Mazagon Dock gets ₹1,250 crore SBLC facility for Colombo Dockyard guarantees

The SBLC in numbers

Why the standby letter of credit is being arranged

The filing says CDPLC must furnish bank guarantees to its clients against advances received for shipbuilding contracts.

A back-to-back Standby Letter of Credit has therefore been arranged for the bank in Colombo, so it can issue guarantees to CDPLC's clients as and when required.

Who bears the cost and the risk

SBLC issuance charges, taxes and directly attributable costs, including out-of-pocket costs, are borne by Mazagon Dock in the first instance and reimbursed by CDPLC with a markup of 10%.

If CDPLC defaults on a guarantee, the liability comes to Mazagon Dock as the back-to-back SBLC provider.

What the SBLC facility means for Mazagon Dock's shareholders

The company takes on a contingent obligation for its subsidiary's guarantees, backed by a ₹1,250 crore facility, with cost recovery from CDPLC at a 10% markup. The filing does not say how many guarantees CDPLC will issue, the term of the facility, the fee beyond the markup, or whether the company has any provision for a CDPLC default.

The filing does not give a next dated step beyond the Board approval of 27 Oct 2026.

Reference: Original filing (PDF)