Mazagon Dock Hunts Equity Partners for Rs 20,000-Crore Shipbuilding Hubs

Mazagon Dock Shipbuilders is scouting equity partners for two planned greenfield shipbuilding clusters at Dighi in Maharashtra and Dugarajapatnam in Andhra Pradesh, as the state-run defence yard pushes into commercial ship construction with a proposed investment of about Rs 20,000 crore over five to seven years. The move marks a shift in scale for a company best known for warships and submarines, and it will build out the industrial base that feeds India’s shipbuilding supply chain.

MDL signed memoranda of understanding worth roughly Rs 30,000 crore with the two state governments within a span of three days, and expects to secure the required approvals by December, chairman and managing director Captain (retired) Jagmohan said in an interaction.

Two clusters, 1.2 million GT each

Each cluster is designed to support an annual output of 1.2 million gross tonnage. The plan will be executed in phases, starting with a first phase capacity of 500,000 GT.

A cluster of this size pulls in far more than a slipway. It implies demand for steel plate and sections, marine engines and propulsion systems, deck machinery, piping, electrical and automation packages, cranes and heavy handling equipment — much of it sourced domestically at present only in part, which is where ancillaries and component makers are expected to plug in.

The financing structure

MDL will initially form a joint venture with the Maritime Investment Fund, which is managed by SBI Ventures, each holding a 50 per cent stake in the shipyard.

The Rs 20,000 crore will be financed through a mix of 70 per cent debt and 30 per cent equity. Across the two clusters, MDL expects to need about Rs 6,500 crore in equity. MDL emerged as the sole suitor to become anchor investor in both clusters, and the next task is raising the remaining 70 per cent of project funding.

For the equity portion, MDL is in talks with large corporations that regularly use vessels for their business and trade requirements — cargo owners and charterers who could anchor the yards commercially. Jagmohan said the company envisages a commercial structure similar to Petronet LNG, whose shareholders include public sector oil companies and GAIL.

Investors from the United States and Germany have already expressed interest, and MDL is in discussions with international maritime equipment manufacturers to come on board as co-investors. The company has, however, said it will not dilute its stake below 26 per cent at any point.

Company clarifies position

In a regulatory filing, MDL said a news report on the partnership search broadly reflected its plans for the Greenfield Shipbuilding Industrial Clusters at Dighi and Dugarajapatnam. It said it is exploring partnerships, investment opportunities and financing arrangements, while the specific project structure, investment requirements and commercial terms remain under consideration and evaluation, subject to approvals.

Why the two sites

Dighi, on Maharashtra’s Konkan coast, sits beside the private Dighi Port operated by Adani Ports and Special Economic Zone, and offers backward linkages to the Pune-Kolhapur industrial belt. Dugarajapatnam on the Andhra Pradesh coast is being developed as a shipbuilding-cum-port cluster. Both are among the greenfield shipbuilding clusters to have received in-principle approval from the National Shipbuilding Mission.

FAQs

1. How much will MDL invest in the two shipbuilding clusters?
About Rs 20,000 crore over five to seven years, spread across the Dighi and Dugarajapatnam clusters, financed through roughly 70 per cent debt and 30 per cent equity.

2. What capacity will each cluster have?
Each cluster is designed for an annual output of 1.2 million gross tonnage, to be built in phases with a first phase capacity of 500,000 GT.

3. Who funds the equity component?
MDL will initially form a 50:50 joint venture with the Maritime Investment Fund, managed by SBI Ventures. Across both clusters, around Rs 6,500 crore in equity is required, and MDL is seeking vessel-using corporations and international maritime equipment makers as co-investors. MDL says it will not dilute its stake below 26 per cent.

4. What kind of ships will these yards build?
The clusters are aimed at commercial vessels rather than warships, addressing the large and specialised segments India currently imports capacity for. The commercial structure is modelled on Petronet LNG, where cargo owners are also shareholders.

5. When will approvals come through?
MDL expects to secure the requisite approvals by December. The company has clarified that the specific structure, investment size and commercial terms are still under evaluation.

6. Where are the two sites located?
Dighi in Maharashtra’s Raigad district, adjacent to Dighi Port, and Dugarajapatnam in Andhra Pradesh, being developed as an integrated shipbuilding and port cluster.