The financial woes of Reliance Naval and Engineering, after its acquisition of Pipavav Defence and Offshore Engineering, has not only spelt trouble for lenders but even a few public sector suppliers, which have been badly hit by the development.
According to sources, around $30 million worth of Bharat Electronics Ltd’s (BEL’s) order was stuck as the private sector defence company was not able to honour its commitment to take the supply, despite placing orders.
“Around $30 million worth of order was not picked up during the last financial year, as Reliance Naval was not able to honour its buying commitment.
As it was categorised as deemed exports, the overall export revenue of BEL witnessed a sharp plunge due to this,” sources at the public sector electronics major said.
BEL has seen a sharp drop in export revenue to $26 million in the last financial year against $65 million reported in 2016-17. The Bengaluru-headquartered company is hopeful that the pending supply order would be absorbed in the current financial year by Reliance Naval.
“Hopefully, the buying commitment by the company would be honoured this fiscal,” the source added.
An email sent to Reliance Naval's spokesperson on Wednesday for comments didn’t elicit any response.
Subsequently, it was renamed as Reliance Naval and Engineering last year.
The company, which owes around Rs 90 billion to over two-dozen banks, led by the troubled IDBI Bank, has been classified as a non-performing asset (NPA) by lenders after Reliance Naval’s auditors raised doubts over its ability to run operations in the coming years.