Mazagon Dock's Lanka deal to give India big foothold in region

Time of India

5 hours ago

NEW DELHI: In a major development, Mumbai-based defence shipyard Mazagon Dock Shipbuilders Limited is poised to acquire a controlling stake in Sri Lanka's largest shipyard, Colombo Dockyard PLC (CDPLC), in a deal worth almost $53 million.
The move marks the first international acquisition by India's largest shipyard that builds submarines, warships and other vessels, and will provide it with a 'strategic foothold' in the Indian Ocean Region (IOR).
China, of course, has made deep strategic inroads into Sri Lanka. Chinese Navy's expanding presence in IOR, along with its hunt for additional logistical hubs in the region, has emerged as a major security challenge for India.
The $53 million investment will be carried out through a combination of primary infusion and secondary share purchases, including the acquisition of shares from Onomichi Dockyard Co Ltd, the current majority shareholder.
Lanka deal to herald our emergence as global player: MDL
Upon completion, subject to customary regulatory approvals and closing conditions, Colombo Dockyard PLC (CDPLC) will become a subsidiary of Mazagon Dock Shipbuilders Limited (MDL). Mazagon Dock chairman and managing director Capt Jagmohan told TOI that the proposed acquisition of a controlling stake in CDPLC, which has been approved, is a "gateway" towards achieving the shipyard's ambition of transforming into a regional maritime player first and then into a global shipbuilding enterprise.
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"With CDPLC's strategic location at Colombo port, proven capabilities, and strong regional presence, this step will position MDL as a key player in South Asia and lay the foundation for our emergence as a global shipyard," Capt Jagmohan said.
CDPLC has more than five decades of experience in shipbuilding, ship repair and heavy engineering. "It has a track record of delivering complex offshore support vessels, cable-laying ships, tankers and patrol boats for clients across Japan, Norway, France, the UAE, India and several African nations," another MDL official said.
CDPLC is currently pursuing a pipeline of orders over $300 million, which includes cable-laying ships, multi-purpose utility ships and newbuild fleet support vessels.
"With MDL's support, particularly in technology sharing, access to Indian supply chains, and entry into Indian and allied maritime markets, CDPLC is well positioned for a financial turnaround and long-term growth," the official said.
MDL, on its part, continues to do well in India.
In partnership with German company ThyssenKrupp Marine Systems (TKMS), MDL is on course to bag the mega project to build six new stealth diesel-electric submarines for the Navy. The initial cost of these submarines, with both land-attack cruise missiles and air-independent propulsion (AIP) for greater underwater endurance, was estimated to be around Rs 43,000 crore when it got the 'acceptance of necessity (AoN)' by the defence ministry several years ago.
It will now be around Rs 70,000 crore, as reported earlier by TOI.
Another major contract for MDL in the pipeline is the proposed construction of another three French-origin Scorpene submarines with AIP at a cost of around Rs 38,000 crore. These three new submarines, if approved, will add to the six Scorpene or Kalvari-class submarines already built at MDL for over Rs 23,000 crore.