RInfra slaps arbitration notice on Pipapav Defence promoters

Anil Ambani-led Reliance Infrastructure today issued an arbitration notice against founder promoters of Pipavav Defence and Engineering for "breach of warranties", seeking claims to the tune of Rs 5,440.38 crore.
Reliance Infrastructure Ltd (RInfra), its subsidiary Reliance Defence Systems (RDSPL) and the founder promoters of Pipapav Defence and Engineering Ltd - which has been renamed Reliance Naval and Engineering Ltd (RNEL) - had on March 4, 2015, entered into an agreement for acquisition of shares of Pipapav Defence and Engineering.
"The company, along with its subsidiary, RDSPL has issued an arbitration notice against Nikhil Gandhi, Bhavesh Gandhi and their companies, i.e. SKIL Infrastructure Ltd, Grevek Investments and Finance Pvt Ltd and SKIL Shipyard Holdings Pvt Ltd, all being the founder promoters of Pipapav Defence and Engineering Ltd... asserting the claims for breach of warranties under the purchase agreement dated March 4, 2015," Reliance Infrastructure said in a regulatory filing to BSE.

It said the claims aggregate to Rs 5,440.38 crore.
In March 2015, RInfra had announced the acquisition of controlling stake in Pipavav Defence and Offshore Engineering for up to Rs 2,082.3 crore.
Legal sources said RInfra had discovered that there have been serious breaches of warranties and representations made by the founder promoters, and as per the share purchase agreement, the company is entitled to claim the loss caused.

"The company is convinced of the breaches discovered and is therefore compelled to enforce its rights," legal sources said adding that the arbitration would have "no impact on the execution of existing order and upcoming financial liabilities of the company".

When contacted, Reliance Infrastructure refused to divulge more details on the matter.
RInfra's arm Reliance Defence Systems Private Ltd had initially bought about 18 per cent stake in Pipavav Defence and Engineering Ltd to enter the defence sector in 2015.
RInfra had acquired 18 per cent stake in Pipavav Defence for Rs 819 crore, along with an open offer for 26 per cent of shares at Rs 66 per share, for a total of about Rs 2,080 crore.
Reliance Naval and Engineering Limited (RNAVAL) formerly Reliance Defence and Engineering Limited / Pipavav Defence and Offshore Engineering Company Limited is the first private sector company in India to obtain the licence and contract to build warships.

It operates Indias largest integrated shipbuilding facility with 662 M x 65 M Dry dock. The facility houses the only modular shipbuilding facility with a capacity to build fully fabricated and outfitted blocks.
Shares of Reliance Infrastructure closed at Rs 433.10, down 1.95 per cent on BSE.