Article Posted on : - Apr 30, 2013

NEW DELHI (PTI): Amid allegations of non-compliance and favouritism, the Defence Ministry has put on hold a joint venture between public sector Mazagon Dockyards and private sector Pipavav shipyard for building warships for Indian Navy.

The Defence Ministry has formed a Committee under an Additional Secretary-rank officer to look into the "joint venture formation, price discovery mechanism and several other aspects of the tie up between the two shipyards", sources told PTI here.

This is the second time in the last couple of years that the JV has been put on hold by the Defence Ministry amid complaints by the rival private shipyards.

Soon after the largest defence public sector shipyard MDL chose Pipavav as its partner, other two bidders ABG Shipyard and Larsen and Toubro (L&T), questioned the selection process.

Both the companies had forwarded their letters to Defence Secretary, Secretary (Defence Production) and the office of the Navy Chief, while requesting Mazagon Dock to reconsider its decision.

Asked for comments on the Ministry's decision, Pipavav Chairman Nikhil Gandhi said there were certain issues which were to be clarified and expressed hope that the JV Company would be allowed to continue to work in near future.

The Defence Ministry also told Parliament on Monday that "some allegations of non-compliance to JV guidelines, Articles of Association, etc have been received with regard to process of formation of JV by MDL with private shipyards. The matter is under examination."

The MDL-Pipavav tie-up had come under the scanner recently when the latter suggested former MDL Chief Vice Admiral (retd) H S Malhi's name for heading the new firm.

It was under Malhi, who was CMD of MDL till January 31, that the defence shipyard processed the proposal for tying up with Pipavav and agreements were signed in February last year.