Tata Motors has recently decided to offloads its 20% stake in Telco Construction Equipment Company Ltd (Telcon) to the latter's Japanese partner for a whopping Rs. 1,000 crore.

After the deal will be in effect, Hitachi will own a 60% stake in Telcon being the largest stakeholder in the company. The offloading exercise is believed to be Tata Motors' ongoing deleveraging exercise. In fact, as the deal ends it will empower Hitachi to get Telcon a new growth base as it work on significant new technology transfer to boost the firm's operations.

Notably, it has already failed to give the much-desired boost to the revenue growth even as the prospects for India's construction and infrastructure sector remained optimistic.

The companies who are advising both the parties are Standard Chartered and KPMG for Tata Motors and Hitachi respectively. It was earlier expected that India's largest Commercial vehicle major may exit the entire holding in Telcon in favour of Hitachi but the Group has said that it has no plans to dilute any more stake in the time to come.

Analysts believe that the deal is going to help the home-grown automaker to offload its Rs 23,100 crore debt as on December 2009 with a debt-to-equity ratio at 4.3.