Tata Motors Ltd (TML) on Thursday said the board has approved sale of company's defence business and aerospace portfolio, TAL Manufacturing Solutions Ltd (TAL), to Tata Advanced Systems Limited (TASL), a wholly-owned subsidiary of Tata Sons Limited.

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"On our transition to a full range combat vehicle player, we realised that our current portfolio is small and we need scale to unlock its true potential. We believe TASL will be better equipped to execute larger and more complex projects and be more globally competitive as part of the larger Tata Group," said Guenter Butschek, CEO and MD, Tata Motors.

Tata Motors will receive an upfront consideration of Rs 100 crore, and a deferred consideration of 3% of revenue generated from identified projects for up to 15 years from FY20 subject to a maximum of Rs 1,750 crore, the company said in a statement.

The sale of TAL to TASL is at an enterprise value of Rs 625 crore.

"TAL Aerospace Solutions is a non-core business to Tata Motors. We have been working on charting our next phase of growth and would like to use the opportunity of consolidation at Group level to monetise our investment in this area.” said Guenter.

Pure civilian vehicles are not included in the deal and it will continue with the Tata Motors. The company will also acquire the non-aerospace business from TAL at a value of Rs 10 lakh.

First Published:May 3, 2018 9:21 PM IST