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  • Target Company-Pipavav Defence Acquirer - Reliance Infra

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    Pramod Kumar
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    Reliance Infra (RInfra) is acquiring Pipavav Defence and Offshore Construction (PDOC) to gain access to PDOC's established shipbuilding and defense infrastructure in India. PDOC has an order backlog of Rs. 9,000 Cr and has bid for additional orders of Rs. 30,000 Cr from India's defense sector. It also has technological partnerships to build submarines and aircraft carriers. The acquisition is strategically beneficial as RInfra can leverage PDOC's facilities for defense manufacturing under India's 'Make in India' initiative, while PDOC's large order backlog and cash flows issues are addressed. The deal allows both companies to capitalize on the growing Indian defense sector spending

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    It is a basic deal rationale structure

    Original Title

    M & A Deal Rationale

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    Reliance Infra (RInfra) is acquiring Pipavav Defence and Offshore Construction (PDOC) to gain access to PDOC's established shipbuilding and defense infrastructure in India. PDOC has an order backlog of Rs. 9,000 Cr and has bid for additional orders of Rs. 30,000 Cr from India's defense sector. It also has technological partnerships to build submarines and aircraft carriers. The acquisition is strategically beneficial as RInfra can leverage PDOC's facilities for defense manufacturing under India's 'Make in India' initiative, while PDOC's large order backlog and cash flows issues are addressed. The deal allows both companies to capitalize on the growing Indian defense sector spending

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    31 views2 pages

    Target Company-Pipavav Defence Acquirer - Reliance Infra

    Uploaded by

    Pramod Kumar
    Reliance Infra (RInfra) is acquiring Pipavav Defence and Offshore Construction (PDOC) to gain access to PDOC's established shipbuilding and defense infrastructure in India. PDOC has an order backlog of Rs. 9,000 Cr and has bid for additional orders of Rs. 30,000 Cr from India's defense sector. It also has technological partnerships to build submarines and aircraft carriers. The acquisition is strategically beneficial as RInfra can leverage PDOC's facilities for defense manufacturing under India's 'Make in India' initiative, while PDOC's large order backlog and cash flows issues are addressed. The deal allows both companies to capitalize on the growing Indian defense sector spending

    Copyright:

    © All Rights Reserved
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    Flag for inappropriate content
    of 2

    Deal Rationale

    Target Company- Pipavav Defence

    PDOE has developed an Integrated


    shipbuilding , Ship Repair, Defence Ship
    production and Offshore construction &
    Heavy Engineering facility at the Port of
    Pipavav , Gujarat
    The order book of PDOC has R9,000 Cr and
    has further bid for orders worth R30,000 Cr
    from Indias defence
    It has entered into a JV with Mazagaon Docks
    Ltd to carry out Mazagaons vessels building
    program
    The company is capable of building
    submarines and aircraft carriers on the back
    of a technological alliance with Swedish
    defence company SAAB

    Macro outlook

    Prime Minister has kept arms manufacturing


    at the heart of Make in India campaign
    FDI increased to 49% and FIIs up to 24%
    Under Make in India initiative Russian
    players to collaborate with Indian private
    firms to jointly work on defence projects
    Indias defence spending will rise to 2.47
    trillion Indian rupees ($40.07 billion), up over
    12% from previous year
    The navy needs new submarines and stealth
    ships to counter the Chinese presence in
    Indian Ocean
    PM aim to raise domestic arms procurement

    Acquirer- Reliance Infra

    RInfra is one of the fastest growing


    companies in the infrastructure sector with
    turnover of Rs 20,299 crore and market
    capitalization of over Rs11,400 crore
    RInfra already has presence in areas like
    power, also has three wholly-owned
    subsidiaries -- Reliance Defence Systems,
    Reliance Defence Technologies and Reliance
    Defence and Aerospace (RDA)
    It has airfields in Nanded, Latur, Osmanabad,
    Yavatmal, and Baramati which is on a long
    term lease to leverage for manufacturing,
    testing, simulation and training facilities.
    It is focusing on growth and capacity
    building through organic and inorganic
    growth targeted at defence and aerospace
    sector
    It is also in talks with several international
    Synergies
    collaborators like
    Euro copter of France,
    Kamov
    Russia,
    and Sikorsky
    of the
    RInfra of
    can
    get access
    to already
    set US,
    up for
    technological
    tie-ups
    Infrastructure
    for the manufacturing of naval
    vessels and submarines
    Pipavav already has a big order book but
    cash flows was an issue which can be
    resolved by Reliance backing
    Availability of entrepreneurial talent, Support
    from DRDO, Government, existing potential
    in defence all augurs well for the future of
    Indian defence

    XLRI -Deal Box


    (RELINFRA:
    PIPAVAVDOC)

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