Tata Group is one of the oldest and biggest group in the country. The group has many companies and we always see restructuring happening in the group and subsidiaries year after year. There can be many reasons behind internal restructuring like better group structure, selling of profitable or nonprofitable business, consolidation of similar businesses etc. In a similar restructuring, we are seeing that TATA Motors shall be giving its Defense Business to TATA Advanced Systems via a Slump Sale Transaction.

TRANSACTION:

TATA Motors Ltd. (TML), the Transferor Company has recently on 11th September 2018 filed a draft scheme of Arrangement with the Bombay Stock Exchange proposing to sale the  Company’s Defense Undertaking to Tata Advanced Systems Limited (TASL), Transferee Company, a wholly-owned subsidiary of Tata Sons Limited, to be entered into between the Transferor Company, Transferee Company  and their respective members and/or creditors, as the case may be, pursuant to the provisions of Sections 230 to 232 of the Companies Act, 2013 and the rules made thereunder. The Scheme provided for transfer of the Company’s Defense Undertaking to the Transferee Company at an upfront consideration of minimum 100 Crores (to be adjusted for capex incurred and changes in working capital) plus a deferred consideration of 3% on future revenue share from identified set of projects for a period of 15 years from April 1, 2019. However, the deferred consideration will be maximum upto 1750 Crores.

STRUCTURE:

Tata-Motors-Defence-Slump-Sale-1

DEFENSE UNDERTAKING:

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