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Tata Motors open to stake sale in finance arm, expects Rs 50k cr AUM by 2020

Press Trust of India  |  New Delhi 

is open to divesting stake in its financing arm, Finance, which is expected to have Rs 50,000 crore of assets under by 2020, according to company officials.

The auto major, however, intends to keep control in Finance Ltd (TMFL), an entity which it expects to play a key role in its future growth even as it sells a stake in other businesses or winds up some operations abroad as part of a restructuring exercise.

"Of course, we are very clear that we will now continue to invest as far as Tata Motors Finance is concerned. We will maintain control as far as Tata Motors Finance is concerned. But clearly, there is no intention to say that it should always hold at 100 per cent. That is also clear," PB told analysts.

He said the company expects "a very strong broad-based rebound" in TMFL, which saw 24 per cent increase in assets under (AUM) in 2017-18 at Rs 27,932 crore as against Rs 22,517 crore in 2016-17.

"Probably the most heartening to see is gross NPA has gone from 18 per cent last year (FY17) down to 4 per cent (in FY18) and the business actually generates an ROE (return on equity) of 17 per cent," added.

Elaborating on strategic goals, Tata Motors Finance Ltd(TMFL) said in an investor presentation that the company is aiming to be a "Rs 50,000 crore asset under group" by 2020.

As part of the plan, TMFL also plans to expand its reach by increasing total branches across to 500 by 2020 from 270 at present, he added.

Moreover, Gupta said TMFL is also targeting to "attain 20 per cent sustainable ROE" by 2020.

Apart from driving up financing of its new vehicles by TMFL, Tata Motors also looking at the financing arm to help its partner suppliers with poor financial health.

Conducting the financial risk assessment of stressed vendors, providing assistance in correcting capital structure and financial working capital requirements are some of the areas that Tata Motors is looking to leverage on TMFL.

The significance of TMFL to Tata Motors is in contrast to other businesses such as defence the sale of which is in progress.

said Tata Motors is "now holding for sale of a stake in as well as Tata Hitachi" and some small shareholding in other companies like

"We are winding up our business (Tata Hispano), which is already in final stages as well as Tata Precision in has been wound up," he added.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sun, June 10 2018. 10:15 IST