News ArticleMazagon Dock Shipbuilders Secures ₹1,250 Crore Credit Facility to Issue Standby Letter of Credit for Colombo Dockyard PLC
Facility arranged with State Bank of India to support bank guarantees for Sri Lankan subsidiary’s shipbuilding contracts
Mazagon Dock Shipbuilders Limited has approved an additional credit facility of ₹1,250 Crore with State Bank of India to issue a Standby Letter of Credit (SBLC) in favor of its Sri Lankan subsidiary Colombo Dockyard PLC. This facility enables issuing bank guarantees to support Colombo Dockyard's shipbuilding contracts, with associated charges reimbursed by the subsidiary under agreed terms.
Mazagon Dock Shipbuilders Limited
Credit Rating
Mazagon Dock Shipbuilders Limited's board has approved an additional ₹1,250 Crore credit facility with State Bank of India to issue a Standby Letter of Credit on behalf of its subsidiary Colombo Dockyard PLC, Sri Lanka, enabling bank guarantees for the subsidiary’s clients as required by shipbuilding contracts.
The approved credit facility is specifically arranged with State Bank of India, Mumbai branch, to issue Standby Letters of Credit favoring State Bank of India, Sri Lanka, for Colombo Dockyard PLC (CDPLC).
Colombo Dockyard PLC requires bank guarantees against advances received from clients under its shipbuilding contracts. Due to resource limitations relative to order volumes, the subsidiary requested Mazagon Dock to provide comfort to the issuing bank through a back-to-back SBLC arrangement.
The amount involved for this facility is ₹1,250 Crore (Rupees One Thousand and Two Hundred Fifty Crores only).
SBLC issuance charges, taxes, and directly attributable costs, including out-of-pocket expenses, will be borne by Mazagon Dock Shipbuilders and reimbursed by Colombo Dockyard PLC with a 10% markup.
In case Colombo Dockyard PLC defaults on honoring any bank guarantee, Mazagon Dock Shipbuilders, as the back-to-back SBLC provider, will assume the liability.
Highlights
- Additional credit facility amounting to ₹1,250 Crore approved on 27 October 2026.
- Facility enables issuance of SBLCs through State Bank of India to support Colombo Dockyard PLC’s bank guarantees.
- Colombo Dockyard PLC required this arrangement due to limited resources relative to order levels.
- SBLC-related costs borne by Mazagon Dock and reimbursed by subsidiary with a 10% markup.
- Liability on Mazagon Dock Shipbuilders if subsidiary defaults on bank guarantees.
Key Data Snapshot
What happened
- Mazagon Dock Shipbuilders approved an additional ₹1,250 Crore credit facility with State Bank of India to issue Standby Letters of Credit for its subsidiary Colombo Dockyard PLC.
- The facility supports issuance of bank guarantees required by Colombo Dockyard PLC’s shipbuilding contracts.
Key details
- Credit facility amount: ₹1,250 Crore.
- SBLC issuance charges and related costs borne by Mazagon Dock and reimbursed by Colombo Dockyard PLC with 10% markup.
- Mazagon Dock takes liability if Colombo Dockyard PLC defaults on bank guarantees backed by the SBLC.
Regulatory and governance context
- Disclosure made pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI Master Circular dated 30 January 2026.
- The Board meeting was held on 27 October 2026 from 10:30 hrs to 14:40 hrs IST.
Highlights
- Additional credit facility amounting to ₹1,250 Crore approved on 27 October 2026.
- Facility enables issuance of SBLCs through State Bank of India to support Colombo Dockyard PLC’s bank guarantees.
- Colombo Dockyard PLC required this arrangement due to limited resources relative to order levels.
- SBLC-related costs borne by Mazagon Dock and reimbursed by subsidiary with a 10% markup.
- Liability on Mazagon Dock Shipbuilders if subsidiary defaults on bank guarantees.
Disclosures
- SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
- SEBI Master Circular No. HO/49/14/14(7)2025-CFD-POD2/113762/2026 dated 30 January 2026
No promoter or promoter group interest in transaction; done at arm’s length.
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