2 min read.Updated: 12 Sep 2020, 10:22 AM ISTAmit Panday
Tata Motors was in unsuccessful talks with American private equity firm Warburg Pincus three years ago for a potential stake sale in Tata Technologies
The Tata Motors management wants to make the India business free cash flow positive by FY21, JLR by FY22 and passenger car business by FY23
Tata Motors Ltd has initiated the process of selling stakes in units Tata Technologies Ltd and Tata Hitachi Construction Machinery Co. Pvt. Ltd as part of its ambitious plan to turn debt-free in three years, three people aware of the plans said.
The divestment plans are critical for the parent of Jaguar Land Rover (JLR) Automotive Plc, which saw its net consolidated debt soar to ₹68,000 crore as of 31 July from ₹48,000 crore as of 31 March following extensive cash burn due to disruptions from the coronavirus outbreak.
“Tata Motors has resumed talks with multiple stakeholders for potential equity stake sales in its software arm (Tata Technologies) and in the Hitachi joint venture," said one of the three people, requesting anonymity.
“The intent is to monetize non-core assets and the exercise has begun with these two companies," the person added.
Tata Motors was in unsuccessful talks with American private equity firm Warburg Pincus three years ago for a potential stake sale in Tata Technologies.
“While Tata Motors has decided to sell stakes in these two companies first, more non-core businesses would be opened up for stake sale soon. The company is also open to equity infusion by promoters towards reducing its debt," said the second person.
“There is nothing fresh to share beyond what was said in the AGM (annual general meeting)," a Tata Motors spokesperson said when asked about the stake-sale plans.
N. Chandrasekaran, chairman, Tata Motors, told shareholders at an annual general meeting last month that while the management plans to make the automaker debt-free in three years, it is already taking action to generate free cash flows across its India and JLR businesses.