In a filing to the BSE, the company said, "Ministry of Defence (has) lifted the hold on Mazagon Dock Pipavav Defence Joint Venture (JV) to build the warships for Indian Navy. JV can go ahead and can carry on the business on open and transparent basis."
The 50:50 JV --Mazagon Dock Pipavav Defence Pvt Ltd-- was a first joint venture project between public and private sector shipbuilders in the defence sector and was aimed at easing the workload of Mazagon Dock, the largest defence shipyard in the country.
However, formation of the Mazagon-Pipavav JV had been in controversy since its inception and was put on hold for second time in April this year by the Defence Ministry amid allegations of non-compliance and favouritism.
The Ministry of Defence (MoD) had also formed a Committee to look into the JV formation, price discovery mechanism and several other aspects of the tie up between the two shipyards.
However, Pipavav said the "government lifting of hold vindicates the vision and decision of MoD to form JV between Mazagon Dock Ltd and Pipavav in a completely transparent manner which will immensely benefit Indian Navy, Coast Guard and other clients."
It added the JV, formed in December, 2012, will "implement its vision of executing the contracts without any time and cost over-run received through appropriate transparent mechanism."
Besides, the JV will also focus on working on other large and complex projects both meant for Indian Navy and friendly navies of the world, Pipavav said.
Mazagon Dock, which accounts for more than 85 per cent of the defence vessels built in the country, is estimated to have an order book of over Rs 1,00,000 crore. However, it was not clear how much of the work load would get transferred to the Mazagon-Pipavav JV.
Following the announcement, shares of Pipavav were being traded at Rs 65.70 apiece on the BSE at 1500 hours, up 4.20 per cent from the previous close.