Mumbai: Tata Power has completed the sale of its Defence Business on October 31, 2020, to Tata Advanced Systems, a wholly-owned subsidiary of Tata Sons. The sale was completed as per a scheme of arrangement, which was approved by the National Company Law Tribunal at Mumbai and Hyderabad in December 2019 and March 2020 respectively.
The company is expected to receive enterprise value of Rs1,076 crore as upfront payment (Rs1,040 crore as per agreements which were revised in line with closing adjustments). 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.
“The sale of the Defence Business is in line with our commitment to divest non-core assets and businesses,” said Praveer Sinha, CEO and 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.”
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 product areas include manufacturing and assembling missile launchers, electronic warfare systems, night vision systems and gun systems. The division has been awarded programmes of national importance such as (i) Missile Launchers: Pinaka MBRL / Akash launchers for the Army and Air Force / strategic missile launchers / MR-SAM launchers, (ii) Electronic Warfare (iii) Modernisation of Airfield Infrastructure. SED has three dedicated manufacturing units, viz, in Bangalore Electronic City, Vemagal in Karnataka (under construction), and a SEZ near Bengaluru (under construction).
