Mazagon Dock Shipbuilders (MDL), a major Indian defense shipyard, announced that it intends to acquire a majority stake in Colombo Shipyard in Sri Lanka for no more than US$52.96 million to expand its shipbuilding and repair business.
According to regulatory filings by MDL, the transaction involves the acquisition of at least 51% equity interest in Colombo Shipyard and is expected to be completed within six months, pending statutory and regulatory approvals.
The stake was originally held by Japan’s Onomichi Dockyard, which announced its sale plan in December last year. The two parties have reached an equity transfer agreement. If the transaction is successful, this will be the first international acquisition by an Indian shipyard.
Colombo Shipyard is the largest shipbuilding and repair facility in Sri Lanka. The shipyard has faced prolonged financial difficulties, due in part to losses on certain shipbuilding contracts that were signed at lower prices prior to the New Crown epidemic.In 2023, the shipyard incurred a record loss of US$38 million.In 2024, Colombo Shipyard realized operating income of approximately US$84.89 million.
The acquisition of Colombo Shipyard will expand the company’s presence in the Indian Ocean region and enhance its ability to serve maritime customers globally,” said MDL officials. With over 50 years of experience in shipbuilding and repair, Colombo Shipyard has established a global customer base, including major European ship owners. Its current order program is valued at $300 million.”
MDL is understood to be India’s leading defense shipbuilder, known for building warships, submarines and destroyers for the Indian Navy. The acquisition of Colombo Shipyard is part of MDL’s major expansion program, through which it will expand its shipbuilding capacity and enhance its R&D capabilities.
In addition to the acquisition of the shipyard, MDL is moving ahead with a shipyard expansion project, with plans to build two new sites called South Yard Anne and Nhava Yard around the existing shipyard, creating a “mega shipyard” by integrating it with the existing shipyard.
The new shipyard will have India’s largest dry dock and will be able to accommodate the Indian Navy’s next generation aircraft carriers. The new shipyard will utilize solar energy and natural light and comply with the standards of the Indian Green Building Council. The design phase will last 18 months.
In addition, as India’s major defense shipyard, MDL has signed a memorandum of understanding (MoU) with Hindustan Shipyard (HSL) to accelerate India’s ability to independently build submarines.
With the cooperation between the two shipyards, India believes that this move will be able to efficiently meet the strategic needs of the country’s navy, overcome previous production capacity constraints, and maintain continuous operation and strategic flexibility.