Ratan Tata mulls Tata Sons float

Tata Sons earns revenues through dividends from various group companies.

Ratan Tata, chairman of the Tata Group, is considering listing of the group's holding company Tata Sons.

The decision, which follows the American investment guru Warren Buffet's Berkshire Hathaway, is a departure from the usual practice of the domestic business houses to keep the details of the holding company away from the public attention.

"We would list Tata Sons as an investment company. It would not be very different from Berkshire Hathaway (the group founded by Warren Buffett, the American investment guru)," he said in an interview to 'The Sunday Times' published on Sunday.

Started as a trading company in 1868, Tata Sons today promotes and manages all the Tata group companies spread across various sectors-automobiles, steel, hospitality, software, consumer goods, chemicals and telecom.

The proposed listing is expected to unlock value of the Tata group investors A 66 per cent of the equity capital of Tata Sons is held by philanthropic trusts, 18 per cent is held by construction baron Pallonji Mistry, who is the single largest shareholder. The remaining is held by various Tata group entities (12.86 per cent) and directors.

Tata Sons earns its revenues through dividends from various Tata group companies, however till last fiscal 2003-04, it's major revenue contributor was from Tata Consultancy Services. For the year ended March 31, 2004, TCS recorded revenues of Rs 5939.5 crore as compared with Rs 4,997.5 crore.

Ratan Tata said one option was to use funds to buy or grow another TCS-style company, and use it as a spring-board to float Tata Sons itself.

Tata Sons' sales and revenues in Fiscal 2003 stood at Rs 5158.87 crore, up from Rs 4329.53 crore in fiscal 2002. Tata Sons is the proprietor of the Tata marks and licenses the marks to various Tata group companies for use in relation to their products and services for a fee under the Tata Brand Equity and Business Promotion Scheme.

Post the listing of TCS, one of the largest floats to hit the Indian capital markets, Tata Sons is awash with cash.

The Tata group has been restructuring its business operations, each of the businesses were evaluated on its ability to be in the top three in its sector, its ability to compete globally and its profitablitiy. Tata Sons has been hiking its holding in various group companies.

The average holding across the group is now 26 per cent and Ratan Tata plans to increase it to 50 per cent.