New Delhi: Home-grown auto major Tata Motors today said it will sell its defense business to group entity Tata Advanced Systems Ltd (TASL), subject to requisite approvals.
The deal will not include the pure civilian vehicles which will continue to be with Tata Motors, the company said in a statement.
The Board of Tata Motors has approved the sale and the company will receive an upfront consideration of Rs 100 crore adjusted for capex incurred and changes in working capital in the intervening period until closure date and a deferred consideration of 3 per cent of revenue generated from identified specialised defence projects for upto 15 years from FY20, subject to a maximum of Rs 1,750 crore, it added.
We believe Tata Advanced Systems Ltd will be better equipped to execute larger and more complex projects and be more globally competitive as part of the larger Tata Group.
The Board also approved sale of Tata Motors’ shareholding in its wholly-owned subsidiary, TAL Manufacturing Solutions to TASL at an enterprise value of Rs 625 crore.
In return, Tata Motors will acquire the non-aerospace business from TAL for Rs 10 lakh.
“We believe Tata Advanced Systems Ltd will be better equipped to execute larger and more complex projects and be more globally competitive as part of the larger Tata Group,” Tata Motors CEO and MD Guenter Butschek said.
Also, TAL Aerospace Solutions is a non-core business to Tata Motors, he said adding that we have been working on charting our next phase of growth and would like to use the opportunity of consolidation at group level to monetize our investment in this area.
The move is in line with Tata Motors’ plan to drive Turnaround 2.0 and take necessary steps to further the defense business by leveraging the scale and strengths of the unified aerospace and defense entity at group level, while monetizing its non-core assets to reduce debt, the company said.