N Chandrasekaran picks speed on consolidation

Tata Sons Chairman N Chandrasekaran (Chandra) is consolidating stakes in listed Tata companies within the holding company. 

This was one of the key tasks on Chandra’s agenda after he took over as chairman of the group in February 2017, said a source. 

The consolidation exercise picked up pace on Tuesday, with Tata Chemicals selling shares worth Rs 922 crore in Tata Global and Tata Global divesting shares of Rs 674 crore in Tata Chemicals.

In another transaction on Monday, Tata Sons bought 1.1 per cent stake from the open market in Tata Motors. In June 2017, Tata Sons had bought 2.9 per cent holding in Tata Motors from Tata Steel for Rs 3,787 crore. After Chandra become chairman, Tata Sons had bought holdings worth Rs 5,383 crore from other listed Tata entities (see chart).

The cross-holding structure of the group has come under the scanner in the past, as investors have said this limited operating companies’ ability to deploy funds in their core businesses. Besides institutional investors, who prefer to not own companies that have stakes in unrelated businesses, operating companies can deploy the funds in capital expenditure in their own businesses or repay debt. 

Tata Sons had participated in the Rs 10,000-crore share buyback programme of Tata Consultancy Services in the first quarter of 2017-18. At the end of June 2017, the cash and cash equivalent of Tata Sons was around Rs 14,708 crore, according to a CRISIL statement. 

In August, Tata Sons had raised Rs 3,300 crore by issuing non-convertible debentures and is using the funds to shore up its stakes in group companies.

* Tata Sons had bought 2.9% of Tata Motors from Tata Steel at Rs 452.8 per share for Rs 3,787 crore on June 23, 2017