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| 5 Tata firms may sell shares for funds |
| BS Reporter / Mumbai Jan 01, 2009, 00:35 IST |
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Group’s steel, auto, hotels, beverage and chemicals cos eye market.
The Rs 251,543-crore Tata group today said at least five of its companies may be readying plans to raise funds from additional share sale to expand their respective businesses instead of depending on the holding company to finance the growth.
The group’s steel, automobile, hotels, beverage and chemicals businesses may tap the capital market to raise funds. "When stock exchanges start recovering, there are many options for the group companies Tata Motors, Tata steel, Indian Hotels, Tata Tea and Tata Chemicals to go and raise capital,’’ said R K Krishna Kumar, executive director, Tata Sons, the holding company of the Tata Group.
India’s second-largest business group, which has seen its prestigious hotel property in Mumbai ravaged by terrorist attacks in late November, said the share sale may happen only after a revival in the economy and stock markets. "As you see a general recovery we will be seeing Tata group going out to raise funds,’’ Krishna Kumar said. "It’s been a tough challenge, this is not the first time and not the last time that those kinds of challenges are met and overcome."
While terming 2008 as "extraordinarily challenging year on all fronts", including the global slowdown and terror attacks, Krishna Kumar expected the general recovery in economy to begin in the third quarter of 2009. Analysts believe that 2009 will continue to be challenging year for the Tata group which last year acquired Jaguar and Land Rover, the two marquee brands of Ford Motor in the UK, for $2.3 billion. Tata Motors is now struggling to arrange funds to repay short-term loans raised for acquiring the two assets. The heightened effort to garner funds comes amid a general slowdown in the economy which has hit the automobile industry most. JLR itself is reported to be seeking a bailout package from the UK government while steel prices have dropped hurting prospects of Corus and Tata Steel. "Financially and economically the Tata Group will be a bit more pressured. The group isn’t relatively well placed against other groups such as against the Ambani’s or the Birla’s,’’ Hitesh Agarwal, head of research at Angel Broking, said.
As part of its strategy to tide over the difficult times, the group plans to consolidate its businesses after undertaking a comprehensive review. "We will have to consolidate whatever we have done. The process of both organic and inorganic growth by way of acquisition in all of our businesses will be reviewed carefully. There will be a greater dose of prudence in making those,’’ he said. Still, the group endeavours to maintain its growth record. The group’s steel company in 2007 bought Corus in the UK and scaled up the combined revenue of the group to $50 billion. "The group will remain clearly on track on its growth pattern,’’ Krishnakumar said. ''When the first light breaks you will see the Tata group running first.’’
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