India's government-owned Mazagon Dock Shipbuilders Limited (MDL) has announced its decision to acquire a controlling stake in Sri Lanka's Colombo Dockyard PLC (CDPLC) in a deal valued at up to USD 52.96 million.
This marks MDL's first international acquisition and is expected to be completed within six months, pending statutory and regulatory clearances, including approval from the Colombo Stock Exchange.
The agreement, signed on June 27 between MDL, Colombo Dockyard, and Japan's Onomichi Dockyard Co. Ltd. (CDPLC's current majority shareholder), will see Mazagon Dock acquire at least 51% of the Sri Lankan shipyard through a combination of primary and secondary share purchases, making CDPLC its subsidiary.
Located strategically in the Port of Colombo, CDPLC provides MDL with a "strategic foothold in the Indian Ocean Region—a key maritime corridor," according to an MDL statement.
MDL also said that it expects to close the deal within four to six months.
Colombo Dockyard, a well-known ship repair, shipbuilding, heavy engineering, and offshore engineering facility, has been grappling with persistent losses, accumulating over LKR 28 billion in short and long-term debt.
Lalith Ganlath, Chairman of Colombo Dockyard, described the last financial year as "one of the most challenging and traumatic years" in the shipyard's history, noting the significant exit of its long-term majority shareholder, Onomichi Dockyard of Japan.
Onomichi Dockyard, which held the majority stakes in Colombo Dockyard, decided to exit the firm last year.
Official Indian sources indicated that Colombo "urgently requested" New Delhi to "encourage Indian investors" to consider investing in Colombo Dockyard, fearing the implications of a default. MDL was shortlisted due to its experience in shipbuilding and financial strength.
Despite the financial distress, Ganlath stated that the company has a clear strategic trajectory, planning to strengthen its presence in high-growth niches such as hybrid technology-propelled vessels and offshore energy support ships. Plans also include expanding infrastructure at Hambantota and investing in lean management processes to enhance efficiency.
This acquisition by an Indian company within the Colombo Port is notable amidst New Delhi's growing concerns over increasing Chinese outreach in the region. India has previously raised concerns about Chinese research vessel visits to Sri Lankan ports, leading Colombo to impose a moratorium on foreign research vessels. President Anura Kumara Disanayake's government has indicated it will develop a new national policy on visits by foreign vessels.
MDL's investment is not the first by an Indian firm in the Colombo Port. In April of this year, Adani Ports and Special Economic Zone Limited commenced operations at the Colombo West International Terminal (CWIT), a joint development with the Sri Lanka Ports Authority and Sri Lankan conglomerate John Keells Holdings, situated adjacent to the China-backed Colombo International Container Terminal (CICT).
-With input from The Hindu
This marks MDL's first international acquisition and is expected to be completed within six months, pending statutory and regulatory clearances, including approval from the Colombo Stock Exchange.
The agreement, signed on June 27 between MDL, Colombo Dockyard, and Japan's Onomichi Dockyard Co. Ltd. (CDPLC's current majority shareholder), will see Mazagon Dock acquire at least 51% of the Sri Lankan shipyard through a combination of primary and secondary share purchases, making CDPLC its subsidiary.
Located strategically in the Port of Colombo, CDPLC provides MDL with a "strategic foothold in the Indian Ocean Region—a key maritime corridor," according to an MDL statement.
MDL also said that it expects to close the deal within four to six months.
Colombo Dockyard, a well-known ship repair, shipbuilding, heavy engineering, and offshore engineering facility, has been grappling with persistent losses, accumulating over LKR 28 billion in short and long-term debt.
Lalith Ganlath, Chairman of Colombo Dockyard, described the last financial year as "one of the most challenging and traumatic years" in the shipyard's history, noting the significant exit of its long-term majority shareholder, Onomichi Dockyard of Japan.
Onomichi Dockyard, which held the majority stakes in Colombo Dockyard, decided to exit the firm last year.
Official Indian sources indicated that Colombo "urgently requested" New Delhi to "encourage Indian investors" to consider investing in Colombo Dockyard, fearing the implications of a default. MDL was shortlisted due to its experience in shipbuilding and financial strength.
Despite the financial distress, Ganlath stated that the company has a clear strategic trajectory, planning to strengthen its presence in high-growth niches such as hybrid technology-propelled vessels and offshore energy support ships. Plans also include expanding infrastructure at Hambantota and investing in lean management processes to enhance efficiency.
This acquisition by an Indian company within the Colombo Port is notable amidst New Delhi's growing concerns over increasing Chinese outreach in the region. India has previously raised concerns about Chinese research vessel visits to Sri Lankan ports, leading Colombo to impose a moratorium on foreign research vessels. President Anura Kumara Disanayake's government has indicated it will develop a new national policy on visits by foreign vessels.
MDL's investment is not the first by an Indian firm in the Colombo Port. In April of this year, Adani Ports and Special Economic Zone Limited commenced operations at the Colombo West International Terminal (CWIT), a joint development with the Sri Lanka Ports Authority and Sri Lankan conglomerate John Keells Holdings, situated adjacent to the China-backed Colombo International Container Terminal (CICT).
-With input from The Hindu
