By Hercules Rodrigues
Homegrown auto major Tata Motors has decided to sell its defence and aerospace business to Tata Advanced Systems so as to migrate all the Defence business under one banner.
The New Decision taken at the board meeting will include –
The Sale of its Aerospace and Defence business to group entity Tata Advanced Systems has been set at an enterprise value of 625 Crores.
Pure Civilian vehicles will continue to be manufactured by Tata Motors Limited.
Tata Motors will acquire non-aerospace business from Tata Advanced Limited at a value of Rs 10 Lakhs
Tata Motors will receive an upfront consideration of Rs 100 Crores adjusted to capex incurred and changes in working capital until closure date and a deferred consideration of 3% of the revenue generated from the identified specialized Defence Projects for up to 15 years from FY20 subject to a maximum of Rs 1750 Crores.
Speaking on the deals, Guenter Butschek, CEO & Managing Director of Tata Motors said, “Tata Motors has been a strategic partner to the Indian Ministry of Defence in Defence mobility solutions for several decades. We will continue providing civilian logistics vehicles to the Defence customers. On our transition to a full range combat vehicle player, we realized that our current portfolio is small and we need scale to unlock its true potential. We believe Tata Advanced Systems Limited will be better equipped to execute larger and more complex projects and be more globally competitive as part of the larger Tata Group. Therefore, we have decided that it is in our best interests to sell this part of the business to Tata Advanced Systems Limited and participate in the future growth of this business through a revenue share agreement. Also, TAL Aerospace Solutions is a non-core business to Tata Motors. 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.” Added Guenter.
Tata Advanced Limited Aerospace Solutions
Tata Aerospace Solutions is a wholly owned subsidiary of TATA Motors and is one of the leading companies in India wherein its automotive and heavy engine range business has been successfully delivering manufacturing solutions for over 40 years to customers and more recently to the Robotics, Aerospace and Defence Sectors.
