Tata Motors, India’s largest automotive maker by revenues, is open to selling stake in Tata Motors Finance, a vehicle financier fully owned by the Mumbai-based company.
The stake sale will be part of the value unlocking process kickstarted by the maker of cars and trucks even as it looks to sustain the positive momentum in sales and profitability.
As part of the process, the company has identified nearly 10 options, including shutting down of loss-making companies, winding up of unviable projects, off-loading of equity in some companies and merging of allied services.
PB Balaji, group chief financial officer, Tata Motors, said: “We have taken a hard look at the subsidiaries of Tata Motors in India and looked at what was the strategic roadmap, what was the role, why do we think we will win competitively in the future. On that basis we have taken some very clear calls.”
Tata Technologies, Tata Hitachi, Tata Precision, Trilix and Tata Motors European Technical Center (TMETC) are the entities which will be a part of this exercise. As for Tata Motors Finance (TMF), the profit-making company may see stake dilution by the promoter company, said Balaji.
“We are very clear that we will now continue to invest as far as Tata Motors Finance is concerned. We will maintain control as far as Tata Motors Finance is concerned, but clearly there is no intention to say that we should always hold it at 100 percent, that is also clear. As far as others are concerned, the strategic review is underway, and these will be updated in due course”, added Balaji.
Financial turnaround
Profit before tax of TMF stood at Rs 291 crore last financial year as against a loss of Rs 699 crore posted in 2016-17, as per financial details disclosed by Tata Motors. TMF not only managed to dramatically reduce its gross non-performing asset (GNPA) to four percent from 17.9 percent during the two years its market share stood improved to 25 percent from 22 percent.
TMF’s total asset under management stood at Rs 27,932 crore last year, a 24 percent growth compared to Rs 22,517 crore. Last year saw a disbursal growth of 66 percent, the highest in its history, to Rs 15,400 crore.
Last month, Tata Motors said it had written off working capital of Rs 1,641 crore in some of the vehicle projects that it does not intend to carry forward. Nearly 60 percent of that belongs to Tata Motors, and the balance to Jaguar Land Rover. Racemo, a production-ready mini performance car, which was put on the backburner, has now been put up for sale.
“The defence business the sale is in progress. We are now holding for sale our stake in Tata Technologies, Tata Hitachi as well as some of the small shareholding that we have in other companies like Tata Steel, etc. We are winding up our Spain business, which is already in final stages as well as Tata Precision that is Singapore-based business which has been wound up. Design capabilities like Trilix and TMETC are all coming together under one umbrella," added Balaji.
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