Why has Adani Enterprises picked up a stake in PLR Defence Systems?
Answer
Answer
You are right. The acquisition has been made by Adani Land Defence Systems which is a subsidiary of Adani Enterprises. The company has bought 51% stake in PLR Systems, which is an arms company based out of Gwalior. The deal was an all-cash transaction.
PLR Systems specializes in manufacturing machine guns, carbines and other weapons for Indian and the export markets. The company is 49% held by IWI of Israel, since that is the maximum that foreign companies can hold in an Indian defence company.
That was the one major gap in the group portfolio and the acquisition will give them the capabilities in unmanned aerial vehicles or UAVs as well as helicopter systems and aero structures. Defence has emerged as a big opportunity in the last few months.
Under the new policy, the Ministry of Defence will hive off orders worth Rs.350,000 crore to domestic manufacturers and that could be a big opportunity. This is aligned with the Atma-Nirbhar Bharat initiative of the government of India.
The products manufactured by PLR Systems not only had demand from the Indian army but also from the paramilitary forces as well as the state policy. It is reported that there could be major orders underway and this deal will also give PLR the required balance sheet heft.