With Airbus unit, Pipavav plans to repair planes

Pipavav Defence and Offshore Engineering (earlier called Pipavav Shipyard), India’s biggest shipbuilder by market value, will form a joint venture with European Aeronautic, Defence & Space Co NV (EADS), the maker of Airbus SAS aircraft, to set up a $100 million maintenance, repair and overhaul (MRO) facility for aircraft in India.

The facility and related infrastructure, to be used for civilian and military applications, may cost $100 million in the first phase, Pipavav said.

EADS is expected to pick up a 26% stake in the joint venture and further increase it to 49%, the Gujarat-based company said in a statement to the exchanges on Wednesday.

It said a memorandum of understanding to this effect has been signed between Pipavav, its promoter company SKIL

Infrastructure Ltd and Airbus Industrie of France.

Pipavav shares gained on the news, closing with a gain of 2.6% on a day the broad-based index shed 0.5%. The shares have shed 8% so far this year.

Sources said the company has shortlisted three locations for the said facility — Bangalore, Kochi and Ahmedabad — and a final decision on the location and other financial and investment aspects of the projects is expected to be finalised in two months or so.

Interestingly, the European company refused to commit to the JV.

“EADS is in discussions with several partners about the establishment of an MRO facility and Pipavav is just one of them. The discussions are at the exploratory stage,” a spokesperson told DNA.