Tata Sons to tap in-house funds for growth

Mumbai: Tata Sons is recalibrating the conglomerate’s funding plans and searching for to bolster its money reserves to fund new enterprise ventures and assist the monetary wants of group firms. This strategic transfer hinges on utilising dividends from Tata Consultancy Services (TCS) and different worthwhile group firms, and avoiding exterior borrowings, officers near the matter mentioned.Tata Sons generates a big share of its earnings from dividends paid by group firms the place it holds substantial stakes, from 8% to 71.74%. The market worth of its listed investments is presently at ₹15.8 lakh crore. Notably, Tata Sons, the holding entity for firms underneath the group, earned a dividend of ₹24,931 crore from TCS for the primary 9 months of the present fiscal yr.

TCS accounted for 84%, or ₹18,947 crore, of Tata Sons’ complete dividend income final fiscal, adopted by Tata Steel, Tata Motors, and different group firms.

Tata Sons has additionally strengthened its steadiness sheet by absolutely repaying its debt. Throughout FY24, Tata Sons’ dividend earnings fell 35% to ₹21,528.9 crore, whereas it repaid its whole borrowings of ₹20,274 crore and had web money of ₹2,679 crore in comparison with a web debt of ₹27,753 crore in FY20.

Tata Sons didn’t remark.

“Not all firms would require funds on the similar time. And most of the listed group firms have sufficient heft to handle their very own steadiness sheets and Tata Sons could step in for assist if required, for say inorganic acquisitions or so. Tata Sons has a really robust steadiness sheet and might fund future plans with its reserves as and when wanted,” mentioned an official near the matter.

Tata Digital, Tata Electronics, and Air India, that are within the building-up section, will achieve in scale and switch into financially robust companies over the subsequent three years, Tata Sons chairman N Chandrasekaran had advised ET in an interview final yr. They’re anticipated to be among the many group’s prime 10 companies within the subsequent three years.

“The corporate has invested in its new and current companies primarily based on their requirement for capital, progress, and deleveraging their steadiness sheets,” Tata Sons mentioned in its annual report. Tata Sons’ complete investments in unlisted fairness shares of its subsidiaries, associates, and joint ventures elevated by ₹9,822 crore to ₹70,732.5 crore in FY24, a 16% improve from a yr in the past.

Traditionally, Tata Sons maintained vital debt on its steadiness sheet to assist group ventures, a apply typical of huge holding firms.

The group’s deliberate capital infusion into rising enterprise areas and key priorities-such as semiconductors, defence, electric vehicles, and Air India-is anticipated to surpass $120 billion within the coming years. Earlier estimates had projected round $90 billion in capital deployment by 2027. A serious portion of those investments can be allotted to capital-intensive initiatives like semiconductors and Air India, representing the biggest home funding dedication within the conglomerate’s historical past.