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  1. Reliance Defence to ink Rs 66k-cr deal with Russia

Reliance Defence to ink Rs 66k-cr deal with Russia

Anil Ambani’s Reliance Defence and Russian United Shipbuilding Company (USC) will announce their plans to build four frigates for Indian Navy at the end of summit-level talks between Prime Minister Narendra Modi and Russian President Vladimir Putin on Thursday.

By: | Updated: December 24, 2015 1:01 AM

Anil Ambani’s Reliance Defence and Russian United Shipbuilding Company (USC) will announce their plans to build four frigates for Indian Navy at the end of summit-level talks between Prime Minister Narendra Modi and Russian President Vladimir Putin on Thursday.

According to sources, proposal for four Talwar class frigates on agenda for summit meeting in Russia on Thursday. These frontline warships will be built at a cost of around Rs 30,000 crore at recently acquired shipyard at Pipavav, Gujarat, India. Under this agreement, a major warship will be built for the first time at an Indian Private Sector Shipyard.

The agreement between Reliance Defence and USC also includes a partnership for refit and modernisation of all Indian Navy surface ships of Russian and Soviet origin at Reliance’s Pipavav Shipyard in India. Currently, there are 35 Russian / Soviet-origin surface ships in the Indian Navy fleet. The value of this business is estimated to be over Rs 35,000 crore over the next 15 years. Combined value of two opportunities exceeds $10 bn (R66,000 cr) over next ten years.

The strategic cooperation agreement, is the first one of its type between a Russian Defence OEM and an Indian Private Sector company and this will demonstrate the capability of Pipavav Shipyard as a leading global warship builder.

This is set to be a transformational catalyst in the emergence of private Indian shipyards as lead suppliers to the Indian military. It is also intended to usher in new standards for quicker delivery of warships made in India while ensuring the highest quality and workmanship.

The Reliance – USC agreement is also expected to herald the arrival of Pipavav as a leading shipyard in the MRO, refit and mid-life upgrade segment of the military shipbuilding industry.

It maybe recalled Reliance Infrastructure had acquired an additional 17 per cent stake in Pipavav Defence for an estimated Rs 850 crore through an open offer, taking its total holding to nearly 35%. Reliance Infrastructure had purchased an additional 17 per cent stake in Pipavav Defence through an open offer. The open offer was made by Reliance Infrastructure and its wholly-owned subsidiary, Reliance Defence Systems Pvt Ltd.

Reliance Infra had said in a statement, “Upon completion of applicable formalities, Reliance Infrastructure will acquire sole management control of Pipavav Defence and the board ofPipavav will be reconstituted, together with the company being renamed Reliance Defence and Engineering Ltd,” the statement said.

In March 2015, the company had acquired about 18 % stake from Pipavav Defence’s promoters for Rs 819 crore at a price of Rs 63 apiece. The Competition Commission of India (CCI) and the Gujarat Maritime Board (GMB) have already approved the acquisition together with management control of Pipavav Defence. Last month, Pipavav Defence had also announced it plans to exit the corporate debt restructuring (CDR) package, post Reliance Infrastructure open offer.

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