Tata Motors has announced that they will be selling all defense and aerospace businesses to Tata Advanced Systems, also a part of the Tata Group, thereby bringing all Tata Motors defense related businesses under a common banner.
Effort are on to reduce debt and monetise non-core assets. The sale of its defense and aerospace portfolio to Tata Advanced Systems Limited in the company’s words would unlock their full potential.
With this change over, all large trucks and weapons system carriers and specialized vehicle that were once supplied by Tata Motors to Indian military forces and to global defence systems, will now be handled by Tata Advanced Systems. Tata Motors, on the other hand, will continue to supply light civilian vehicles such as the Safari Storme that is currently being readied for use by the Indian army.
TAL Manufacturing Solutions Limited will also be sold to Tata Advanced Systems for INR 625 crores while Tata Motors will acquire the non aerospace segment of TAL business for INR 10 lakhs. Tata Motors will also receive INR 100 crores as capital expenditure.
Talks of moving all Tata Motors defense and aerospace businesses to Tata Advanced Systems follows Tata Power also selling off similar businesses to Tata Advanced Systems in April 2018. Tata Motors, will however, continue to provide civilian logistics vehicles to its Defence customers with a smaller range of vehicles coming under this banner.
Guenter Butschek, CEO & MD, 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.”