Tata Group raises Rs10,000 crore through share pledge

12 February 2009

Mumbai: Nine Tata group companies revealed that they had pledged about 123 crore shares aggregating to Rs10,000 crore as per Wednesday's closing price to meet the group' financial requirements.

The nine Tata companies are Tata Communications, Tata Tea, Tata Chemicals, Tata Motors, Tata Coffee, Tata Steel, Tata Power, Tata Teleservices (Mah) and Indian Hotels.

On 21 January, the Securities and Exchange Board of India had made disclosure of pledged shares mandatory after it was revealed that former Satyam chairman B Ramalinga Raju had pledged almost his entire holding with financiers to fund plans of other family-related firms.

A Tata Sons spokesperson said that the pledging of shares ''is not a new practice; it has been existing since the age of joint stock companies. It has been done primarily for long-term funding requirements of Tata Sons.''

During the market flare up, the Tata Group had undertaken several acquisitions, expanding its clout across the world. These include a 30-per cent stake in US-based Glaceau (Energy Brands) for $677 million, and full acquisitions of Anglo-Dutch steel maker Corus and British luxury brand Jaguar-Land Rover. Tata Tea had acquired US-based Eight'O clock coffee company for $220 million in June 2006.

In a disclosure to the Bombay Stock Exchange Tata Chemicals said three of its promoters have pledged a 20.02-per cent stake in the company with lenders, while Tata Tea said one of its promoters, Tata Sons, had pledged 11.32 per cent stake in the company with lenders, representing 70 lakh shares.