Private power producer Tata Power on Thursday said it has sold its defence business to Tata Sons’ subsidiary Tata Advance Systems for an enterprise value of Rs 22.30 billion. The move, the company said, is part of the company’s plan to monetize its non-core assets and improve the balance sheet.
“The Board has approved the sale of its defence business to Tata Advance Systems Limited, a wholly owned subsidiary of Tata Sons at an enterprise value of Rs. 22.30 billion, out of which Rs 10.40 billion is payable at the time of closing and Rs. 11.90 billion is payable on achieving certain milestones,” Tata Power said in its statement. The deal is subject to government and other approvals.
“Strategic Engineering Division (SED) is a non-core business division of Tata Power. The Company has been working on charting its next phase of growth, for which monetization of non-core assets is a critical step. This sale will also help in reduction of leverage,” said Anil Sardana, chief executive officer and managing director for Tata Power
SED is a non-core defence electronics division of the company, engaged in 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. In its statement, the company said, SED has three dedicated manufacturing units- of which Bangalore Electronic City is operational and Vemagal in Karnataka (and a SEZ near Bengaluru) are under construction.
Last week, Tata Power said it sold its stake in Panatone Finvest to Tata Sons for a value of Rs 15.42 billion and also entered into a sale agreement with Panatone for sale of its stake in Tata Communications for Rs 6.13 billion.