Introduction Colombo Dockyard limited was found in 1974 under the Ministry of Shipping and Tourism as a limited liability

company. It started operations of ship repairing with the faculty of three dry docks and it is now Sri Lankas largest engineering facility leading in the business of ship repairs, ship building, heavy engineering and offshore engineering. It was initially funded by Employees Trust Fund Board, Ceylon Shipping Corporation and Ocean Shipping Enterprises (Pvt) Ltd of Hong Kong. The modern chapter of ship-building in Sri Lanka started after the Colombo Dockyard commenced steel ship building in 1975 and the first vessel was commissioned in 1977 for the Colombo Port Commission (CPC). In 1976 Colombo dockyard incorporated with the Ceylon Shipping Agency Pvt limited in Singapore and in 1981 it then incorporated with the Ceylon Bulk Carriers Ltd, as a wholly owned subsidiary of CDL which was renamed as Dockyard General Engineering Services (Pvt) ltd. In 1982 Colombo Dockyard Ltd (CDD) was formed as private limited Co. and in 1983 CDD was converted into a public Liability Co and established as licensed enterprise under the Board of Investment. After privatization of the Colombo Dockyard in 1983 there was a boost in its operations. During the period of 1983/88 CDL invested US $ 42Mn for the addition of 125,000 dwt. Dry dock and ancillary facilities and the company purchased land area of 2.15ha from Sri Lanka Ports Authority in 1985. Restructuring of CDL was initiated in collaboration with Onomichi Dockyard Ltd. Of Japan in 1993. The issued Share Capital is worth Rs. 651,781,630 and Onomichi Dockyard, Japan purchased 51 + % of CDD while Horizon Group LLC UAE and Public Shareholders including State Entities of owned 21+% and 27+% respectively. In 1994, CDD was renamed as Colombo Dockyard Ltd. (CDL) and registered as a public quoted company and internationalizing the ship repair business during the tenure. CDL diversified its operations exploiting new territories such as ship-repairing, offshore engineering since 2004 and heavy engineering projects since 1998 (such as construction of tanks, irrigation systems and bridges). 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. In 1983 Colombo Dockyard Limited (CDL) undertook the first export ship-building project and it was a Spilt Hopper 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 are now bidding for international tenders competitively. During the year 2007 CDL secured a mega project to build three Anchor Handling Tug Supply Vessels to Great ship (India) Ltd, a US $ 30 million project. In 2007, it completed number of major yard expansion project during the year with over Rs. 462Mn investment. The Colombo Dockyard Ltd, has won recently (in 2008) the international tender for the repair of a 189 metre floating dock owned by the India Navy. The total contract value of the project, reportedly the single largest project undertaken by Colombo Dockyard, is $ 13.84 million. Sri Lankan shipbuilder Colombo Dockyard Ltd has emerged the lowest bidder among 13 contenders, including several Indian firms such as ABG Shipyard Ltd, Bharati Shipyard Ltd and state-run Cochin Shipyard Ltd along with global yards such as Norways Havyard Leirvik, to build five anchor handling tug-cum-supply vessels (AHTSVs) for state-run Shipping Corporataion of India (SCI). Great Ship India, India, Shipping Corporation of India, Ofer Ship holdings, Israel, Tide Water, India, tanker Pacific Ship Management, Singapore, Kotoku Kaiun Co. Ltd. Japan and Dredging Corporation of India, vizag are among its international clients. 1

Vision We pursue excellence and superior performance in all what we do to enhance the longterm interests of all our stakeholders in a socially responsible manner.

Mission We strive : To be most competitive and viable business entity in South Asia in Shipping, Ship repair, Heavy Engineering and allied activities. To efficiently and effectively manage all our resources. To achieve sustainable growth. To enhance the interests of our stakeholders and thereby contribute to the pursuit of our vision.

Quality Policy We always satisfy our customers requirements consistently and cost effectively strive to exceed their expectation and add value to the interest of our others stakeholders in viable corporate environment. Colombo Dockyard Limited is capable of working in compliance with all Classification Society Standards and strict adherence to international Safety and quality Standards and is accredited with the ISO 9000-2000 Quality Certification.

Ship repair Industry 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 Lankas geographical position gives the optimum advantage in this business segment. It is situated within the port of Colombo. And also is in the hub of international naval routes. Besides bring a convenient geographical location, it also has the benefits of a deep water harbor provides, ensure quicker turn around times and affordable rates. Also It has the capability of handling all types of commercial vessels, including tankers, Bulk Carriers, General Cargo< passenger Cruise Ships, and Barges research Vessels, Reefer and Container ships etc. It has been building both military and civilian vessels for both local and overseas clients, Classes of built vessels by the CDL can be categorized as follows. Jayasagara class patrol craft Fisheries Protection Vessel Colombo Class Coastal surveillance vessel 2

Fire fighting vessel 29 M Landing Craft Fast Landing Craft 35 & 40 Meter Fisheries Protection Vessel 65 Ton Bollard Pull Tug Anchor Handling Tug Supply Vessel (80 Ton Bollard Pull) Passenger Vessels (250 Passengers)

CDL provides all repairs such as machinery, hull propeller, electrical, electrical and automation, cargo gear and international tank/cargo hold blasting and coating repairs.

