Japan’s Onomichi Dockyard, the majority shareholder of Colombo Dockyard PLC since 1993, has decided to exit the Sri Lankan shipbuilding company. This move signals a significant shift in the shipyard’s ownership and management, as the company grapples with financial difficulties stemming from global economic disruptions and operational setbacks.
The decision was formalized with the resignation of Onomichi’s nominee directors—T. Nakabe, K. Kobatake, and J. Furukawa—effective December 6. Colombo Dockyard’s board has appointed L. Gamlath, a longstanding director with nearly three decades of experience on the board, as the new non-executive chairman.
Colombo Dockyard confirmed that it is actively searching for a strategic investor to replace Onomichi Dockyard. Discussions with several potential parties are already underway. Onomichi has assured its willingness to transfer its shareholding to an investor capable of making a substantial commitment to the company’s recovery and growth.
The shipyard’s financial troubles were compounded by the COVID-19 pandemic, which disrupted global supply chains and delayed projects. Post-pandemic, Colombo Dockyard faced further challenges, including its failure to deliver vessels to a European client, leading to a loss of revenue and reputational damage.
The company’s financial difficulties have also been influenced by Sri Lanka’s broader economic crisis, which has strained the country’s industrial sector. Colombo Dockyard has struggled to maintain operations and fund its capital needs, prompting the search for new investors and negotiations with banks for credit lines to stabilize its financial position.
Onomichi Dockyard’s decision to exit highlights a broader trend of foreign investors reconsidering their involvement in Sri Lanka due to economic instability. The transition to a new strategic investor will likely determine the shipyard’s future trajectory, potentially positioning it for recovery if suitable backing is secured.
Colombo Dockyard, located in Colombo Port, is a significant player in the region’s maritime industry, specializing in ship repairs and construction. Its ability to attract a strong investor could not only ensure its survival but also restore its role as a vital contributor to Sri Lanka’s economy.
