A consortium of lenders led by IDBI has given its approval to the corporate debt restructuring exit plan of Reliance Defence and Engineering Ltd. (RDEL), a subsidiary of Reliance Infrastructure. The lenders have also given their go-ahead for the implementation of refinancing scheme of RDEL.
Both the proposals were presented to the CDR empowered group’s (EG) meeting on March 29, 2017 and were approved by the requisite majority of CDR lenders. The Reserve Bank of India (RBI) had also given it nod for RDEL to exit the CDR package.
The lead lender of the consortium IDBI has also written to the Ministry of Defence confirming the approval granted by CDR group to RDEL’s CDR exit plan and refinancing scheme.
The confirmation from IDBI to the ministry of defence makes RDEL eligible to participate in all the future contracts of the Indian Navy.
Now, RDEL and Larsen & Toubro are the only two private sector shipyards, which will compete with government owned shipyards for the prestigious contracts for making Submarines, Landing Platform Dock (LPD) and Corvette.
As per the refinancing scheme approved by CDR EG, about Rs 6,800 crore of RDEL debt will be refinanced with maturity of about 20 years and lower interest rate.
RDEL's current order stands at over Rs 5,300 crore from the Navy, Coast Guard and commercial vessels.
Reliance Infra had acquired Pipavav Defence and Offshore Engineering Co, in March 2015, which was later on renamed as Reliance Defence and Engineering..
Immediately after acquiring Pipavav, the Reliance Group had announced its plans to exit CDR. At that time, the company had said in a statement exit from the CDR would lead to improved financial flexibility and increased business opportunities for the shipyard.