PremiumNikhil P. Gandhi says R-Infra was chosen to buy Pipavav Defence as he needs somebody ready to bite the bullet of the Make in India concept
Mumbai: Nikhil P. Gandhi, a first-generation entrepreneur with business interest in marine equipment, marine engineering and infrastructure, had sold a majority stake in the Navi Mumbai special economic zone (SEZ) to Mukesh Ambani in 2006. In 2015, he has sold a controlling stake in his port and defence project to the younger Ambani brother, Anil.
Gandhi, founder and non-executive chairman of Pipavav Defence and Offshore Engineering Co. Ltd, says he will stay invested in his company even after selling it to Anil Ambani.
Anil Ambani-controlled Reliance Infrastructure Ltd on Wednesday announced the acquisition of Pipavav Defence, together with sole management control. Reliance Infrastructure, together with its wholly-owned subsidiary Reliance Defence Systems Pvt. Ltd, has agreed to acquire from the promoters of Pipavav Defence 130 million equity shares representing an approximately 18% shareholding in the company at a price of 63 per share, aggregating 819 crore. He says that younger Ambani has offered two boards seats following the deal. Edited excerpts from an interview:
Why did you sell?
Building a greenfield facility is a big challenge. It is so complex and time consuming. You need to take too many risks in creating a new facility. It is a task by itself. After building a greenfield facility, fatigue sets in while you want to take that to the next level. On the other hand, most of the people wanted to use readymade facilities considering the complexity in setting up greenfield infrastructure.
But it was your baby...
Yes. I am a greenfield champion. I create value and that is the reason I am staying invested in the project. But if there is somebody else out there who is capable of creating more value, you should not restrict that. Value creation should be done on a constant basis.
Were there any past instances of creating more value?
Yes. In the 1990s, I had created ports, rail and roads as a project. Nine years ago, I sold that greenfield project to AP Moller of Denmark. Now, in nine years, AP Moller had created nine times the value of what I had sold to them. Gujarat Pipavav Port is today truly a world-class port.
Coming back to the Pipavav Defence deal, the Mahindras and the Munjals were also in the race?
I don’t want to comment on that.
Why did you opt for Reliance Infrastructure?
I need somebody who is ready bite the bullet of the Make In India concept. There were no big deals in the defence sector after Prime Minister Narendra Modi announcing the Make In India programme. This is the first deal and biggest deal in defence after Make In India was announced. Reliance Infrastructure is sharing my vision. And they had a deep commitment and decisive attitude for the defence segment.
But they are a new entrant?
(Laughs) Was I born with a machine gun in my hands? No. They have a vision and courage of conviction, which I liked.
Will they retain the name Pipavav Defence?
There is no reason not to retain the name Pipavav as it is a strong brand. But nobody is stopping them from changing the name. It is their prerogative. Pipavav is named after a famous saint.
After the open offer, how much will the Gandhis hold?
We will be holding around 18%.
Now what happens to the debt and the CDR (corporate debt restructuring) process?
Debt will be part of the new company and the CDR process is going on well. Who would not want to support an infrastructure like this?
What next for you?
I will continue to play a role to ensure value creation. I would focus on increasing shareholder value. I have done enough greenfield projects in the last 25 years. I am happy focusing on creating more value and increasing own wealth. National and energy security are two critical areas where a nation should focus on the journey towards developed nation status. And me and my brother (Bhavesh Gandhi) will help in creating truly world-class assets.
You sold the Navi Mumbai special economic zone to Mukesh Ambani and now the port to younger brother Anil Ambani...
Let me tell you I had stayed invested in the Navi Mumbai SEZ project. Mukesh Ambani brought in other investors, so my stake stands diluted.
So will you have board representation in Pipavav Defence?
Mukesh Ambani was kind enough to give two representations on the board of the SEZ project while younger brother Anil Ambani is generous enough to give me and my brother seats on Pipavav Defence.
