Tatas to babysit technology firms

Group has Rs 1,000 crore to pick up stakes.

Tata Industries Ltd will pick up between 10 per cent and 26 per cent equity, in the initial phase, in companies it has identified in the emerging areas of technology.

The plan is to fund such companies for the next 5-10 years, so that at least three or four of them are able to scale up as mega businesses.

Money is not a constraint and Tata Industries Ltd, the investment arm of the Tata group, could invest over Rs 1,000 crore in the next few years to help such companies scale up. It is also ready to hike its stakes later if the promoters want to dilute their holding.

The Tatas have identified alternative medicine and materials, non-conventional energy, agricultural inputs, biotechnology, and healthcare as areas to concentrate on.

Tata Industries Ltd is ready to put in equity in a company at different stages. It could pick up a stake in a company at the concept stage of a product, when it might require funds in the range of Rs 5-15 crore, fund entrepreneurs who want money for trial runs or commercialisation of a product, and, of course, support them in the phase of growth.

It may also look at investing in companies that have the potential to turn around, provided they are synergetic to its area of focus. Further, it may look at investing in 5-10 companies in one emerging area (like biotechnology), and merge them into one large company if the need arises.

Speaking to Business Standard, Kishor Chaukar, managing director of Tata Industries Ltd, pointed out: "We will look at investments in emerging areas of business, and our aim is to grow them and stay invested. We expect that in the next 5-10 years at least three or four of these businesses will become large "" like our telecom business."

Tata Industries Ltd is looking at a range of new areas, though it declined to name the companies it could invest in. In alternative materials, an area of interest is biodegradable materials, which could replace plastics.

In healthcare, remote diagnostics could be a key area for potential growth. In energy, there is potential for converting biomass into electrical energy cheap, generating energy out of hydrocarbons, or even finding ways to make solar cells from new materials and reducing costs.

In alternative medicine, there is potential in assimilating the knowledge of Indian systems like unani, homeopathy and siddha to come up with new products. An improvement in seeds could be an area of focus in the agricultural input space.