State-Run Mazagon Dock Confirms JV with Pipavav Defence to Build Warships and Submarines

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Posted on: May 04, 2012

 

India’s largest private defence shipyard Pipavav Defence and Offshore Engineering has been chosen by state-run Mazagon Dock as a joint venture partner to build warships and submarines for Indian Navy. While the joint venture was stalled earlier due to a row over the Mazagon Dock’s selection policy, the joint venture now stands confirmed by the government.

According to Nikhil Gandhi, chairman of Pipavav Defence, the 50:50 joint venture named Mazagon Dock Pipavav will implement part of the existing orders of Mazagon Dock of Rs 1,00,000 crore ($21.69 billion) and also bid for future defence contracts in India. The venture has been established to fast-track warship and submarine contracts held currently by the Mazagon Dock.

This crucial joint venture was put on hold since other private sector giants and Pipavav Shipyard’s rivals including Larsen & Toubro and ABG Shipyard had complained to the government over the inconsistencies in the selection process by Mazagon docks. However, Defence Ministry has overruled any allegation of foul play after studying the complaints received from the other private shipyards. This tie-up will give Pipavav Shipyard a distinct edge over its rivals such as L&T and ABG Shipyard who are also up for a chunk of the defence pie.

Pipavav Shipyard covers roughly 200 hectares with approximately 720 m of sea front and 685 m of outfit quay. Besides being the largest shipyard in India, Pipavav is also one of the largest drydock in the world. The latest joint venture would afford better utilisation of Pipavav's shipyard which is considered as one of the most modern in India. Mazagon Dock will now use Pipavav's facility in Gujarat to build orders that it has on hand.

In an earlier statement, Pipavav Chairman revealed that the yard was equipped to build five warships or ten smaller ones a year. The Mazagon order book, with part execution alone, is expected to keep the company busy for over 15 years. Pipavav had also stated that it would require five yards of Pipavav's size to complete the Mazagon Dock's pending orders.

The Indian government had formulated a policy in 2011 which led to the public-private partnerships in the defence sector. The state-run Mazagon Dock was the first to be exposed to this collaboration and the rest of the state-owned shipyards will be gearing towards the same owing to the backlog and size of defence orders in the country.