Tata group merges defence businesses

By Ajai Shukla

Chennai

Business Standard, 11 April 18

Tata Sons has formally announced consolidation of its sprawling aerospace and defence businesses, which have developed under various group companies, under a single entity, Tata Aerospace and Defence (Tata A&D).

Tata Sons Chairman N Chandrasekaran on Wednesday said: “The formation of Tata A&D, a single unified entity, will allow us to better target emerging opportunities in aerospace and defence, and engage holistically with customers both in India and globally.”

Banmali Agrawala, Tata Sons chief for infrastructure, defence and aerospace, has explained the rationale behind the merger: “Tata A&D, when formed, will be better equipped to execute larger and more complex projects and be more globally competitive as part of the global supply chain. We have moved beyond providing individual products to develop integrated offerings across land mobility, airborne platforms and systems, as well as weapons systems and C4I (command, control, computers, communications and intelligence).”

Highlighting the group’s intention to become part of the defence production establishment, Agrawala said: “In India, Tata has built an industrial base in defence intentionally designed to complement and integrate with the efforts of the Defence Research & Development Organisation (DRDO) and defence public sector units (PSU).”

Sukaran Singh, who currently heads Tata Advanced Systems (TASL), will be chief of Tata A&D. The statutory and regulatory approvals are being obtained, said Tata Sons.

“Tata A&D proposes to bring together over 6,000 employees, and have production facilities in Telangana, Karnataka, Jharkhand, and Maharashtra,” the Tata Sons’ statement said. 

The consolidation will bring together several significant defence businesses — Tata Motors’ defence division, which is a strong competitor for defence ministry projects to build tracked, armoured platforms such as the futuristic infantry combat vehicle (FICV) and future-ready combat vehicle (FRCV).

Also coming under Tata A&D will be Tata Power’s Strategic Engineering Division, which has been the high-tech, innovation-based defence performer from the Tata stable. An electronics-based firm, it won a global tender to modernise air force air bases, won the “Make” procedure tender to develop the tactical communications system, and built sub-systems for the Pinaka rocket launcher and the Akash missile and strategic missiles.

On March 29, as part of this consolidation, Tata Power announced that its board had approved the sale of its defence business to Tata Advance Systems for ~22 billion.  Of this Rs ~10.4 billion will be payable to Tata Power on closing the deal and the remaining Rs ~11.9 billion on achieving certain milestones. This still needs ratification by the company’s shareholders.

Tata Power (SED) chief executive Rahul Chaudhry is likely to resign after the merger, said sources.