Colombo Dockyard nears deal with new investor to steer turnaround

Colombo Dockyard PLC (CDPLC) is in the final stages of formalising an agreement with a new strategic investor, a pivotal move that is considered to be essential to navigate out of a “vulnerable” financial position and secure a “bright future”.

The announcement, made in the company’s 2024 annual report, follows what Chairman Lalith Ganlath described as one of the “most challenging and traumatic years” in the shipbuilder’s history. The company has been navigating severe headwinds, including continued financial losses and the significant exit of its long-term majority shareholder Onomichi Dockyard of Japan.

“The financial position of the company remains vulnerable, with the immediate need for financial restructuring,” Ganlath stated in the report. 

He noted that a “real risk remains”, given the large bank borrowings required to sustain the operations.

The turning point was initiated after Onomichi’s Japanese directors stepped down from the board on December 7, 2024, prompting an urgent search for a new partner. The company launched a formal process to find an investor to acquire Onomichi’s shares and inject a minimum of US $ 30 million in new capital through a rights issue.

The search garnered significant interest, with 40 formal inquiries leading to five final offers. According to Ganlath, a “clear winner” emerged from the evaluation process and “the management is in the process of finalising the agreements at the time of writing”.

Despite the financial turmoil, CDPLC maintained operational resilience. 

“Our teams delivered three advanced hybrid vessels to Norwegian clients, executed 183 ship repair projects across multiple ports and advanced our capacity in niche sectors such as cable-laying and offshore support vessels,” Ganlath highlighted.

Looking forward, the company has a clear strategic trajectory. 

“We will strengthen our presence in high-growth niches such as hybrid technology-propelled vessels and offshore energy support ships,” Ganlath said. 

Plans also include expanding infrastructure at Hambantota and investing in lean management processes to enhance efficiency.

“As we engage with prospective strategic investors, we seek to establish partnerships that will sustain and accelerate our long-term growth, reinforce our export-led value proposition and align with Sri Lanka’s maritime development priorities,” Ganlath concluded.