Jhunjhunwala effect

Mumbai, Sept. 7: Shares of Nikhil Gandhi-promoted Pipavav Defence and Offshore Engineering Company rose over 4 per cent on the Bombay Stock Exchange today after its board approved the allotment of 1.05-crore convertible warrants worth Rs 81.9 crore to billionaire investor Rakesh Jhunjhunwala, his wife Rekha Jhunjhunwala and Utpal Sheth, another investor.

However, the share price of Pipavav Defence, formerly Pipavav Shipyard Ltd, closed 50 paise lower at Rs 76.80 on the BSE.

According to a notice issued by the company to the stock exchanges, each warrant priced at Rs 78 is convertible into one fully paid-up equity share of Rs 10 each of the company any time within 18 months from the date of allotment.

Rakesh Jhunjhunwala and his wife Rekha will be allotted 50,00,000 warrants each, while Utpal Seth will get 5,00,000 warrants.

The notice adds that the proceeds from the issue of warrants will be used to explore more opportunities in the defence segment and for general corporate purposes. The company recently bagged an order from the Indian Navy to make five offshore petrol vessels. Reports indicate that in April, the foreign Investment Promotion Board allowed the company to build warships. This will enable the company to bid for big defence contracts.