TATA Motors Sells Defence Business To TATA Advanced Systems For Rs 725 Crore

As part of the ongoing consolidation being done across TATA Group companies, TATA Motors Ltd will sell its Defence business to TATA Advanced Systems Ltd (TASL). This will not include the pure civilian vehicles which will continue to be with TATA Motors.

TATA Motors will receive an upfront consideration of ₹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 the revenue generated from identified specialised Defence projects for up to 15 years from FY20 subject to a maximum of ₹1,750 crore.

TATA Motors will also sell its wholly owned subsidiary, TAL Manufacturing Solutions Ltd (TAL) to TASL at an enterprise value of ₹625 crore. As a condition precedent, TATA Motors will acquire the non-aerospace business from TAL.

“This is in line with TATA Motor’s 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 company said in a statement.

Speaking on the two strategic deals, Guenter Butschek, CEO & MD, TATA Motors, said: “We will continue providing civilian logistics vehicles to the Defence customers. 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 more complex projects and be more globally competitive as part of the larger TATA Group.”

TATA Sons is in the process of consolidating its various businesses across aerospace and Defence sectors together under a single entity – TATA Aerospace & Defence (TATA A&D).