A joint venture between Mazagon Dock Ltd (MDL) and two private ship builders – Pipavav Defence & Offshore Engineering Co Ltd (PDOC) and Larsen & Toubro Ltd (L&T) – may get a fresh lease of life with the new Defence Procurement Policy set to clear the ground for more public-private participation.
“The new DPP has enough provisions that may provide an opportunity to public-private joint ventures. However, we will have to wait for the final notification of the DPP 2016 to be issued next month by the Defence Ministry,” a senior government official said.
India’s largest warship maker MDL’s joint venture with PDOC and L&T has been stagnant since inception in December 2012, with the Defence Ministry holding back transfer of warship building orders to the JV due to lack of transparency.
Mazagon Dock Chairman & Managing Director, Rear Admiral Rahul Kumar Shrawat declined to comment for this story, saying only that the new guidelines will decide the fate of the joint venture.
According to him, Mazagon Dock holds an order book size of Rs 83,000 crore. Asked about the indigenisation of warships under the Make in India mission, Mr Shrawat said, “Our ships under 15-A and 15-B series are based on more than 60 per cent indigenous content.”
In order to boost self-reliance in defence shipbuilding and improve defence public sector undertakings’ capability to produce advanced naval ships on time and at globally competitive prices, the government framed rules in 2012 to start firms in partnership with private companies.
This resulted in MDL’s joint venture with L&T for submarines and with Pipavav for warships. The venture between Mazagon and Pipavav was incorporated as Mazagon Dock Pipavav Defence Pvt Ltd, while the joint venture with L&T is yet to be named.
Recently, with Reliance Infrastructure Ltd acquiring management control in PDOC, the company has been renamed Reliance Defence and Engineering Ltd.
R-Infra acting CEO, Lalit Jalan said, “All the strategic joint ventures are in place and we expect the JV with Mazagon Dock to be useful for our new defence venture. We are looking at opportunities in the naval segment through this partnership.”
Analysts too say defence prospects for R-Infra may improve following the Pipavav acquisition. “An indigenous focus will support the joint venture with MDL and provide scope for the JV to co-bid for the MDL order book, to the tune of about $20 billion,” said a senior analyst with ICICI Securities who did not wish to be named.
The writer is a freelance journalist
India’s largest warship maker MDL’s joint venture has been stagnant since Dec, 2012
