islands	24	-
11	Daman & Diu	2	-
12	Puducherry	3	-
13	Lakshadweep	10	-
(as of July 26, 2024)	Total	217	12

Companys overview

The Dredging Corporation of India Limited (DCI),established in 1976, specialises in providing comprehensive dredging services to ports, the Indian Navy and other organisations in India. The headquarters of the Company is situated in Visakhapatnam Andhra Pradesh and it is under the administration of four major ports - Visakhapatnam Port Authority, Jawaharlal Nehru Port Authority (Mumbai), Paradip Port Authority and Deendayal Port Authority (Kandla). The core operations of the Company involve integrated dredging and associated marine services aimed at supporting both national and international maritime trade, beach nourishment, reclamation, inland dredging and environmental protection. While the Company primarily operates within the Indian dredging industry, it has also executed international projects in countries, including Sri Lanka, Taiwan and the UAE.

Facilities/Instruments	Rating
Long-Term Bank Facilities	CARE BBB+; Positive
Long Term / Short Term Bank	CARE BBB+; Positive /
. Facilities	CARE A3+
Short-Term Bank Facilities	CARE A3+

Key objectives of Dredging Corporation of India

Maintain its position as the ‘number one player in the Indian dredging industry

Enter the global market through joint ventures with reputed international companies or chartering of vessels

Promote training and effective recruitment activities to improve its workforce

Integrate e-governance throughout its operations through the DCI FIIT project

MoU signed between DCI and BEML

DCI and Bharat Earth Movers Limited (BEML) signed a Memorandum of Understanding (MoU) to drive innovation, promote indigenous manufacturing and strengthen the Indian maritime sector. Although the MoU signed by the CMD of BEML and the MD and CEO of DCI is valid for three years, it can however be expanded further.

Acquisition of new Dredger

The Ministry has approved the Expert Committees recommendations for the procurement of 12000 m3 TSHD dredgers by DCI under the Atma Nirbhar Programme. The agreement between Dredging Corporation of India and Cochin Shipyard Limited was signed on 17/03/2022, and the tripartite agreement between DCI-CSL-IHC was signed on 13/04/2022. The Cost of the dredger is 104.59 million EUROs. The first dredger is targeted for delivery by 2025, with the second in 2028. The third dredgers procurement will depend on the performance of the previous two. The third dredger capacity will be calculated based on a market gap viability analysis in 2030, to meet the dredging requirements at Indian Major Ports as outlined in the Maritime Vision 2030. All the instalments/payments due under the said agreement in the financial year 2024-2025 were paid by DCI within the time limit. This is a major milestone in the new market for which the company has been working for more than a decade.

Performance

The capacity utilisation in number of days and quantity as against the targets during the year is as under

Craft	Target	Actual	% utilisation
No. of Days	2953.00	2289.79	77.54%
Quantity (Mln. Cu.M)	622.33	505.64	81.25%

Key strengths

• Strong promoter backing with continued support

DCI is promoted by a consortium of four major ports, Vishakhapatnam Port Trust (VPT), Paradip Port Trust (PPT), Jawaharlal Nehru Port Trust (JNPT) and Deendayal Port Trust (DPT). This strategic backing enables the Company to secure orders on a nomination basis, providing a stable business pipeline.

• Long track record in dredging services

With over four decades of experience, the Company has gained a leadership position in the dredging industry. It consistently delivers high quality solutions across various ports and for the Indian Navy.

• Strong hopper capacity

DCI possesses one of the largest hopper capacities in the industry, offering it the flexibility to handle high-volume dredging projects. This provides significant competitive edge in executing large-scale assignments effectively.

• Skilled and experienced workforce

The Companys team comprises skilled and experienced professionals who ensure timely and effective execution of projects, thereby upholding quality and client satisfaction.

• Advanced dredging fleet: DR-XIX, XX and XXI

DCIs premium assets— DR-XIX, XX and XXI are equipped with the advanced technology. These assets are capable of executing specialised tasks such as aggregate dredging, beach nourishment and reclamation works with high efficiency.

• Optimised performance

The constant focus on fleet maintenance and equipment upgrades helps DCI reduce operational costs and enhance overall operational efficiency, strengthening its position.

• Reputed clientele

DCI serves a wide array of prestigious clients, including the Indian Navy, highlighting its credibility and trust in the industry.

Threats

• Ageing fleet infrastructure

Several of DCIs older dredgers are outdated and require extensive refurbishments. This leads to reduced operational performance and increased downtime due to frequent breakdowns.

• Dependency on imports and Euro loans

The Company relies heavily on imported components and spare parts, making it vulnerable to global supply chain disruptions. Exposure to euro-dominated loans for funding dredgers adds financial risk due to currency fluctuations.

• Rising competition

Increasing competition from both domestic and international players is intensifying competition in the dredging sector, impacting DCIs market share, pricing flexibility and long-term growth prospects.

• Strict environmental regulations

Growing environmental compliance requirements are leading to project delays and increased operational costs, posing challenges for the Companys efficiency and profitability. •

Weaknesses

• Delays in repairs and dry docking

The procurement of spares and stores involves long lead times, often causing delays in repair and dry-docking

• activities. While the implementation of Enterprise Resource Planning (ERP) aims to streamline inventory management, challenges persist.

• Unavailability of skilled workforce

A shortage of qualified professionals has resulted in delayed retirements and workforce inefficiencies. This impacts project execution timelines and hampers overall operational efficiency.

Opportunities

• Modernisation of equipment

Upgrading the current fleet and adopting new technologies in response to evolving market trends and demands can enhance operational capabilities and competitiveness.

• Strategic collaborations

Building partnerships and collaboration with key institutes and organisations will promote sustainable growth and open new avenues for the Company.