Tata Power Company hopes to raise about Rs 3,000 crore from divestment of non-core operations and restructuring the renewable energy business with an aim to cut debt by at around 40 per cent to Rs 25,000 crore this financial year
Mumbai: The Tata Power Company’s Singapore arm has entered into definitive agreements with Oldendorff Carriers GmbH & Co of Germany for the sale of three ships at an estimated consideration of $212.76 million, the company said Friday.
The sale is a part of the Tata group utility’s strategy to divest non-core operations to pare debt and become asset light.
“The sale of our shipping assets announced today is in line with our long term plans to reduce debt and raise funds to invest in our future growth plans, including expanding our presence in the renewable energy business. The sale is also part of the restructuring within Tata Power to chalk out the roadmap for growth over the next decade,” said Chief Executive Officer and Managing Director Praveer Sinha.
Tata Power Company hopes to raise about Rs 3,000 crore from divestment of non-core operations and restructuring the renewable energy business with an aim to cut debt by at around 40 per cent to Rs 25,000 crore this financial year, Sinha had told ET in an interview published on June 2. This sale of ships is a part of this plan. The company has reduced its debt-to-equity ratio from 2.19 to 1.99 in FY20 and aims to reduce it to below 1.5 in FY21.
Over a decade ago, Tata Power acquired stake in coal mines and bought ships to ensure backward integration. This also helped the utility expand its global presence.
But changes in the macro-economic environment and rising debt made the company change its strategy.
The sale of the three ships owned by Tata Power arm Trust Energy Resources Pte– MV Trust Agility, MV Trust Integrity and MV Trust Amity– is likely to be concluded in the next three to four weeks and is subject to necessary regulatory approvals.
The sale includes existing long term freight contracts associated with the ships with Oldendorff Carriers GmbH & Co. KG Germany, one of the largest dry-bulk shipping companies in the world, Tata Power said.
Source: energy.economictimes.indiatimes
