India’s Mahindra group is planning to acquire 30% stake in Pipavav Defense as it plans to make a foray into defense sector.
Pipavav is India’s largest shipyard in the private sector. Larson and Tubro (L&T) and another major corporate were in the race to buy stake in Pipavav but Mahindra made it due to its renewed focus in the sector, Business Standard reported Today.
“Both Pipavav and Mahindra promoters will be meeting in the next few days and will hold equal stake and an open offer to shareholders of Pipavav will be made,” BS quoted a banking source as saying. Mahindra representatives will also join the board of the company.
The Pipavav Defence shares were trading at Rs 56 apiece as on Wednesday.
Tatas, Mahindra and Hero MotoCorp are all eyeing to get into the defense sector since Prime Minister Narendra Modi’s government has made Make-In-India program as an opportunity for corporates to enter the sector.
Pipavav constructs war ships, patrol boats and cargo ships for customers across the world. For the fiscal 2014, the company reported revenue of INR 2,278 crore ($365 million) and its profits were INR 8.36 crore ($1.3 million).
Indian domestic companies are vying orders for trucks, jeeps, submarines, frigates, and aircraft carriers, offshore patrol vessels, corvettes, missile systems and other military hardware as well as software. India has depended on foreign suppliers for the same till date.
Mahindra currently provides armored vehicles serve the Indian Army, Air Force, and Paramilitary and State Police Forces and an entire range of light combat and armored vehicles for defense and security forces.