Colombo Dockyard - frontiers of Lanka's industrialisation

by Surekha Galagoda and Gamini Warushamana

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CDL - A Profile

* Established as a Limited Liability Company by the government in 1974

* Addition of 125,000 dwt. Drydock - an investment of US $ 42 Mn - 1983/88

* Collaboration with Onomichi Dockyard Ltd., of Japan, Restructuring of CDL and internationalising the ship repair business in 1994

* Venturing into Offshore Engineering - 2003/04

* Internationalising Shipbuilding Business - 2005/07

* Public Quoted Company and a Licensed Enterprise under the Board of Investment

Issued Share Capital Rs. 651,781,630

Onomichi Dockyard Japan 51+%

Horizon Group LLC UAE 21+%

Public Shareholders incl.State Entities 27+%

Current Annual Turnover - Approx Rs. 7+Billion

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The vision of Colombo Dockyard Limited (CDL) is to be the leader in the modern ship building industry. CDL is now achieving its goals and becoming an important ship repairing and ship building dockyard in the South Asian region. This is a capital intensive industry that does not match the level of industrial development in the country and therefore the CDL proudly says "we are the frontiers of Sri Lanka's industrialisation". Export substitution

Managing Director and CEO of CDL Mangala P.B. Yapa said that ship- building for the export market is vital for the company to sustain and grow. The Colombo Dockyard was established in 1974 to build naval crafts for the country. The objective was import substitution under a closed economy. Today this segment of business is very small.

CDL diversified its operations exploiting new territories such as ship-repairing, offshore engineering and heavy engineering projects (such as construction of tanks, irrigation systems and bridges).

But the business was still volatile and there were wide fluctuations of revenue with the changing political and economic situation in the country. We saw the potential in ship building for the export market with our expertise, well trained and experienced workforce with Japanese training.

After we started our ship-building projects for the export market now we have the stability and CDL is now reaching its set target for 2010, Yapa said.

At present all four dry docks at the CDL in the Colombo harbour are fully occupied by large vessels that have come for repairs or building vessels for export orders. Devsi, an Indian cargo ship is now getting the final touches in dock number 01.

The newly painted dark brown hull has given her a younger look. Outside the dock a Chinese cargo ship Yong Wang is awaiting her turn after Devsi's repairs are completed. In dock No.2 Ruhunu Putha, a cargo ship belonging to Master Divers is undergoing repairs. In the same dock missile craft Nandimithra of the Sri Lanka Navy is undergoing re-engineering.

Track record

As a nation we can be proud about the track record in CDL's ship- building industry. Though it is not a fully Sri Lankan owned company according to the share ownership, all the projects are carried out by Sri Lankan ship builders, from engineers to casual labourers.

After privatisation of the Colombo Dock Yard in 1993, today 51% of the CDL shares are owned by Onomichi Dockyard Co.Ltd Japan, 10.65% by Horizon Representation of Companies LLC, another 10.65% by Horizon Energy LLC and the rest by small shareholders.

Ship building for export

The history of the ship-building industry in Sri Lanka dates back to the first century AD. As an island nation we had to develop vessels to cross the sea to link with the rest of the world.

History says that we had a developed ship-building industry and between 11-13 century AD rulers of Egypt had offered Sri Lanka to construct 20 vessels each year.

The modern chapter of ship-building in Sri Lanka started after the Colombo Dock Yard commenced steel ship building in 1975 and the first vessel was commissioned in 1977 for the Colombo Port Commission (CPC).

In 1978 the first towing tug was built for the CPA. In 1982, the Colombo Dock built the first offshore patrol vessel for the Sri Lanka Navy. After privatisation of the Colombo Dock Yard in 1983 there was a boost in its operations.

In 1983 Colombo Dockyard Limited (CDL) undertook the first export ship-building project and it was a Split Hopper Barge for Burma Ports Corporation, Myanmar.

Thereafter the CDL developed to build large vessels. It has provided a number of vessels to the Maldives, Saudi Arabia, India and Nigeria and are now bidding for international tenders competitively. During the past year CDL secured a mega project to build three Anchor Handling Tug Supply Vessels to Greatship (India) Ltd, a US$ 30 million project.

