Mazagon Dock Plans ₹20,000 Crore Shipbuilding Hubs in Maharashtra and Andhra Pradesh

Mazagon Dock Shipbuilders Limited (MDL), a government-owned defence public-sector enterprise, is moving forward with an ambitious plan to expand into commercial shipbuilding. The company is actively searching for equity partners to support two major shipbuilding hubs proposed at Dighi in Maharashtra and Dugarajapatnam in Andhra Pradesh, with an estimated investment of ₹20,000 crore.

Over a span of three days, MDL signed memoranda of understanding (MoUs) valued at ₹30,000 crore with the governments of Maharashtra and Andhra Pradesh. These agreements set the stage for establishing shipbuilding clusters capable of producing 1.2 million gross tonnage (GT) annually at each location. Captain (retired) Jagmohan, MDL’s Chairman and Managing Director, shared with Business Standard that the company aims to complete all necessary approvals by December this year.

Jagmohan outlined that the project will be executed in phases, starting with a first phase capacity of 500,000 GT. The planned investment of ₹20,000 crore is expected to unfold over five to seven years. Financing will involve the Maritime Investment Fund (MIF), which will provide equity funding. MDL intends to form a joint venture with the MIF, managed by SBI Ventures, where both entities will hold equal stakes of 50 percent.

The MIF is part of a larger ₹25,000 crore Maritime Development Fund (MDF) announced by the government. This fund forms a segment of the broader ₹69,725 crore package aimed at revitalising the Indian shipbuilding and maritime industries. The MDF includes the MIF for equity investment and a ₹5,000 crore Interest Incentivisation Fund designed to lower borrowing costs for shipyards and maritime businesses. The MIF’s structure is intended to attract private and institutional investments alongside government contributions.

To manage these projects efficiently, MDL plans to establish two dedicated project companies under the main holding company. These subsidiaries will have separate operations and financial management, ensuring focused execution and accountability.

MDL is currently in discussions with major corporations that frequently require vessels for their operations, aiming to bring them in as equity partners. Jagmohan compared the envisioned partnership model to that of Petronet LNG, which includes public-sector oil companies and GAIL India as shareholders.

The overall financing strategy for the shipbuilding hubs involves a combination of 70 percent debt and 30 percent equity. Across both clusters, the total equity requirement is projected to be around ₹6,500 crore. Addressing concerns regarding the scale of investment, Jagmohan emphasized MDL’s financial capability and experience, stating that the company’s own cash reserves are sufficient to cover its equity share without strain.

MDL emerged as the sole anchor investor for both shipbuilding clusters, but the company still needs to secure the remaining 70 percent of funds. Interest has been shown by investors from the United States and Germany, and MDL is also exploring partnerships with international maritime equipment manufacturers to broaden the investment base. Despite these collaborations, MDL intends to maintain at least a 26 percent stake in the ventures to preserve significant control.

Looking ahead, MDL is contemplating an initial public offering (IPO) for the shipbuilding projects to raise further capital. Such a move would be considered once the shipyards become operational and start generating returns.

India’s broader maritime ambitions include becoming one of the top five shipbuilding nations globally by 2047, targeting an annual production capacity of about 4.5 million GT. The Maritime Amrit Kaal Vision 2047 sets out investments near ₹80 trillion over the next two decades, with ₹54 trillion earmarked specifically for shipbuilding. MDL’s initiatives fit into this national vision, positioning the company as a key player in the country’s evolving maritime industry.