State-run Mazagon Dock Shipbuilders Limited (MDL) is going to acquire a controlling stake in Sri Lanka’s Colombo Dockyard PLC under a $52.96 million (₹450 crore) deal, deepening India’s strategic presence in the island nation’s port logistic infrastructure.
MDL’s acquisition marks its first international venture and is seen as a major milestone in the company’s transformation from a purely domestic shipbuilder into a regional maritime player with global aspirations.
“Located in the Port of Colombo, Colombo Dockyard PLC (CDPLC) gives MDL a strategic foothold in the Indian Ocean region – a key maritime corridor,” the MDL said in a statement.
Officials said MDL’s stake in CDPLC will significantly change the shipbuilding and ship repair landscape in the region.
This is the second instance when an Indian company is engaging in the port logistic sector. In April, Adani Ports and Special Economic Zone Ltd. (APSEZ), India’s largest integrated transport utility, announced the commencement of operations at the Colombo West International Terminal (CWIT), located at the Port of Colombo.
Colombo Dockyard PLC, listed on the Colombo Stock Exchange, is the flagship of Sri Lanka’s maritime industry and serves a wide spectrum of commercial and governmental clients across Asia, the Middle East, and Africa.
“The investment, valued at up to $52.96 million, will be carried out through a combination of primary infusion and secondary share
purchase, including the acquisition of shares from Onomichi Dockyard Co Ltd, the current majority shareholder,” the company informed the bourses.
Strategic fit
MDL will bring an order pipeline for CDPLC from both domestic and international markets for repairs, refits and new builds. As such, there is a continuous revenue stream of ship repairs from the Indian sub-continent and MDL acquiring controlling stakes would only further this trend, they said.
The move comes amid concerns in New Delhi over China’s persistent attempts to expand its strategic influence in the island nation.
A number of orders for which potential clients are approaching MDL can also be diverted to CDPLC, which will ensure that there is a supply chain and industrial connectivity, the officials cited above said.
The CDPLC, which is currently under financial distress, can benefit from MDL’s strong financial capabilities and resource base, thereby expediting the turnaround process, the officials said.
They said both the shipyards possess enormous expertise garnered over the past decades and this strength can be leveraged for mutual benefit and can result in a win-win scenario.
The resources available at both the yards can be shared for mutual benefit.
For instance, the detailed design capabilities possessed by both the yards can be leveraged for projects at MDL as well as at CDPLC.
MDL can leverage its resources for the augmentation of the operations of CDPLC and its subsidiaries in other ports of the country based on opportunities that may arise, they added.