India's MDL Acquires Majority Stake In Sri Lanka's Colombo Dockyard Amid Concerns Over Growing Chinese Presence In Region

Mazagon Dock Shipbuilders (MDL), India’s state-owned defence shipyard, will acquire a controlling stake in Sri Lanka’s Colombo Dockyard for up to $52.96 million (~ Rs 452 crore), as per its latest regulatory filing.

The acquisition follows a tripartite agreement signed on Friday (27 June) between MDL, Colombo Dockyard, and Japan’s Onomichi Dockyard, under which MDL will take over Onomichi’s controlling share in Colombo Dockyard..

Known as the ‘Shipyard of the Nation’, Mumbai-based MDL operates under India’s Ministry of Defence and is a leading builder of warships, submarines, and merchant vessels.

The move comes after the Sri Lankan government requested the Indian government to ask Indian investors in the Colombo Dockyard, which was on the verge of default.

MDL was reportedly shortlisted in view of its shipbuilding record and financial strength.

MDL's decision 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.

With a market cap of $15.12 billion and minimal debt, MDL reported turnover of $1.13 billion. Colombo Dockyard, plagued by financial stress, is expected to leverage MDL’s backing to reclaim lost contract opportunities.

"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.

The move comes amid concerns in India over China's persistent attempts to expand its strategic influence in the island nation.

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. It is Sri Lanka's largest shipyard.

"The investment, valued at up to USD 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," according to a statement, PTI reported.

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