SKIL Infrastructure has initiated a restructuring exercise to sell non-core assets worth Rs 750 crore and use the proceeds to repay bank loans. Infrastructure assets identified for sale include real estate. The group is also undertaking top management changes by bringing in Rajiv Shukla, the former managing director at Citigroup and Morgan Stanley, as chief executive and Neelu Khatri, head of defence services at KPMG, as the business development head of Pipavav Defence, an SKIL Infrastructure company, said a company official.
SKIL Infrastructure is also reviving its plans get listed over the next three months. The non-core assets to sell are being identified. SKIL Infrastructure had taken a loan to buy out Punj Lloyd's stake in Pipavav Defence two years ago.
The changes are being made to take advantage of the $247-billion worth of defence orders to be placed by the Indian government over the next five years. The Indian government wants Indian private companies to bag a sizeable portion of these orders to avoid paying in foreign exchange to companies abroad. Another big chunk of orders worth $55 billion to make and maintain oil rigs and ships will come from the oil and gas sector, which is investing heavily to develop energy assets in India.
Top Indian companies led by Reliance, Mahindras, L&T and the Tatas are in the race to get a slice of these orders.
According to sources, Pipavav Defence is working to raise equity at the holding company and subsidiaries to improve the balance sheet further. Currently, it has a healthy long-term debt equity ratio of under 1:1.
The group has roped in a $160-billion Swedish multinational, SAAB (Wallenberg group), as an equity partner in Pipavav Defence. According to the deal, SAAB will bring in proprietary technology to build missile systems, underwater systems and other combat systems for the first time in India.
At the same time, the company's joint venture with Mazagon Dockyard is also taking shape. The venture will localise construction of critical warships and submarines within India. This will be first time the Indian private sector is making submarines for the Indian Navy.
According to sources, besides SAAB, two more global investors are planning to buy stake in the company as they want to invest in an infrastructure company which is capable of building warships, submarines and offshore assets. The current order book of Pipavav has crossed $2.1 billion and the company is expecting its orderbook to swell to $ 5 billion by March 2014.
When contacted, group chairman Nikhil Gandhi said the group will stay focused on infrastructure, defence, and oil and gas sector assets. "There is a long-term and perpetual potential in these sectors as no country can survive or grow without building world class infrastructure for economic growth and protecting the vital national security interest be it defence or oil and gas sector."
On Friday, Pipavav Defence's shares closed at Rs 65.70 apiece on BSE, up 4.5 per cent.
