Tata Industries to raise up to Rs 6,000 cr in bonds to invest in group cos

Tata Industries Ltd (TIL), Tata group’s investment arm for upcoming businesses, plans to raise upto Rs 6000 crore through debentures for investment into group companies.

TIL is the core investment company for Tata Group's strategic investments in new and high-technology areas which complements the investment philosophy of Tata Sons. TIL also provides strategic advisory to other Tata Group companies.

TIL has incubated several businesses, including auto ancillaries (TACO), defense (Tata Advanced Materials Ltd (TAML), Telecom, logistics and supply chain solutions (Drive India Enterprise Solutions Ltd) and Information Technology Park, Bangalore. The company also has an advisory services division, Tata Strategic Management Group (TSMG) and an education division, Tata Classedge.

The businesses are incubated in TIL and are divested to separate verticals within the group upon reaching critical and sustainable levels. The proceeds of divestment are used for investment in its ongoing initiatives in areas such as e-commerce, healthcare and technology.

CRISIL has assigned 'AAA/Stable' rating for company’s non-convertible debentures (NCDs). TIL is expected to raise borrowings of up to Rs 6,000 crore for making investments in Tata companies.

TIL’s revenues were down to Rs 321 crore in Fy18 from Rs 391 crore in Fy17.

The ratings factor in the strong support by the parent Tata Sons Ltd. It has articulated intention to maintain dominant shareholding in TIL and also assist TIL to perform repay to lenders and debt holders in full and in a timely manner.

The rating also reflects TILs strong management strength in incubating new businesses. These rating strengths are partially offset by volatility in returns from incipient business ventures and their inherent risk.

Rating agency flagged low returns for TIL incubates early stage business ventures with relatively high degree of financial, commercial, technological and regulatory risk. But, these risks are partially offset by strong parentage, access to capital, well qualified management and effective risk management framework, CRISIL said.