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Corporate - Taxation


Dredging Corpn wants tax sops restored — `Treat dredgers as ships'

Our Bureau

Visakhapatnam , Sept. 24

THE tax burden on Dredging Corporation of India (DCI) has increased substantially due to the new taxation policies during the current financial year and it has been pleading with the Union Government to reconsider the decision and restore the tax concessions, the Chairman and Managing Director, Mr N.K Guptha, has said.

At a press meet here on Friday, he said DCI had been left out while imposing the tonnage tax, "as according to the Government, a dredger is not a ship." Therefore, DCI would not be able to avail itself of the tax concessions under Section 33 AC of the Income-Tax Act, 1961.

"We have to pay the tax in full like other corporates and will not be eligible for concessions given to shipping companies. We are trying to persuade the Government that a dredger ought to be treated like a ship and the DCI be given the same benefit," he explained.

During 2003-2004, DCI had recorded its highest ever income of Rs 560.93 crore, compared with Rs 519.66 crore during the previous year. The net profit after tax stood at Rs 170.01 crore against Rs 161.83 crore the previous year. As required by the Income-Tax Act, Rs 180 crore had been transferred to reserves.

DCI had declared the highest ever dividend of 120 per cent on the paid-up share capital of Rs 37.91 crore during 2003-04 against 100 per cent the previous year. A sum of Rs 17.50 crore had been transferred to general reserve during the year, he said.

Mr Guptha said the dredging capacity of DCI as on March 31, 2004, was 798.50 lakh cubic metres and during the year under review, the quantity dredged under various contracts amounted to 750.85 lakh cu.m. The capacity utilisation was, therefore, 94.03 per cent. He attributed the drop in capacity utilisation to a fire at Paradip port in August 2003, in which the dredger was damaged. The vessel had been repaired and it was now in operation at Kandla, he said.

During 2003-04, the Government had disinvested 56,00,000 equity shares of Rs 10 each amounting to 20 per cent of the paid-up share capital. The issue was subscribed 18 times, he said.

Mr Guptha said the DCI had chartered vessels to Bahrain and was expecting an income of Rs 50 crore.

Currently, DCI was engaged in maintenance dredging works at various ports. Replying to a query, he said capital dredging projects would be executed by augmenting the fleet and by forming joint ventures (or special purpose vehicles) with leading international dredging companies. PricewaterhouseCoopers was engaged for the purpose.

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