Not Big Enough: A p-17A Stealth frigate under construction at the dry dock at Mazagon Docks

Capacity constraints have hit expansion plans, say the defence shipbuilder’s IPO papers

Mumbai: Mazagon Dock Shipbuilders Ltd, India’s biggest warship builder, is weighing plans to set up a greenfield yard at Nhava near Mumbai as the State-run yard looks to overcome capacity constraints for expansion.

“Our future growth and expansion is limited by our current infrastructure,” the Mumbai-based MDL, controlled by the Ministry of Defence, wrote in the draft papers filed with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO) of shares, adding that its capacity for outfitting warships and submarines was limited “by our location”.

Space Constraint

MDL said it may not be able to undertake any further expansion activities on its premises due to “lack of additional space”. “Since, we can execute only for a limited number of projects, we may lose business opportunities and our business, results of operations, financial condition and prospects maybe adversely affected,” the shipbuilder said.

While MDL said it is “exploring options to develop a greenfield shipyard at Nhava, Navi Mumbai”, its board is yet to approve the capital expenditure, the draft prospectus said.

“The planned new yard will have a ship-lift, wet basin, workshops, stores and buildings and a ship-repair facility spread over an area of 40 acres which we believe will be suitable for construction and repair of warships and commercial ships with larger dimensions. We believe that the revival of our ship repair operations will result in augmentation of our revenues and profitability.”

Mazagon Dock had once considered forming joint ventures with private yards to capture huge defence orders given its capacity constraints, but the plan was shelved by the government to avoid charges of irregularities.

India’s only yard to build destroyers and conventional submarines for the Navy, MDL raised capacity for outfitting warships from eight to the current 10, and submarine capacity from 6 to 11, following a modernisation project in 2016.

The modernisation comprised a new wet basin, goliath cranes, module workshop, cradle assembly shop, store-building and associated ancillary structures for an integrated modular construction that would substantially reduce the build period.

The yard currently has orders for building four ‘P-15B’ destroyers, four ‘P-17A’ stealth frigates and five Scorpene-class submarines for the Indian Navy, all of which is valued at a combined ₹52,760.8 crore. The orders were awarded to Mazagon by the Ministry of Defence on a nomination basis after issuing a limited tender only to the company.

Apart from reviving its ship repair business, the yard is also seeking to revive the export of defence and commercial products to Latin America, Africa, South-East Asia, West Asia and Scandinavian regions, and have identified certain defence and civil sectors in such regions.

We are also in the process of entering into an agreement with a design partner in Norway which will enable us to market offshore vessels in the international markets, MDL said.