The Tata Power Company Ltd has announced the completion of the sale of its defence business on Oct 31 to Tata Advanced Systems Ltd, a wholly-owned subsidiary of Tata Sons Pvt. Ltd. The sale was completed as per a scheme of arrangement approved by the National Company Law Tribunal (NCLT) at Mumbai and Hyderabad in December 2019 and March 2020, respectively.
The company is expected to receive an enterprise value of Rs 10.76 billion as an upfront payment – Rs 10.40 billion as per agreements, which was revised in line with closing adjustments. The balance consideration is subject to completion of achieving certain milestones specified in the agreements.
The sale of the defence business is part of the company’s ongoing strategic plan to monetise its non-core assets and reduce overall leverage.
“Sale of defence business is in line with our commitment to divest non-core assets and businesses,” said Praveer Sinha, CEO & Managing Director, Tata Power.
“The sale proceeds will help the company to reduce leverage and increase focus in the core business areas like renewable generation, distribution and new service-led businesses, which will bring greater value for our shareholders,” he added.v The Strategic Engineering Division (SED) is a non-core defence electronics division of the company, engaged in the business of indigenous design, development, production, integration, supply and life cycle support of mission-critical defence systems. The key products include manufacturing and assembling missile launchers, electronic warfare, night vision systems and gun systems.
The division has been awarded programs of national importance such as missile launchers (Pinaka multi-barrel rocket launcher (MBRL), Akash launchers for Army and Air Force, strategic missile launcher, medium-range surface-to-air (MR-SAM) launchers), electronic warfare systems and modernisation of airfield infrastructure (MAFI).
SED has three dedicated manufacturing units, viz. Bangalore Electronic City, Vemagal in Karnataka (under construction) and an SEZ near Bengaluru (under construction).