Pipavav Defence jumps after MoD lifts hold on JV with Mazagon Dock

The company made the announcement during trading hours today, 12 July 2013.

Meanwhile, the S&P BSE Sensex was up 174.66 points, or 0.89%, to 19,850.72.

On BSE, 2.49 lakh shares were traded in the counter as against an average daily volume of 3.30 lakh shares in the past one quarter.

The stock hit a high of Rs 66.20 and a low of Rs 63 so far during the day. The stock had hit a 52-week high of Rs 98.35 on 13 December 2012. The stock had hit a 52-week low of Rs 52.65 on 27 July 2012.

The stock had underperformed the market over the past one month till 11 July 2013, sliding 8.02% compared with the Sensex's 2.78% rise. The scrip had also underperformed the market in past one quarter, falling 15.43% as against Sensex's 6.12% rise.

The mid-cap company has an equity capital of Rs 711.70 crore. Face value per share is Rs 10.

Pipavav Defence and Offshore Engineering Company (Pipavav) said that the joint venture (JV) can go ahead and carry on the business on open and transparent basis.

The company said that the JV implements its vision of executing the contracts without any time and cost overrun received through appropriate transparent mechanism. The JV will also focus on working on other large and complex projects both meant for Indian Navy and friendly navies of the world, the company said.

Government lifting of hold vindicates the vision and decision of Ministry of Defence (MoD) to form JV between Mazagon Dock and Pipavav in a completely transparent manner, which will immensely benefit Indian Navy, Coast Guard and other clients, Pipavav added.

In 2011, Pipavav announced that it was selected by the MoD as its JV partner for building warships for the Indian Navy. Pipavav had said it would form a JV company with Mazagon Dock, a company controlled by the MoD, for building warships. The JV was to be named as Mazagon Dock Pipavav.

Later some media reports suggested that L&T, along with other private shipbuilders like ABG Shipyard and Bharathi Shipyard, had expressed disappointment at the way the deal was struck between Pipavav and Mazagon Dock. They alleged total lack of expertise and track record of Mazagon Dock's partner of choice viz. Pipavav Defence and Offshore Engineering Company.

Following the allegations, the Defence Ministry had to put on hold the JV between Pipavav and Mazagon Dock to build warships and submarines.

Pipavav Defence & Offshore Engineering Company reported net profit of Rs 8.24 crore in Q4 March 2013 as against net loss of Rs 12.82 crore in Q4 March 2012. Net sales rose 20.28% to Rs 724.46 crore in Q4 March 2013 over Q4 March 2012.

Pipavav is an integrated defence, heavy engineering and offshore oil & gas assets construction company.

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