Mazagon Dock Shipbuilders Ltd. is gearing up to accommodate the substantial order inflows coming the industry's way in the next couple of years. The shipbuilding sector can expect an order-book of Rs 2 lakh crore over the next two years, distributed between three shipbuilders, Sanjeev Singhal, chairman and managing director of the Mumbai-based shipbuilder, told NDTV Profit.
The order pipeline is expected to include three Scorpene-class submarines, six Project-75I submarines, up to eight Project-17 Bravo class frigates, and next generation corvettes and destroyers is expected to be placed in the coming years, he said.
While orders may be bagged by single shipyards, some orders may be split between two shipyards, he added.
MDL continues to remain inherently confident about their prospects, Singhal said.
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MDL is investing between Rs 4,000 crore to Rs 5,000 crore in a new facility, he said, a move indicative of confidence in continued growth and demand beyond 2027.
This expansion aims to increase the company's capacity to build and accommodate up to 1.5 to 2 times more ships and submarines compared to the current setup, he said.
Mazagon Dock’s current infrastructure, which can simultaneously handle 11 submarines and 10 ships, would be sufficient if the company was not optimistic about future prospects, Singhal said.
The substantial investment in the new location underscores its commitment to scaling up operations to meet both domestic and international needs.
MDL is also tapping into the export market, with a recent order for six ships from Denmark. This move aligns with its strategy of portfolio diversification, incorporating repair and maintenance services alongside primary focus on new builds.
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Despite this diversification, revenue from refit and repair will remain minimal, with a projected contribution of less than 10% from these segments, Singhal said.
However, the long lifecycle of submarines—typically around 30 years, with an additional 10-12 years post-refit—ensures that the company will benefit significantly from ongoing maintenance and refit contracts, he said.
In terms of financial health, Singhal emphasised on MDL's strong position as a debt-free entity, which allows them to invest heavily in growth without the burden of significant liabilities. The company’s cost management remains a priority, with continuous efforts to optimise expenses and maintain a stable cost structure.
Singhal maintains that achieving a margin above 10% would be considered healthy for the shipbuilding industry.
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