RInfra issues Rs5,440-cr ‘breach of warranties’ notice to Pipavav Defence
06 Mar 2018
Reliance Infrastructure and along with its subsidiaryReliance Defence Systems Pvt Ltd (RDSPL) have issued an arbitration notice of Rs5,440.38 crore to the founder-promoters of Pipapav Defence and Engineering Ltd for breach of warranties under the purchase agreement.
According to a BSE filing, the notice has been issued against Pipavav Defence (now Reliance Naval and Engineering Limited) founder promoters Nikhil Gandhi, Bhavesh Gandhi and their companies.
The case relates to an agreement entered into on 4 2015 by Anil Ambani's RInfra and the founder promoters of Pipapav Defence for the acquisition of shares of Pipapav Defence.
"The company, along with its subsidiary, RDSPL has issued an arbitration notice against Nikhil Gandhi, Bhavesh Gandhi and their companies, i.e. SKIL Infrastructure Ltd, Grevek Investments and Finance Pvt Ltd and SKIL Shipyard Holdings Pvt Ltd, all being the founder promoters of Pipapav Defence and Engineering Ltd ... asserting the claims for breach of warranties under the purchase agreement dated March 4, 2015," Reliance Infrastructure said in a regulatory filing.
"The claims aggregate to Rs54.40 billion," the BSE filing said added.
In March 2015, Anil Ambani-led Reliance Infrastructure announced the acquisition of a controlling stake in Pipavav Defence and Offshore Engineering for around Rs2,082 crore.
Reliance Infra had acquired 18-per cent stake in Pipavav Defence for Rs819 crore, along with an open offer for 26 per cent of shares at Rs66 per share. RInfra at that time was hoping to tap about Rs1,20,000 crore (about $20 billion) worth of defence business in five years. The Competition Commission of India (CCI) and the Gujarat Maritime Board had approved the acquisition together with management control of Pipavav Defence.
As of now, it's not clear what "breach of warranty" the Anil Ambani-led company is claiming. Interestingly, the Rs5,440-crore claim by Reliance is double the amount it paid to acquire the stake in Pipavav Defence in 2015.