DCX Systems spurts on strategic JV with Israel's ELTA Systems

DCX Systems rose 5.07% to Rs 259.90 after the company announced the execution of a Joint Venture Agreement (JVA) with ELTA Systems, a subsidiary of Israel Aerospace Industries (IAI), and its group companies.

The partnership aims to establish a new Joint Venture Company (JVC) in India focused on developing advanced radar systems under the governments "Make in India" initiative.

The JVC will specialize in airborne maritime radar systems, fire control radar systems and other radar technologies designed for both airborne and land applications. According to the filing made by DCX Systems with the stock exchanges today, the venture underscores a long-standing relationship between the two entities and leverages complementary expertise in the radar and defense electronics space.

As per the agreement, ELTA Group will hold a 63% stake in the new entity and DCX Systems will hold the remaining 37%.

Initially, the board of the JVC will comprise four directorsthree from ELTA and one from DCX. However, upon DCXs full investment into the venture, the board will expand to five directors, with DCX gaining one additional seat.

Leadership positions in the new company, including CEO and CFO, will be nominated by ELTA, subject to board approval. ELTA will also grant the JVC an exclusive license to use its radar technology in India, except for government-to-government (G2G) and government-to-commercial (G2C) projects.

This collaboration is expected to significantly enhance Indias indigenous radar manufacturing capabilities. The move is aligned with India's push to reduce dependence on imports in the defense sector and become a global defense production hub.

The agreement outlines various governance and operational structures, including reserved matters, intellectual property rights, and a call option mechanism in the event of a deadlock.

No related party relationships exist between the two entities, and the proposed equity shares to be issued to DCX will be priced at fair market value, in compliance with applicable laws.

DCX Systems is an Indian defense manufacturer specializing in the production and supply of electronic systems, subsystems, and cable & wire harness assemblies for international and domestic customers.

On a consolidated basis, net profit of DCX Systems declined 25.19% to Rs 10.01 crore while net sales rose 0.93% to Rs 200.01 crore in Q3 December 2024 over Q3 December 2023.

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