Tata Motors to Sell Defence, Aerospace Portfolios to Its Group Entity Tata Advanced Sytems Limited
Tata Motors on Thursday announced the sale of its defence and aerospace business to group company Tata Advanced Systems (TASL).
New Delhi, May 5: Tata Motors on Thursday announced the sale of its defence and aerospace business to group company Tata Advanced Systems (TASL). The sale is considered as a part to reduce debt and monetize non-core assets. The non-core defence business sale excludes vehicles made for civilians. According to an official statement, Tata Motors will receive an upfront consideration of Rs 100 crore adjusted for capital expenditure incurred and changes in working capital in the intervening period until closure date and a deferred consideration of three percent of the revenue generated from specialized defence projects for up to 15 years from FY20 subject to a maximum of Rs 1,750 crore.
Tata Motors will also sell its shares in TAL Aerospace Solutions. It is a non-core business to Tata Motors TASL at an enterprise value of Rs 625 crore. According to a report published in Moneycontrol, the operating revenue of the aerospace business in the financial year 2017 was Rs 228.8 crore while its net worth during the same year stood at Rs 82.4 crore, whereas revenues from the defence business in 2016-17 stood at Rs 295 crore. The main aim of the company is to strengthen its defence business. Guenter Butsheck, managing director and chief executive officer, Tata Motors said, “On our transition to a full range combat vehicle player, we realised that our current portfolio is small and we need scale to unlock its true potential. We believe Tata Advanced Systems will be better equipped to execute larger and more complex projects and be more globally competitive as part of the larger Tata Group," reported Moneycontrol.
Tata Motors will continue supplying civilian logistics vehicles to the defence customers. Tata Motors in a statement said, “This is in line with Tata Motors’ plan to drive Turnaround 2.0, take necessary steps to further its defence business by leveraging the scale and strengths of the unified aerospace and defence entity at the Group level, while monetising its non-core assets to reduce net-debt.”
(The above story first appeared on LatestLY on May 05, 2018 02:28 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).