Tata Sons has pledged shares in five group companies, including Tata Steel, Tata Power, Tata Teleservices, Indian Hotels Company Limited and Tata Tea, to raise around 6,500 crore to finance the group's capital expenditure, including M&As.
Tata Sons has pledged about 1,110 million shares, forming 14.6 per cent stake in Tata Steel, 13 per cent in in Tata Power, 3.46 per cent in Indian Hotels Ltd, nearly 50 per cent stake in Tata Teleservices (Maharashtra) Ltd and the entire stake in Tata Coffee or 57.58 per cent of Tata Tea, the companies said in separate filings with the stock exchanges.
The shares of the five Tata Group firms pledged with various lenders have an aggregate value of Rs7,000 crore at current market rates.
The pledged shares include 107,35,982 shares of Tata Tea (representing 57.48 per cent stake in the company and the entire stake in Tata Coffee), 25 million shares in Indian Hotels Company, 96.4 million shares in Tata Power and 32.3 million shares of Tata Steel.
Tata Investment Corporation (TICL) has also pledged 25 lakh shares in Tata Steel as security for the zero coupon convertible bonds issued by TICL - which carry no interest cost and are fully convertible into equity shares of TICL.
The pledging cannot be invoked as no payment obligations arise from issue of the bonds, said the notice to the stock exchanges.
The disclosures by Tata Group companies follow a directive by market regulator SEBI asking promoters of the listed companies to disclose the amount of shares pledged with lenders.
The SEBI's directive comes in the wake of the Satyam scandel, wherein promoter Ramalinga Raju had pledged nearly all his shares at inflated prices.
The Tata Group had to borrow heavily over the past two years to fund both acquisitions and expansion plans. Group firms including Tat Steel, Tata Motors, Tata Tea and Tata Power have made huge investments in overseas acquisitions or are in the process of investing in various projects in the country.