As part of the Indian government’s policy to fast-track the production of naval assets, state-run Mazagon Dock Limited (MDL) has entered into two separate joint ventures with private sector giants Larsen & Toubro and Pipavan Defence and Offshore Engineering. The JVs will enable the timely construction of submarines and warships in the country and enable self-sufficiency.
As for the current deal between state-run MDL and the private giants, Larsen & Toubro will help MDL construct submarines while Pipavav will build surface warships. Both the JVs are based on a 50:50 partnership model. These JVs will enable MDL to capitalize on the private sector’s shipbuilding infrastructure to carry out its enormous orders without time and cost overruns.
The current decision to from JVs with Pipavav Defence and Larsen & Toubro comes nearly an year after a similar agreement was stalled due to objections by L&T and ABG Shipyard who lost the bid. The agreement was initially signed between MDL and Pipavav Defence but put on hold in September last year. Following the discontent expressed by certain firms, the Defence Ministry issued a fresh set of guidelines for public-private partnerships in the Defence sector and the new JVs were formed.
At present, the order book of state-run MDL stands at over Rs 1 lakh crores out of which a significant share belongs to submarine construction. Since the current JVs formed by MDL are not exclusive, MDL will be scouting for similar ventures to execute its orders and explore new products as well.
Mr K. Venkataramanan, Managing Director, L&T has indicated that L&T’s share from the MDL’s order-book will depend on the minimum economic quantity as also how delivery schedules align with the originally targeted delivery programme of MDL. However, the tie up would offer L&T a three-year order pipeline owing to the shipbuilding facilities L&T has at both Hazira and Kattupalli in Chennai.
As for state-run MDL, it is currently building six Scorpene submarines under the P-75 project and is likely to build six more submarines under the P-75 India project. The first six Scorpene submarines are scheduled to join the navy between 2015 and 2018 after three years of delay. As for warship-building, it is constructing three destroyers of Project 15A, namely INS Kolkata, INS Kochi and INS Chennai which would begin joining the navy’s fleet early next year. MDL also has an order for four more destroyers of Project 15B which is expected to be followed by four stealth frigates of the so-called Project 17A. Only last week, MDL handed over a brand new stealth frigate, INS Sahayadri to the navy.