Tata Sons sells 1.05 per cent of holding in TCS

08 May 2009

Tata Sons, the primary holding company of the Tata group, raised Rs633.4 crore by selling 10.32 million shares of Tata Consultancy Services in a bulk deal on the National Stock Exchange. The shares, amounting to a 1.05-per cent stake in India's largest software exporter, were held by Tata Ltd, a UK-based subsidiary of Tata Sons. They were sold at Rs615 per share.

The holding company of one of India's largest business houses has raised the money when its companies are facing a fund crunch.

Tata Motors, the country's largest commercial vehicle maker, is in the process of raising a $2 billion loan to refinance the remaining part of the bridge loan it took to acquire Jaguar and Land Rover brands last year. The company is also in the process of raising Rs 500 crore through a bonds issue.

Tata Sons declined to comment officially on the block deal and its purpose. TCS, India's largest software exporter, has revenues of around $6 billion. The public shareholding in in the company is 23.8 per cent. The Tata group has also pledged around 16 per cent of its holdings in TCS.

Tata Sons continues to directly hold 73.75 per cent in TCS. As the group's primary holding company, the earnings of Tata Sons primarily come from dividends and sale of investments. Tata Sons had Rs2,892 crore as cash and cash equivalents by the end of 31 March, showing high liquidity.

The money raised through this transaction, and possibly others of a similar nature, may be directly provided to Tata Motors as a loan. Tata Sons may also deposit the money with the banks that have provided the bridge to Tata Motors.