CDL today operates four graving dry docks with the maximum capacity up to 125,000 DWT (range from 9,000 to 125,000 DWT) and over 1,0000 m of fully service alongside repair berths. The largest dry dock caters to tankers, bulk carrier and offshore drill rigs, while the 30,000 DWT dry-dock accommodates the Feeders, and Trampers plying in regional waters. The two smaller 9,000 DWT dry-docks provide ideal docking facilities for Fishing Vessels, Trawlers and Work Boats. On average Colombo Dockyard dry-Colombo Dockyard, with its fully equipped workshops, is geared to cater to all types of ship repairs, including machinery repairs, hull repairs, propeller repairs, electrical repairs, electronic and automation repairs, cargo gear repairs, as well as internal tank/cargo hold blasting and coating docks 100 vessels annually, while another 100 vessels are repaired at alongside repair berths. CDPLC is currently expanding its infrastructure facilities enabling it to accommodate larger vessels in keeping abreast with the current trends of new building work internationally. Colombo Dockyard recently won a $ 36.6 million order to build two passenger vessels for the Indian government (the vessels will be used on the Lakshadweep and Andaman and Nicobar Islands route). It is also building two AHTSVs that can pull up to 80 tons for Great ship (India) Ltd, the wholly owned offshore subsidiary of Indias largest private shipping company Great Eastern Shipping Company Ltd. Local ship owners are unable to meet the rising demand for supply vessels from oil explores including Reliance Industries Ltd, Gujarat State Petroleum Corporation, Hardly Oil, Cairns Energy Ltd, British Gas and Oil and Natural Gas Corporation Ltd. Only 30% of Indias supply vessel needs are supplied by Indian ship owners. Therefore, getting orders from India is an exploitation of an emerging market. Productivity and human resources The secret of CDLs success is its excellent quality work and timely delivery of the orders and the strong workforce is truly disciplined and are conscious of their responsibilities. All the employees are given training annually and they believe that training builder cannot be done over night as it is a continuous process. a ship

Company also pay much attention to health and safety standards and practice internationally recognize health environment and safety standards to look after their workforce whom they value very much. The quality and efficiency of CDL is far ahead from the regional competitors. They maintain excellent industrial peace at CDL, buy having collective agreements with tread unions, pay well and look after the staff; therefore there is no interruption to work by strikes or labour unrest. Profit from the ship building and repairing jobs For the duration of year 2004, CDL had deserved net loss of Rs. 220 million from ship repair jobs, but in year 2007 it has gained a profit of Rs 1707Mn due to remarkable increase in the demand for dry docks within region and internationally, working with one of the worlds biggest fleet operators and owners, conducting major steel renewal work and routine dry dock repairs, handling the repairs for 33 fishing travelers to strongest owner specifications by means of a very productive and efficient process. 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. Current Annual Turnovers is approximately Rs 7 Billon. CDL has already secured orders for its full capacity up to 2010.

Obtaining Jobs Business Manager of CDL received ship repair inquiries from ship owners through agents (CDL has 11 overseas agents viz. Denmark, Netherlands, India, Cyprus, Norway, Pakistan, Japan, United Kingdom, United States, Greece, Italy) Having obtained such inquires, BM initially decides whether to quote or not by considering the capability, and the capacity. If BM decides to quote the job, he would get the quotation prepared with the assistance of the Assistant Business Manager Estimating [ABM (E)] and the Assistant Manager Ship Management [AM (SM)]. AM (SM) s held responsible for the allocation of dock space. Under ABM (E) two Estimation Engineers prepare the quotation. The planning engineering estimated the time requirement for the ship repair. Estimation Engineering made a Price Quotations. They used a predetermined tariff for quoting (CDL) used a Tariff Manual for quoting ship repairs. The Tariff Manual was issued on 6th July 1999. Since then, the tariff has been revised only once on February 2004. As per the Estimation Engineer, the revision was also a mere reduction of the original tariff). Where tariff was not available., he would quote an amount based on his experience and with the assistance of the Planning Engineer. However engineer quote the prices on two broad bases. Material Yard supply Material Owner supply

Furthermore to acquire ship repair jobs CDL have had to offer discounts to total price when quoting. The Business Manager in consultation with Estimation Engineers decided discounts. When a job was conformed by the Ship Owner, ABM (SM) appointed a Ship Manager for the project while ABM (I) appoint an invoicing Engineer and field assistants. Once 4

the Ship Manager was appointed for a ship, he would spilt the clients specification into sub jobs according to the nature of repair, through Management Information Systems (MIS). Until the Ship Manager confirm the jobs after the contact Meeting (i.e. held between CDL and Ship Owner at CDL), the job would be in MIS in Pending position. Similarly if, the Ship Owner cancelled any job, it would be cancelled from the MIS as well. When a repair ship arrives, a contact meeting was held between representatives of the Ship Owner and CDL. The confirmation of jobs was done at the contacts meeting . When ship Manager confirm the jobs through the MIS, Assistance Production Managers of the Production Division accept the jobs assigned to them and distribute the jobs among ship repair engineers. The ship repair Engineers Carryout the repair by employing internal workers or sub Contract workers. Invoicing engineer collect the details of the details of the completed repair jobs employing field assistants for preparing the invoice and the Work Done.

