According to newspaper reports, Tata Engineering Limited (Telco) is planning to defer the plan to hive off some of its divisions. It has been reported that valuations quoted by interested parties are not in line with the company's expectations.
The company's decision to hive off its various divisions is aimed at reducing the level of integration in its operations. The management has stated that it will focus on the design and development, assembly and marketing of vehicles only. Another advantage of hiving off its divisions into joint ventures with global leaders would be that Telco would get access to the latest technology. This would go a long way in improving the quality of its vehicles.
It is expected that there will be a substantial inflow of funds as and when its divisions are hived off. By some estimates the company is expected to realise Rs 15 bn from the exercise. The funds could be used to repay debt and also fund its research and development activities. This would further improve the bottomline and the future prospects of the company.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407