BIG move by Mukesh Ambani as Reliance Industries buys shipyard for Rs 382.73 crore, not for building ships, but for...

Reliance Strategic Business Ventures Limited (RSBVL), a wholly owned subsidiary of Reliance Industries, the company led by India's richest billionaire Mukesh Ambani, announced a fresh investment and acquisition on Thursday.

Through Nauyaan Tradings Pvt Ltd (NTPL), RSBVL has paid Rs 382.73 crore to Welspun Corp Ltd for a 74% share in Nauyaan Shipyard Pvt Ltd (NSPL).

In September 2022, Welspun Corp, through Nauyaan Shipyard, bought the Dahej shipyard of bankrupt shipbuilder ABG Shipyard Ltd, in a private sale under the bankruptcy legislation, for Rs 659 crore.

With debt and liabilities totalling Rs 126.57 crore, Nauyaan Shipyard's enterprise value is estimated at Rs 643.78 crore. The total value of its 100% equity is Rs 517.21 crore, and NSPL will pay back the Rs 93.66 crore owed to Welspun Corp.

The move by Welspun Corp. to sell a 74 percent stake in its shipyard to a Reliance Industries unit has raised questions in the shipbuilding industry about whether Mukesh Ambani would want to follow in his brother Anil Ambani's footsteps and enter the shipbuilding industry.  Given that the government is aggressively attempting to support the domestic shipbuilding sector with a new financial aid program, a ship recycling credit facility, and a Maritime Development Fund valued at Rs 25,000 crore, the timing of the deal only serves to fuel this speculation.

Notably, Pipavav Shipyard was purchased by Anil Ambani's Reliance ADA Group, which later filed for bankruptcy. Hazel Infra Ltd then paid Rs 2,100 crore for the firm.
 
Reliance's manufacturing facility, which was formerly operated by the state-owned Indian Petrochemicals Corporation Ltd (IPCL) before being sold to Reliance Industries in 2002 as part of the government's disinvestment initiative, is next to the Nauyaan Shipyard in Dahej.  IPCL became a part of Reliance Industries in 2007.

“Whether they will use it as a separate entity for something else or whether they will enter into shipbuilding is the question,” said the owner of a shipyard located on the western coast.

“Reliance can use this place; it has a waterfront, and the price at which they got it is a very good price,” he said.

The area of the shipyard will be used for other industries like salt handling, storage, and brine preparation facilities, Reliance said, dispelling rumours of shipbuilding.

The shipbuilding industry asked why Reliance Industries didn't buy the yard directly under the Insolvency and Bankruptcy Code (IBC), instead buying it from Welspun Corp.