Tata group companies cut debt by selling shares, some biz portfolios

Group's net debt fell to Rs 2.04 trn in FY21 from Rs 2.6 trn a year ago; Debt of unlisted Tata Sons, the holding company, will go up this fiscal with Air India deal

The Tata group companies including Indian Hotels Company, Tata Motors Finance and Tata Teleservices are taking steps to reduce debt by selling shares and part of business portfolios.

On Wednesday, Indian Hotels launched a qualified institutional placement of shares worth Rs 2,000 crore to reduce its debt by half, as per a stock exchange notification. Tata Motors Finance is in talks with State Bank of India to sell its vehicle portfolio worth Rs 14,500 crore which would reduce consolidated debt of its parent, Tata Motors, said a banker.

The Group’s telecom arm, Tata Teleservices repaid debt worth Rs 2,420 crore in the last two weeks  after its parent, Tata Sons Private infused funds into the loss-making subsidiary. Tata Power, the group’s electricity generation and distributing arm, was also planning to reduce its debt by Rs 25,000 crore by transferring its renewable power business into an investment trust and the work is currently in progress though it is delayed, bankers said.

Statistics collated by this newspaper shows that the Tata group’s net debt fell to Rs 2.04 trillion in the fiscal year ending March 2021 from Rs 2.6 trillion a year ago. Interestingly, in the current fiscal year ending this month-end, the debt of unlisted Tata Sons, the holding company, will go up after it acquired Air India by taking over part of the airline’s debt worth Rs 15,700 crore.

“The group’s policy is to reduce substantial debt across group companies in the next two years,” said an investment banker. Lower debt will help the companies to get better valuations, he said.

Tata Sons did not reply to an emailed questionnaire. Group insiders said Tata Motors and Tata Steel have substantial debt on their books. With the acquisition of Neelachal Ispat for Rs 12,000 crore, Tata Steel’s debt will go up in the current fiscal. “But if Tata Steel manages to sell its European operations or the operations become self-sufficient, it will be a big relief to the company,” said an official.

The company talked to several local companies including Sweden’s SAAB and ThyssenKrupp of Germany to sell or merge the European operations but nothing concrete came out of the talks so far. The steel major has now targeted to bring its net debt of Rs 63,000 crore to zero by September 2024 after it repaid Rs 42,000 crore of debt in the past seven quarters.