RBI allows Pipavav Defence to raise foreign shareholding

Mumbai: Reserve Bank Tuesday allowed foreign investors to raise their investment in Pipavav Defence and Offshore Engineering Ltd.

"Registered Foreign Portfolios Investors/Foreign Institutional Investors /Qualified Foreign Investors can now invest up to 12 percent and Non Resident Indians / Persons of Indian Origin up to 2 percent of the paid up capital of Pipavav Defence and Offshore Engineering Limited under the Portfolio Investment Scheme (PIS)," RBI said in a release.

RBI said the company passed resolutions at its Board of Directors and shareholders' level for allocating the sub limits for the purchase of its equity shares by these entities.

The government last week relaxed foreign direct investment norms in the defence sector by allowing FDI up to 49 percent under automatic route and beyond that through the FIPB's approval.

The government has also done away with the earlier requirement of mandatory permission from the Cabinet Committee on Security (CCS) beyond 49 percent.

As per the earlier FDI policy in the defence sector, foreign investment up to 49 percent was permitted under government approval route.

Portfolio investment and investment by FVCIs were restricted to 24 percent only.

As per data on BSE, FIIs held 4.79 percent in Pipavav Defence and Offshore Engineering as of quarter ended September 2015.

FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through PIS.

The RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis and has fixed the cut-off points two percentage points lower than the actual ceiling.

Shares of the company closed at Rs 62.95 per share on the BSE today, up 5.09 percent from previous level.