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Tata Advanced Systems Limited to buy aerospace and defense business from Tata Motors

Team OD  | Updated: May 04, 2018, 10:55 AM IST

In an official statement released yesterday, Tata Motors stated that the company board has approved the sale of its aerospace and defense business to Tata Advanced Systems Limited. This will not include the civilian vehicles which will continue to be with Tata Motors Limited. This development is in line with the company's plan to drive Turnaround 2.0 that will take necessary steps to further its defense business by leveraging the scales and strengths of unified aerospace and defence entity at the Group level, while monetizing its non-core assets to reduce net debt.

" 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" - Guenter Butschek, CEO and MD, Tata Motors

Tata Motors Limited 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 three per cent of the revenue generated from identified specialized defense projects for upto 15 years from FY20, subject to a maximum of Rs 1,750 crore. The sale of its shareholding in its wholly owned subsidiary, TAL Manufacturing Solutions Ltd. (TAL) to TASL at an enterprise value of Rs 625 crore. As a condition precedent, Tata Motor will acquire the non-aerospace business from TAL at a value of Rs 10 lakh.

Tata Motors CEO and MD Guenter Butschek commented, "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,"


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