L&T and Pipavav Defence and Offshore Engineering Company, formerly Pipavav Shipyard, have signed shareholders agreements with Mazagon Dock to build warships for the Navy.

This is to fulfil the requirement set forth in the ‘guidelines for establishing joint venture companies by Defence public sector undertakings,’ laid down by the Defence Ministry, Pipavav said.

Pipavav had earlier been selected by Mazagon Dock as a joint venture partner to build warships.

Mr K. Venkataramanan, Managing Director, L&T, said the joint venture was for building submarines and warships.

On the share of the Rs 1 lakh crore order book of Mazagon Dock that L&T would get, he said it depended on the minimum economic quantity as also how delivery schedules align with the originally targeted delivery programme of Mazagon Dock.

However, the tie up would offer L&T a three-year order pipeline, given the shipbuilding facilities L&T had at both Hazira and Kattupalli in Chennai.

Mr Venkataraman also pointed out that L&T had worked with Mazagon Dock earlier on its programmes.

While the two joint ventures are for liquidating the Rs 1 lakh crore order book of Mazagon Dock, L&T said it does not prevent it from bidding independently for fresh orders from the Government.

Mazagon Dock’s initial tie-up with Pipavav raised a furore, with L&T and other shipbuilders raising questions on the lack of transparency in the selection process.

The Defence Ministry intervened and laid down the guidelines for establishing joint venture companies by defence public sector undertakings.

shanker.s@thehindu.co.in

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