Tata Sons, the holding company of the Tata group, is on a fund raising spree to invest in the rights issues of group companies, retiring debt and fund new businesses like aviation and infrastructure.  Since January this year, the holding company has raised close to Rs 1,915 crore by way of non-convertible debentures, say bankers.
 
The cash-rich company will require funds to invest an additional Rs 2,000 crore more in its loss-making wireless telephony operator, Tata Teleservices in the next two years and in the equity of loss-making direct-to-home operator Tata Sky Ltd.  Tata Sons was also investing in electronic retail stores Chroma but the company will not require any more fund infusion from the promoter company. Tata Sons raised funds at an average rate of 9.8% for three, five and 10 years tenure bonds in January and March this year.
 
Bankers say Tata Sons would require about Rs 660 crore to retain its 33% stake in Tata Power and another Rs 330 crore to invest in Indian Hotels rights issue. The Tata group holds 37.5% stake in Indian Hotels which is raising Rs 1,000 crore as rights issue. The company has also announced investments to set up two airlines in India in association with Air Asia and Singapore Airlines.
 
A Tata spokesperson declined to comment on Tata Sons fund raising plans.
 
In January this year, Tata Sons invested Rs 2,400 crore in Tata Teleservices which was used by the telecom company to pay off its debt and the company will require another Rs 2,000 crore in the next two years to repay its interest liability, say bankers. 
 
Though Tata Sons is a cash rich and profit making company, it needs money to fund its new businesses including financial services, realty, retail and aviation.  As these businesses are long gestation businesses, Tata Sons is stepping in to fund them in the initial stage. In the fiscal 2013, the company earned a net profit of Rs 3,710 crore on total on   revenues of Rs 5,750 crore as as against a profit after tax of Rs 3,150 crore on total revenues of Rs 4,730 crore for 2011-12. The company’s main revenue stream comes from dividend paid by Tata group companies.
 
The Tata group companies, with operations in more than 100 countries across six continents, employ over 540,000 people globally. While the big boys such as Tata Steel, Tata Power, Indian Hotels and the domestic operations of Tata Motors, however, are under pressure — partly due to an economic slowdown in India and Europe compressing demand for goods and services, software exporter TCS remains its crown jewel.  Nearly half the group’s revenue is currently accounted for by companies and businesses that earn below-par shareholder returns.
 
Of all its businesses, telecom is turning out to be the biggest drag on the group. Tata Sons has invested a massive Rs 26,000 crore till date in its wireless telephony operator, Tata Teleservices but its returns have remained negative.  During the first nine months ending December 2013, Tata Teleservices reported a net loss of Rs 3,485 crore on total operating income of Rs 7,895 crore as against net loss of Rs 3,794 crore on total operating income of Rs 8,190 crore during the same period of fiscal 2013.
 
Source:- business-standard.com