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Pipavav Defence, Mazagon Dock to Jointly Build Warships

Discussion in 'Indian Navy' started by SpArK, Sep 12, 2011.

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  1. SpArK

    SpArK SorCeroR Staff Member ADMINISTRATOR

    Apr 1, 2010
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    Pipavav Defence, Mazagon Dock to Jointly Build Warships

    MUMBAI -- Pipavav Defence and Offshore Engineering Co. said Monday it will form a joint venture with state-run Mazagon Dock Ltd. to build warships, a move that will help the private shipbuilder leapfrog into the vast market for naval vessels in India and overseas.

    The equal joint venture--to be named Mazagon Dock Pipavav Ltd.--will implement part of the existing orders of Mazagon Dock of 1 trillion rupees ($21.69 billion) and also bid for future defense contracts in India, Nikhil Gandhi, chairman of Pipavav Defence, told a news conference.

    Shares of Pipavav Defence, formerly known as Pipavav Shipyard Ltd., surged as much as 12.5% on the news. They closed 11.3% higher at 91 rupees in a Mumbai market that ended 2.2% lower.

    Establishing the partnership with Mazagon Dock will help Pipavav tap large government contracts for defense ships as well as submarines, boosting its revenue and ship-building capabilities.

    It will also enable the government utilize the vast pool of skilled manpower and infrastructure in the private sector to speed up construction and delivery of warships to the Indian Navy. The South Asian country is buying fighter jets, warships and submarines as neighbors China and Pakistan also upgrade their armed forces.

    India plans to allocate 1.64 trillion rupees for the defense sector this fiscal year through March 2012, up from 1.47 trillion rupees last year. The budget is nearly double the 890 billion rupees in 2006-2007.

    "We see opportunities of about $25 billion-$30 billion in India," Mr. Gandhi said, without giving a time frame. "Apart from government contracts, there are opportunities from offset obligations."

    Under offset rules, foreign companies that receive import orders in excess of 3 billion rupees must draw at least 30% of that contract from domestic suppliers or make a similar-sized investment within India.

    Mr. Gandhi said discussions are also on with six friendly countries to export warships. He declined to name the six countries.

    He said Mazagon Dock Pipavav will build the warships at Pipavav's shipyard in western India's Gujarat state.

    Mr. Gandhi said Pipavav has spent $750 million of its total committed investment of $1 billion to build warships, including building a second dry dock at its Gujarat facility. He said Pipavav has orders outstanding of $1.5 billion, of which 42% comprise defense contracts.

    He said also that Pipavav will appoint bankers soon for a proposed share sale overseas but declined to elaborate.

    Pipavav Defence, Mazagon Dock to Jointly Build Warships - WSJ.com
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  2. vikas jat

    vikas jat Captain SENIOR MEMBER

    Aug 15, 2011
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    indian naval is the only sector where we achive considerable success in achiving resonable ...self reliance as compared to army n airforce ..............good move
  3. jack

    jack FULL MEMBER

    Aug 7, 2011
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    India's defence ministry puts Mazagon-Pipavav JV on ice

    * Defence ministry to wait till JV policy in place

    * Govt's decision to shelve JV after complaints from pvt shipyards

    * The JV would have given Pipavav access to Mazagon's $21.2 bln orderbook

    MUMBAI, Sept 26 (Reuters) - India's defence ministry has decided to put on hold a joint venture between the state-run Mazagon Dock and private sector shipbuilder Pipavav Defence and Offshore Ltd after reports of lack of transparency in the deal.

    The decision to put the deal on ice comes at a time when the government is trying to combat alleged corruption charges on a host of issue including the allocation of telecom spectrum and contracts for commonwealth games.

    The move to put the first private-public defence joint venture on hold also comes when Prime Minister Manmohan Singh's government has been accused of policy paralysis by global investors and corporate India.

    The defence ministry has decided to wait till a policy on JVs is put in place by the government, it said in a release posted on the government's website, justifying its move.

    "We are treading on a new path and we would like to ensure that transparency is maintained at all levels," Defence Minister A.K.Antony said.

    Earlier this month, Pipavav Defence said it had formed an equal JV with Mazagon Dock to build submarines and warships, making the private firm eligible to execute part of Mazagon's orderbook of $21.2 billion. .

    Antony said on Monday the ministry will study the complaints received from some private shipyards regarding the JV. He didn't elaborate on the nature of the complaints.

    Antony also said that JVs must compete for contracts and should not get them on nomination basis.

    "The issue needs to be fully examined and settled before any forward movement takes place on this front," Antony said.

    The Mint newspaper had reported earlier in September that engineering conglomerate Larsen & Toubro had questioned Mazagon Dock's decision to select Pipavav as a joint-venture partner to build warships, saying the selection process was not transparent.

    Nikhil Gandhi, the chairman of Pipavav Defence, could not be immediately reached for a comment. He had said during a press conference to announce the Mazagon Dock joint venture that the selection process was transparent.

    Larsen & Toubro couldn't be immediately reached.

    India's private firms including ABG Shipyard , Bharati Shipyard and Larsen & Toubro have been eyeing the lucrative defence sector business. Pipavav's Gandhi had said that his group will be investing over $1 billion to build warships.

    Shares in Pipavav, valued at $1.09 billion surged nearly 12 percent on Sept 12 when the deal was first announced. The shares have however fallen almost 11 percent since the Sept 12 closing price.

    On Monday, the stock closed flat at 81.25 rupees, ahead of the announcement by the defence ministry.

    Link:UPDATE 1-India's defence ministry puts Mazagon-Pipavav JV on ice | Reuters
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