Decks cleared for sale of profit-making PSU, allegedly, to Abu Dhabi based firm

by Vikrant Jha

When INS Vikramaditya, the aircraft carrier of the Indian Navy, finally stopped at Kochi dry dock in September 2016, there were sighs of relief all around. The carrier inducted into the Indian Navy in 2013 was due for its first dry dock inspection but there were apprehensions if the depth of the channel leading to the dockyard would allow the massive floating ship to undergo maintenance at home.

The commander of INS Vikramaditya, Captain Krishna Swaminathan has said there were technical challenges posed by the depth of the channel, which was eventually dredged to the desired level.

The Dredging Corporation of India (DCI) thumped its chest for completing the task on war footing with no additional financial burden on the Kochi shipyard. DCI pressed additional crafts to meet the deadline. “A similar action from a private party in a crisis situation is unthinkable,” says DCI’s BP Naik, president of DCI’s officers’ association.

The decision of the Department of Investment & Public Asset Management (DIPAM) under the ministry of finance on November 16, 2017, to form an inter-ministerial group for the strategic disinvestment of DSI, therefore, spooked him and his colleagues.

The ball was apparently set rolling on November 2 when the Prime Minister chaired a meeting where approval was given to privatise DCI.

“We have been hearing whispers about the impending disinvestment for some time now. But the Government had denied in Parliament. And in March the MoS (Shipping) Mansukh Manvadiya visited DCI headquarters in Vishakhapatnam and assured us that there was no such proposal with the Government,” recalls Naik.

News of the formation of the inter-ministerial group triggered a series of protests by employees last month. And one of the employees, Venkatesh, committed suicide after leaving a note in which he attributed the decision to uncertainties created by the news of disinvestment.

Since then, Naik and his colleagues confide, nobody from the national capital, the ministry or the Government has bothered to reach out to the employees. “Nobody called, nobody has come. Even when a colleague committed suicide, nobody from the government empathised with us. Directors are sympathetic but then our CMD, Rajesh Tripathi, has not even bothered to send a message in sympathy,” he adds. Tripathi is a member of the inter-ministerial group and for all practical purposes has abandoned DCI to its fate.

Tripathi, who belongs to the Indian Engineering Service (1982 batch), was the Chief Engineer of the Jammu Railway project before being appointed CMD of DCI in 2015 for a term of five years.

Employees met Andhra Pradesh chief minister Chandrababu Naidu on December 7 and like all suave leaders, he assured the DCI delegation that he would take up the matter with the PMO and try and stop the strategic sale of DCI. When told that the Government of India, was expecting to net `1,500 crore from the deal whereas DCI’s assets, excluding its goodwill and expertise, was worth `8,000 crore, the CM said the state government might be interested in buying the company.

How have they calculated the value of the assets at `8,000 crore? Naik explains that DCI has different kinds of dredgers, the most expensive ones costing `600 crore and above while the cheapest cost half that amount. The gross value of all the 17 dredgers, he claimed, would be `8,000 crore. In addition, the DCI is building a state-of-the-art headquarters in Vishakhapatnam, which would also cost `100 crore.

The protesting employees oppose the alleged price tag put on the DCI by the Government at `1,500 crores. They claim, “Although the simple arithmetic of the number of shares multiplied by the market value does lead to `1,500 crores, it is a flawed method driven by vested interests.” The company claims its value to be more than `10,000 crores.

With political parties like the YSR Congress and Pawan Kalyan’s Janasena speaking against privatisation of DCI, the Centre seems to be fast-tracking the strategic sale.

Both Reddy and Pawan Kalyan have written to the PM protesting against the move. Reddy (see box) is apprehensive over the loss of tax revenue to Andhra Pradesh (DCI, it is claimed, pays `100 Crore in taxes to Andhra Pradesh). While neither Reddy nor others would explain why they are convinced that the headquarters of DCI would be shifted after the sale, DCI employees seem to believe that the sale would see the headquarters of DCI shift to Gujarat.

Pawan Kalyan, in his letter to the Prime Minister, alleged that the move would scuttle ‘reservation’ for socially and economically backward people. While DCI as a PSU adhered to guidelines related to reservation in jobs, its sale to a private player would adversely affect the future employment in DCI of the weaker sections. “The employees belonging to SC/ST and backward classes in the company are deeply concerned that their jobs would be at stake,” the letter added.

The Janasena president said, “There are only three PSUs (DCI, RINL and Hindustan Shipyard) that remain in Andhra Pradesh. Hence with the sale of DCI, Andhra Pradesh would be losing one of its prized possessions.”

“Vizag as a city has stood by the BJP and they have a MP (Kambhampati Hari Babu) from there, it is fair to ask the BJP to stand by their word and lend support to Vizag’s jewel, the DCI.”

While nobody knows who would eventually end up buying DCI, there are strong and credible speculation that an Abu Dhabi based company, NMDC, is being favoured by the Union Government. The speculation received a fillip last year when the Centre turned down a proposal put forward by DCI for a Joint Venture with the Abu Dhabi based company. Two directors of DCI confirmed that the reasons forwarded by the government while turning down the proposal were ‘frivolous’.

Indeed, one of them, on condition of anonymity, told NHS, “A deputy secretary in the ministry is known to have interests in a private company Mer-cator engaged in dredging. We believe AG (initials of the gentleman named) is playing the lead role in this transfer.”

DCI officers hint at private players trying to undercut DCI and inconvenienced by the rates offered by the public sector unit. The sale of DCI, they maintain, would enable private players to form a cartel and control rates over which the Government will have no control. Market rates would show, they said, that DCI has been instrumental in maintaining ‘reasonableness’ of the rates.

Over the years, complain DCI officials, efforts have been made to stifle DCI which at present is owed `806 crore by various agencies. The non-payment of dues on account of Sethusamudram project itself is put at over `500 crore. Despite DCI offering discounts to secure the arrears, authorities of Goa Port, Cochin Port, Kolkata Port etc. are seeking directions from the ministry to clear the dues to DCI. This affected the company’s cash flow and ability to bid at competitive rates.

While the DCI has been catering to the dredging requirements of Kolkata/Haldia ports for the past 30 years, the Government of late has “reduced the scope of work at Kolkata port and revenue from the port has significantly come down,” claims a note prepared by the officers’ association.

The coup de grace is the pressure being brought to bear on DCI by the ministry to offer VRS to older and more experienced employees before the strategic sale. The intention is to offer a leaner PSU with less liabilities to the eventual private player.

Does this smell of yet another scam despite the Prime Minister Narendra Modi’s pledge of “Na Kha-oonga, na khane doonga?”

Attempts to contact the shipping minister Nitin Gadkari proved futile. A questionnaire sent to the minister through his PS Vaibhav Dange remained unanswered at the time of reporting.

* NATIONAL HERAL is the mouthpiece of the Congress Party