The first vessel was commissioned on June 27 this year. The second craft is being constructed and the project will be completed by mid 2008.

Although there is not much publicity, CDL provides its own fighter naval crafts for the Sri Lanka Navy. The "Ultra Fast Attack Crafts" produced by CDL is similar to the Israel built Dvora attack crafts. Today both these crafts are commonly called Dvora, and nobody knows that these UFACs are built in Sri Lanka by Sri Lankan ship builders, Yapa said.

The craft has all the advanced features of the Dvora.

We are not a ship-building arm of the Sri Lanka Navy and we get all projects by competing with international companies, Yapa said. CDL has already secured orders for its full capacity up to 2010.

CDL today operates four graving dry docks with the maximum capacity up to 125,000 DWT and over 1,000m of fully service alongside repair berths. The largest dry dock caters to tankers, bulk carriers and offshore drill rigs.

Ship repair business

Yapa said that in the ship repair business CDL is becoming a well-known destination. Now more and more Indian, Chinese and regional orders are coming in. Sri Lanka's geographical position gives the optimum advantage in this business segment.

Sri Lanka is in the hub of international naval routes. Offshore engineering is another sector that we have a comparative advantage but the infrastructure has to be improved.

The secret of CDL's success is its excellent quality work and timely delivery of the orders, said Assistant Manager (Marketing - ship repair) Darshana Chandrasekara.

The quality and efficiency of CDL is far ahead of our regional competitors. We maintain excellent industrial peace at CDL, we have collective agreements with trade unions, pay well and look after our staff, therefore there is no interruption to work by strikes or labour unrest.

This is one of the main advantages we have over our competitors, he said. CDL provides all repairs such as machinery, hull, propeller, electrical, electrical and automation, cargo gear and internal tank/cargo hold blasting and coating repairs. In the ship repair business, CDL has important landmarks.

MV Doulos owned by OM Ships International called at CDL for routine drydock repairs on December 2, 2005. It is listed in the Guinness book of world records as the world's oldest active ocean going passenger vessel. Special care was taken in preparing of the drydock for this unique vessel with a riveted hull.

All production departments teamed up together and delivered the vessel one day prior to its promised date of delivery.

Some of the other well known ships that have been repaired include MV Commandate(25,855 DWT) under the management of Alon Maritime Corporation Greece, TMT. Emerald Hill (70,887 DWT) tanker under the management of Tanker Pacific Management (Singapore) (Pte) Ltd, major retrofit repairs on ocean research vessel Sagar Kanya and Floating Dock Navy 1 are some of the ships repaired by CDL.

5,000-strong workforce

Unskilled workers such as Sumanasiri, Nadaraja and Hussein are today ship builders thanks to the work ethics of CDL and what better proof than Yapa who joined CDL as a trainee engineer and is today Managing Director and CEO. The 5,000-strong workforce is truly disciplined and are conscious of their responsibilities.

This is what we observed during our visit to the CDL. They are given training annually and it is put to good use to keep the company and the Sri Lankan flag flying high." Training a ship builder cannot be done overnight as it is a continuous process and we have done it.

We pay much attention to health and safety standards and practise internationally recognised Health Environment and Safety standards to look after our workforce whom we value very much," said Yapa.

Truly Lankan company

CDL creates value with Sri Lankan expertise and skills while adding value to the national economy as well as distributing value to over 3,000 Sri Lankans and most of all sharing knowledge and skills among Sri Lankans. therefore in this sense we can be called a truly Sri Lankan company though officially 72% of the shares are held by companies in Japan and UAE.

CDL increased its overall revenue by 24% in 2006 to Rs. 7.3 bln. The value addition has grown two-fold to Rs. 2,542 mn. The profit of CDL was Rs 607mn.

CDL has captured the international market as well and as we celebrate the 33rd anniversary on August 1. we are now ready to meet any requirement of ship repairing or shipbuilding meeting all international requirements, said Yapa.

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