Mumbai: Ship maker Pipavav Defence and Offshore Engineering Co. Ltd on Friday said the government had cleared its proposed joint venture with state-run Mazagon Dock Ltd to build warships for the Indian Navy.
The Mazagon Dock Pipavav Defence joint venture can go ahead and “can carry on the business on open and transparent basis”, Pipavav Defence said in a statement to the BSE, citing a defence ministry communication.
In September 2011, the defence ministry had put on hold the planned joint venture after rival companies said the selection of Pipavav lacked transparency.
The ministry has also decided to formulate a policy for such partnerships between defence shipyards and private shipbuilders to meet rising demand for warships from the Indian Navy and the Coast Guard.
Mazagon has an order book valued at some Rs.1 trillion, accounting for about 85% of the order book of four state-owned defence shipyards. The other three state-run defence shipyards are Goa Shipyard Ltd, Hindustan Shipyard Ltd and Garden Reach Shipbuilders and Engineers Ltd. Pipavav’s rivals such as Larsen and Toubro Ltd, ABG Shipyard Ltd and Bharati Shipyard Ltd have questioned the selection process adopted by Mazagon and had asked the government to review it.
Pipavav Defence said the joint venture will execute contracts without any time and cost overruns.
“JV (joint venture) will also focus on working on other large and complex projects both meant for Indian Navy and friendly navies of the world. Government lifting of hold vindicates the vision and decision of MoD (ministry of defence) to form JV between Mazagon Dock Ltd and Pipavav Defence and Offshore Engineering Co. Ltd in a completely transparent manner which will immensely benefit Indian Navy, Coast Guard and other clients,” it said.