Pipavav Defence in talks with France's DCNS for tie-up

Pipavav Defence and Offshore Engineering Company Ltd (PDOECL) is in "advanced stages" of discussions with DCNS for a strategic partnership, which may include selling some stake to the French defence major.

"We are at an advanced stage of discussion with the French company, DCNS, a world renowned warship and submarine builder, for a strategic partnership that will allow for the transfer of state-of-the-art technologies to PDOECL.

"An investment from DCNS in our company is also on the cards," Pipavav's Chairman Nikhil Gandhi said in a communique to the shareholders. He did not elaborate further.

Last year in June, Pipavav had said that it has decided to establish the strategic partnership with DCNS for bringing in its technologies, methods and skills. DCNS product portfolio includes Scorpene submarine.

Industry sources said that talks between the two firms are on for quite some time for forging the partnership, which include negotiations on Pipavav offloading some of its equity to DCNS.

However, both the firms are yet to finalise the size of the stake sale and its route, they said.

The stake sale's route could be through issuing new equity to DCNS, thereby diluting the present share capital of Pipavav, they added.

This could not be confirmed from the company. An e-mail and SMS sent to Nikhil Gandhi on the issue remained unanswered.

Last year, Pipavav had forged a similar strategic partnership with Swedish defence major SAAB and had announced to allot about 3.5% stake to SAAB for 250 million Swedish Kronors (Rs 200 crore).

Pipavav promoters hold 45.03% stake in the company, while LIC is the second largest shareholder in Pipavav with 8.34% stake.

The Nikhil Gandhi-promoted firm is one of the leading domestic private companies in the Indian defence sector, particularly in the naval space. It has aggressive plans to expand its businesses in several areas of the sector.

Last year, the company had signed a joint venture with Mazagaon Dock - leading defence PSU - to build surface warships for the Indian Navy.

The company's scrip closed marginally down at Rs 73.40 on the BSE.