A win-win in Colombo

What Mazagon Dock’s controlling stake in Colombo Dockyard means for India’s maritime ambitions

- BY SANJIB KR BARUAH AND LAKSHMI SUBRAMANIAN

One plus one is two. But not when India’s leading shipbuilder—a maker of submarines and warships—joins forces with Sri Lanka's main shipbuilder. In this case, the total is much more than the sum of its parts.

In June end, the board of the India government-owned Mazagon Dock Shipbuilders Limited okayed an investment of about ₹450 crore to acquire at least 51 per cent privately owned existing shares of the publicly listed Colombo Dockyard PLC (CDPLC).

The CDPLC shares include that of the majority-stake-holding Japanese Onomichi Dockyard Co Ltd. One reason for the sellout is the non-provision of Sri Lankan bank guarantees to the loss-making CDPLC.

With a pedigree in new builds and repairing, CDPLC lies within the strategically located Colombo port, which is just 76 nautical miles from major shipping lanes connecting the west, Middle East, the far east, Africa and Australia. This means there is tremendous scope for undertaking ship repairs, maintenance and overhauls.

With a current order book of more than $50 million and a pipeline order of $300 million, CDPLC fell into bad times during 2019 because of black swan events like the April 21 Easter bombings and the island nation’s economic crisis, followed by the pandemic.

“We see it as a robust business proposition that will unlock operational synergies by a cross-fertilisation of varied capabilities,” Biju George, director (shipbuilding), MDL, told THE WEEK.