Mazagon Dock Eyes Orderbook Diversification Beyond Navy

Mazagon Dock Shipbuilders Ltd. is gearing up for significant expansion and diversification beyond its traditional focus on naval projects, according to Chairperson Sanjeev Singhal.

"We intend to diversify beyond the Navy and create capacities where we can cater to commercial requirements, repairs, refits and exports," Singhal told NDTV Profit.

The company is also exploring opportunities in offshore verticals like undersea pipeline laying and offshore platform works. Beyond government projects, Mazagon has started accepting orders from the Indian Coast Guard and export clients, the managing director said. "This is a significant diversification for us."

Mazagon has acquired 15 acres of land adjacent to its existing premises and is developing its navy yard. The company plans to invest around Rs 5,000 crore in capital expenditure over the next four to five years, he said. "With this expansion, we would more than double our capacity, opening a gateway for handling commercial projects."

"The company reported its best quarter since inception, driven by strong execution and deliveries. But, going ahead, we feel that the next couple of quarters are going to be pretty decent." Singhal said.

Mazagon successfully completed 15 projects, including six submarines under the Scorpene P75 programme. Three major deliveries were made this quarter — two in December and one submarine in early January. "All three deliveries were a challenge by itself," he added.

The company is making steady progress on the 17-Alpha project. "We have already delivered the first vessel in December 2024. The second delivery is expected in April-May, followed by the third and fourth vessels. It is quite possible that in fiscal 2025–26, we might deliver two of the 17-Alpha ships," he said, adding that the remaining work and BND spheres would extend into fiscal 202728.

Mazagon boasts a strong order book of approximately Rs 34,800 crore. The company is also confident about securing additional orders for three Scorpene submarines. "I won't discuss figures here, but yes, it is a big order," Singhal said.

The company is collaborating with Germany's ThyssenKrupp Marine Systems for the P75-I submarine project, a crucial contract where Mazagon is the only technically qualified bidder. "The bids have been opened, and this process will continue. I expect that in the next 10–12 months, the order should be in place. If the process moves at its normal pace, we expect six submarine orders," he said.

Mazagon is optimistic about the follow-on project of 17-Alpha, known as 17-Bravo, which could involve around seven ships — four at MDL and three at a sister shipyard. Discussions are also underway for the Next-Generation Destroyers. "Considering that destroyers have only been built by MDL, we are confident that a good chunk of these orders will come to us," Singhal said, though he estimated these projects to be 18–30 months away.

Mazagon's margin currently stands at 7.5–8%, with a long-term industry benchmark of 12–15%. The company attributes its strong financials to production process innovations.

It has also developed an in-house shafting procedure that provides a time advantage of six to eight months, leading to cost savings. "It is not just about getting orders on a nomination basis. Even in a competitive bidding scenario, we would have seen such profits," Singhal said.

While Mazagon aims for moderate margins when bidding for orders, continuous innovation, and research-and-development investments could improve profitability. "A better margin cannot be ruled out; it is very much a possibility," he shared.