Tata Power Completes Defense Biz Sale to Tata Sons Arm; Aims to Focus on Core Biz

In line with its ongoing strategic plan to monetize non-core assets and reduce overall leverage, utility giant Tata Power Company Ltd has completed the sale of its Defense business to Tata Sons arm Tata Advanced Systems Ltd on October 31, 2020.

The sale was completed as per the Scheme of Arrangement, which was approved by National Company Law Tribunal (NCLT) at Mumbai and Hyderabad in December 2019 and March 2020 respectively.

Also, Tata Power is expected to receive an enterprise value of Rs 1,076 crore as an upfront payment (Rs 1,040 crore as per Agreements which was revised in line with closing adjustments). However, balance consideration is subject to completion of achieving certain milestones specified in the agreements.

Commenting on the sale transaction, Praveer Sinha, CEO & Managing Director, Tata Power, said“sale of Defense business is in line with our commitment to divest non-core assets and businesses.”

“The sale proceeds will help 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,” Sinha added.

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 (i) Missile Launchers: Pinaka MBRL / Akash Launchers for Army & Air Force (AAFL & AAL) / Strategic Missile Launcher / MR-SAM Launchers, (ii) Electronic Warfare (iii) Modernization of Airfield Infrastructure (MAFI). SED has three dedicated manufacturing units viz. Bangalore Electronic City, Vemagal in Karnataka (under construction) and a SEZ near Bengaluru (under construction).

Meanwhile, scrips of Tata Power were trading at Rs 52.25 apiece, up 0.19 per cent, from the previous close on the exchanges at 13:15 hours.