Mumbai: India’s largest vehicles maker Tata Motors Ltd is selling about 20% stake in its equipment and services unit to Japan’s Hitachi Construction Machinery Co. Ltd for roughly $220 million (around Rs1,000 crore), a person with direct knowledge of the deal said on condition of anonymity.
Divestment move: Tata Motors CFO C. Ramakrishnan.
Telco Construction Equipment Co. Ltd (Telcon), in which Tata Motors holds a 60% stake and Hitachi 40%, supplies a wide range of construction equipment such as excavators, mining shovels and dumpers to the construction and earth-moving sector.
Hitachi Construction is Japan’s No. 2 maker of earth-moving equipment. Standard Chartered is advising Tata Motors on the deal.
“We have stated our intent to explore options through divestments. As and when these are concluded, we will make the required announcements,” Tata Motors chief financial officer C. Ramakrishnan said about the stake sale.
Last year, the company sold shares worth $150 million in group firm Tata Steel Ltd and is also looking at selling a stake in its financing unit Tata Motors Finance Ltd.
Earlier this week, the company, which had a debt of $5.1 billion as of December-end, said it was offering an early conversion to its foreign currency bond holders to help reduce the debt on its balance sheet.
Shares in Tata Motors fell 1.87% to Rs725.25 each on the Bombay Stock Exchange while its benchmark Sensex index closed up 0.6%.