Defence ministry lifts hold on MDL-Pipavav joint venture

Gujarat-based private ship builder Pipavav has claimed that the Defence Ministry has approved a joint venture between Pipavav shipyard and state-owned Mazgaon Dock Limited (MDL).

It was earlier put on hold for close to two years for violation of norms while forming the joint venture (JV).

In a filing to the Bombay Stock Exchange (BSE) on Friday, Pipavav Defence and Offshore Engineering Company said, “Ministry of Defence lifted the hold on Mazgaon Dock Pipavav Defence joint venture to build warships for the Navy. JV can go ahead and carry on the business on open and transparent basis.”

However, when contacted, spokespersons of MDL and Ministry of Defence (MoD) denied having any knowledge of the MoD lifting the prohibition on the JV. “For us, the deal is still under MoD review,” MDL spokesperson told Deccan Herald.

When the JV is realised, it would be for the first time the Navy will use a private company to design and construct large warships like destroyers and frigates. The joint venture company will also focus on other large and complex projects for the Indian Navy and friendly navies of the world, says the filing at BSE.

The much talked about deal was on hold since 2011 in the wake of allegations that MDL was not following standard norms while forming the JV.

Defence Minister A K Antony put the deal on hold till the time a policy is framed on how defence public sector units will form JVs with the private sector. Subsequently, a new JV policy was approved in February, 2012 paving the way for a review of the MDL-Pipavav deal.

The partnership with MDL will help Pipavav to design large warships, some components of which will also be made at its yard in Gujarat. The final assembly and integration will be done at MDL.