Tata Power Company’s Singapore-based arm has completed the sale of its three ships to Germany’s Oldendorff Carriers GmbH & Company for $ 212.76 million (around Rs 1,594 crore), the Tata group power utility said on Tuesday.
In June, Tata Power had said that its arm Trust Energy Resources Pte has signed definitive agreements to sell the three ships as a part of the company’s strategy to divest non-core and operations and some overseas assets to pare debt.
“The sale of our shipping assets announced today is in line with our long term plans to reduce debt and raise funds to invest in our future growth plans, including expanding our presence in the renewable energy business,” said Praveer Sinha, chief executive officer and managing director of Tata Power.
Sale of the ships – MV Trust Agility, MV Trust Integrity and MV Trust Amity – is likely to be concluded in the next three to four weeks, subject to necessary regulatory approvals, the Tata Group utility said.
The sale agreement for the three ships– MV Trust Agility, MV Trust Integrity and MV Trust Amity– includes existing long-term freight contracts associated with the ships with Oldendorff Carriers, one of the largest dry-bulk shipping companies in the world.
“TERPL will now cater to the shipping requirements of the Company’s imported coal-based CGPL plant at Mundra under an asset light model which will help unlock significant value and returns for the Company’s shareholders,” the company said.
Tata Power aims to cut debt by at around 40% to Rs 25,000 crore this financial year, Sinha had told ET in an interview published on June 2. The company had reduced its debt-to-equity ratio from 2.19 to 1.99 in FY20 and aims to reduce it to below 1.5 in FY21.
Tata Power acquired stakes in coal mines and bought ships to ensure backward integration about a decade ago. This also helped the utility expand its global presence. But changes in the macro-economic environment and rising debt made the company change its strategy.