Mazagon Dock Shipbuilders reported a sharp deterioration in its financial performance for the September quarter of FY27, as weaker revenue generation and significantly lower margins weighed heavily on earnings.

The state-owned shipbuilder posted a net profit of ₹199 crore in the second quarter, representing a steep 71% decline from ₹695 crore recorded in the corresponding period of the previous financial year.

The company’s operational revenue also came under pressure during the quarter. Revenue from operations stood at ₹2,446 crore, down 16.5% from ₹2,929 crore reported a year earlier. Compared with the immediately preceding quarter, revenue declined 17% from ₹2,942 crore, reflecting a slowdown in business execution and revenue recognition.

Profitability weakened considerably alongside the decline in revenue. Operating margins contracted to 8.1%, compared with 23.7% in the same quarter last year. The 1,560-basis-point reduction highlights the extent of cost pressures and the challenging earnings environment faced by the shipbuilder during the period.

Separately, the company’s board approved additional credit facilities amounting to ₹1,250 crore from State Bank of India, Mumbai. The facility is intended to support the issuance of a Standby Letter of Credit (SBLC) in favour of SBI Sri Lanka on behalf of Colombo Dockyard PLC, a subsidiary of Mazagon Dock Shipbuilders.

The arrangement will operate under terms agreed between the lending bank and Colombo Dockyard. Initially, Mazagon Dock will bear all charges associated with the issuance of the SBLC, including applicable taxes and other directly attributable expenses, as well as out-of-pocket costs. These expenditures will subsequently be reimbursed by Colombo Dockyard PLC with an additional 10% mark-up.

Under the structure of the transaction, Mazagon Dock will also assume responsibility as the back-to-back SBLC provider in the event that Colombo Dockyard PLC defaults on its bank guarantee obligations, underscoring the company’s financial support for its subsidiary.

The board also declared an interim dividend of ₹5 per equity share for FY27. The shares carry a face value of ₹5 each. The company has fixed 3 November 2026 as the record date for determining shareholder eligibility, while dividend payments are scheduled to be completed on or before 26 November.

In another significant corporate development, Mazagon Dock proposed increasing its authorised share capital to ₹900 crore from the existing ₹323.72 crore. Under the plan, the authorised capital would consist of 180 crore equity shares with a face value of ₹5 each, compared with the current structure of 64.744 crore shares.

The proposed expansion of authorised share capital remains subject to the necessary approvals from the Department of Investment and Public Asset Management (DIPAM) through the administrative ministry, as well as shareholder approval.

The proposal is aimed at providing greater financial flexibility as the company pursues future growth opportunities and strategic requirements alongside its expanding role in India’s naval and shipbuilding ecosystem.

Agencies