Estimation for Ship Repair Jobs The Estimation Engineers (Planning) prepares the time estimation for significant jobs after receiving the ender details. When preparing the time estimation, the Estimation Engineer (Planning) considers only the availability of yard capacity without consulting the production divisions. The Estimation Engineers (Planning) decide the yard capacity based on the following.

Blasting jobs Dry Dock Other Jobs

No of blasting guns Future occupancy of CDL Dry Docks. available workforce in each location

The Estimation Engineers (Planning) prepared a bar chart based on ship repair time estimation. The purpose of preparing the time estimation was, to acknowledge the client with regard to the time requirement for the entire ship repair job. The Assistance Production Managers (APM) in each production departments planned the jobs accepted by them separately and estimated the time requirement for each job after the contact meeting. APMs prepared a bar chart individually for the jobs to be performed under each department without consulting and coordinating with other production departments. In addition when preparing the time estimation. Prepared by the Estimation Engineers (planning) The Estimation Engineers (Planning) did not coordinate with the other production departments when preparing the time estimation. Accordingly the production department would not be able to perform the jobs within the estimated time duration given by the estimation [CDL had established a Strategic Management Committee to implement the target costing for ship repair jobs. The committee evaluated the material consumption, labour utilization and subcontract cost for ship repair jobs. Based on the evaluation, the rates were determined by the committee for individual jobs to set out the Budget Engineers (Planning). Ship Repair Engineers could draw materials for ship repair jobs through Material requisition Notes (MRQs) at their discretion. Though CDL quoted for all the repairs, the ship owner/his representative could cancel repairs at his discretion at the contact meeting. Accordingly, the ship manager updates master list of jobs (MLJ) stating whether the job is 5

confirmed or cancelled by the ship owner. After the contact meeting the ship manager updated the job in the Master list of jobs as confirmed jobs. According to the Assistant Production Managers (Hull repair) own experience and the available capability, he allocated the ship repair engineer for Hull repair jobs to performed. Furthermore, he decided that sub jobs that could be performed by the sub-contractors and/or internally, based on his own experience and knowledge. The Marking Department prepared a draft repair report based on the physical observations at the vessel by identifying locations to be repaired. The marking department forwards a report to the ship superintendent, but for the confirmation of the repair jobs. The Hull repair department carried out the steel renewal jobs, which are conformed by the ship superintendent were not been performed. Each sub contract(s) by divisional heads. CDL has year marked specific jobs, However, some jobs are assigned to sub contracts without considering internal labour force at the time of initial inspection of the vessel. The remaining jobs are allocated among CDL workers and sub contractors, where priority is given to sub contractors. According to the Engineer in-charge of the workshops the reason for the double work. Shortage of qualified workers, as a result, the quality of the output was slow. Lack of required tools CDL workers are not engaged in cleaning work relevant to their jobs but outsourced CDL purchased material from local suppliers and foreign suppliers. Most of the purchases were import. In most of the cases when the materials were required urgently. The material procurement division was used to get the material air freighted. There are registered foreign and local suppliers in CDL. 90% of imports had been done by the Ceylon Shipping Agency (Pvt) Limited (CSA) which was incorporated as fully own subsidiary. The head office of CSA is located in Singapore. Once a week, a vessel sailed to Colombo from Singapore with a consignment to the CDL. Revenue from each Sector (Rs.Mn) Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Ship repair 797 1018 1381 1318 1632 1459 1763 1674 1976 1929 2349 2279 2860 3317 4685 New construction 164 97 323 689 1954 1406 624 2129 2826 2506 91 1355 1769 3472 3579 Heavy Engineering Offshore Engineering

142 99 328 111 289 98 243 200 105 201 95

915 1182 343 292

Organizational Structure

Chairman

Managing Director (CEO)

Director/Busin ess Advisor

Technical Advisor/Altern ate Director

Technical Advisor

New building projects Dev. Manager Prod: Manage r

R&D Manager

Business Manager

Pro: & Eng : M

Sup & Mat

Fin Manage r

HRD & Ad.Mgr

Qulty Assu.

Mgt Rep

Business Dev. Manager

Yard Dev. Manager

Internal Audit (Out Sourced)

Legal Advisor

Legal Officer/Co Secretary

PA to MD

PA to Chairman