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Indian Dredging Firms Struggle to Get Long-term Funding

Posted on May 12, 2016

Banks and financial institutions (FI) are not keen to fund shipping and shipbuilding sectors, says the financial newspaper.

“Banks are simply reluctant to lend (to this sector) on a long-term basis,” Mercator Ltd CFO Prasad Patwardhan has been quoted as saying.

“Funding tenure needs to match dredging contract period, which is usually for 15-20 years. But banks have been approving only medium-term funding of 3-5 years. This is making it difficult for dredging companies to raise funds and tap the ample business opportunity,” he told the daily.

Mercator focuses on maintenance dredging and owns 9 dredgers.

Dredging is an excavation activity carried out underwater to keep waterways navigable.

“Getting a loan sanctioned for dredges is an unending process,” Chennai-based Swalf Dredging founder Senthil Kumar has been quoted as saying.

Swalf Dredging has been trying for the last 3 years to get a INR 5-crore loan to buy a dredger.

Bankers’ reluctance has compelled domestic dredging companies to look at overseas funding, according to the paper.

Domestic dredging businesses also has to deal with high operating costs, says the daily.

Lack of in-house technology puts them in an unfavourable position when competing with foreign companiess, which offer services 25-35 per cent cheaper, according to the daily.

Ocean Sparkle and state-owned Dredging Corporation of India are the biggest dredging companies in the domestic market engaged in capital as well as maintenance dredging, reports the paper.

Source: IIFL

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