The dividend income of Tata Sons, the holding company of the Tata Group, fell by a mere 3 per cent in 2008-09 despite the sizeable losses suffered by group companies such as Tata Steel and Tata Motors.
The holding firm managed to protect its income to a great extent by increasing its shareholding in Tata Motors, Tata Steel, Tata Communications and Indian Hotels, which got beaten in the stock markets during the downturn. To manage this, it sold a part of its stake in Tata Consultancy Services, where its holding came down to 73.75 per cent from 75 per cent earlier.
The holding firm received Rs 1,650 crore dividend income for 2008-09, from 14 listed entities, against Rs1,706 crore for the previous financial year. The dividend income is crucial, as that was responsible for Tata Sons getting the highest rating, LAAA, from ICRA in April this year for its Rs 6,750 crore non-convertible debenture (NCD) programme. “A sharp downfall in dividend income would have impacted the rating,” said a senior executive at a leading rating firm. “This, in turn, would have increased the borrowing cost at the group level,” he said.
| DIVIDEND DECLARED BY GROUP Cos | ||||
| Company | Dividend FY 08 (Rs crore) | Tata Sons’ stake (%) 31/03/08 | Dividend FY 09 (Rs crore) | Tata Sons‘ stake (%) 31 /03 /09 |
| TCS | 1,027.70 | 75.01 | 1,013.40 | 73.75 |
| Tata Power | 70.10 | 30.24 | 76.70 | 30.16 |
| Tata Steel | 326.10 | 27.90 | 342.10 | 29.27 |
| Tata Motors | 122.70 | 21.92 | 78.10 | 28.94 |
| Tata Comm | 10.90 | 8.51 | 13.90 | 10.88 |
| Tata Tea | 49.30 | 22.78 | 24.60 | 22.78 |
| Tata Chem | 30.10 | 14.29 | 30.10 | 14.26 |
| Tata Inv | 28.40 | 54.98 | 28.70 | 55.55 |
| Indian Hotels | 13.60 | 11.89 | 12.40 | 14.37 |
| Voltas | 10.60 | 23.79 | 12.50 | 23.79 |
| Titan | 3.10 | 8.87 | 3.90 | 8.87 |
| Trent | 3.50 | 25.91 | 2.70 | 25.91 |
| Tata Elxsi | 9.20 | 42.22 | 9.20 | 42.22 |
| Rallis | 1.40 | 7.52 | 1.40 | 7.52 |
| Total | 1,706.70 | 1,649.70 | ||
Tata Sons has a fund-raising plan of nearly Rs 9,300 core. ICRA has also given it the top rating for another Rs 500 crore debt-raising through NCDs. Further it has got the top, A1 Plus, rating for its Rs 2,625 crore commercial paper programme. A1 is the highest credit quality rating assignment for short-term debt instruments by ICRA. Usually, ratings are taken for fund-raising plans within the next one year. It could not be immediately ascertained how much of this has been already raised. “Tata Companies have large investment plans and investment requirements, some of which may be supported by Tata Sons,” said the rating agency in its note.
TCS is the only group company that pays a quarterly dividend. Its total dividend for 2008-09 was Rs 14 a share, which made it pay a total of Rs 1,370 crore, according to its annual report. Of this, the total payment to Tata Sons was Rs1,013 crore, down from Rs1,027 crore earlier. The company announced one bonus share for every share of TCS on June 16. After that, it brought down its dividend per share for the first quarter to Rs 2 a share.
