Anil Ambani-led Reliance Defence and Engineering on Monday announced an agreement with the US Navy to repair and maintain the Seventh Fleet warships. It is estimated that the pact will result in high-potential business for Reliance Defence.
The Seventh Fleet operates in the Western Pacific and the Indian Ocean and there are roughly 50-70 ships and submarines, 140 aircraft and about 20,000 sailors under its command.
The company, formerly known as Pipavav Defence, signed the Master Ship Repair Agreement (MSRA) with US Navy months after India and US signed a key logistics pact. The company is the first private sector firm in India to obtain a licence and contract to build warships.
In August last year, India and the US signed the Logistics Exchange Memorandum of Agreement (LEMOA) to allow their armed forces to work closely and use each other's bases for repair and replenishment of supplies. In a statement, the Ministry of Defence had said the "agreement does not create any obligation on either party to carry out any joint activity" and "does not provide for the establishment of any bases or basing arrangements."
In a regulatory filing with the BSE, Reliance Defence said its shipyard at Pipavav in Gujarat is the first shipyard in India to have received MSRA Certification to undertake servicing and repairing works for the vessels of Seventh Fleet. Currently, the vessels of Seventh Fleet chose Singapore or Japan for such works.
In 2015, the Anil Dhirubhai Ambani Group had acquired a controlling stake in Pipavav Defence for Rs 2,082 crore.
Meanwhile, Reliance Defence on Saturday said its standalone net loss narrowed to Rs 132.7 crore for the quarter ended December 31, 2016, on account of higher revenue from operations. The company had posted a net loss of Rs 293.6 crore in the corresponding quarter of the previous financial year.
Total income from operations more than doubled to Rs 122.7 crore from Rs 51.4 crore in the year-ago quarter.
On Monday, shares of Reliance Defence traded at Rs 59.85, up 1.85 percent from their previous close on the BSE.