Tata Sons plans Rs8,000-cr group restructuring: report

04 Mar 2017

Tata Sons' under new chairman N Chandrasekaran could soon embark on a restructuring exercise to simplify the group's shareholding, which is aimed at addressing areas of concern arising out of the rift with ousted chairman Cyrus Mistry.

Tata Sons, the holding company of the $104-billion Tata group, plans to buy shares worth about Rs8,000-10,000 crore in group companies that hold shares in other listed group firms in a bid to reduce cross-holding, reports said quoting industry sources.

The idea is to reduce the holding of larger group companies like Tata Steel, Tata Chemicals and Tata Power in other group companies and Tata Sons, the group holding company, increasing its direct stake in operating companies.

If this proposal is executed, some of the listed entities, including Tata Steel, Tata Motors and Tata Chemicals, will receive money from Tata Sons, which could be used to pare debt.

Tata Steel, for example, holds stakes worth over Rs16,000 crore in 13 other listed Tata entities, including Tata Power, Tata Motors, Tata Consultancy Services, Tata Sponge Iron and Titan. Under the restructuring plan, Tata Sons will hold shares in these companies directly, and not through Tata Steel.

Earlier, Nusli Wadia, then an independent director on the boards of Tata group firms, had said the cross-holding structure locked up value for companies like Tata Motors. Wadia had told shareholders that Tata Motors should sell its stake in other Tata companies, valued at about Rs8,800 crore.

The restructuring will also boost Tata Trusts, which holds 66-per cent stake in group holding company Tata Sons. 

Meanwhile, in a letter to employees of the group on the occasion of the 178th birth anniversary of Tata Trusts Founder Jamsetji Nusserwanji Tata, Ratan Tata, chairman emeritus of the group, thanked them for their hard work, zeal and integrity.

You the ''inheritors and custodians of the (Tata) Trusts'' and of its ''belief in making a sustainable change'' in the society, Tata told employees.

''You bring your zeal, your vigour, your integrity and most importantly your hard work. It is because of you that we can derive and obtain the opportunity and the privilege to serve our community and through that, our nation,'' he said.

''This year (2017) also marks the completion of 125 years of Tata Trusts,'' he said. ''As one of the largest stakeholder communities for Trusts, you as Tata employees have played an important role in making the legacy come alive and we hope that you are proud of our group's capacity of thinking beyond business,'' Tata said.

Introducing new Tata Sons chairman N Chandrasekaran at a function in Jamshedpur, Tata said the Tata Group is in the safe hands of Chandrasekaran, who would take it to a new level of progress and growth. He expressed confidence that Chandra (Chandrasekaran) will take the group as well as the city to a new level of progress and growth.