Tata Global Beverages to divest stake in group's firms to parent

With N Chandrasekaran taking over as chairman of the board early this month, Tata Global Beverages (TGBL) has decided to sell its stake in various Tata group listed companies to its parent, Tata Sons, in the next few months. TGBL owns close to Rs 755 crore worth of stake in other Tata group firms, especially in Tata Chemicals.

According to statistics with the stock exchanges, TGBL owns 4.39 per cent stake in Tata Chemicals, worth Rs 715 crore, taking into account Tuesday’s closing, and miniscule stakes in Indian Hotels and Tata Investment Corporation. While the stake sale would help TGBL to raise funds to expand its portfolio of products, it would also help Tata Sons to consolidate the group’s cross-holdings of shares with itself.

TGBL shares closed at Rs 169 a share on Tuesday, up 1.5 per cent.

A Tata Sons spokesperson declined to comment.

On June 23, Tata Sons had announced that it bought around 2.85 per cent stake in Tata Motors from Tata Motors for Rs 3,784 crore. 

Tata Chemicals, Tata Motors and Tata Steel own cross-holdings in various group listed and unlisted companies worth Rs 14,000 crore. In the coming years, Tata Sons would gradually buy out these shares as it would help the operating firms to raise cash for their expansion or help reduce debt, as in the case of Tata Steel. 

The group firms built stake in each other, which resulted in lower returns over the years, and in many cases like in Tata Teleservices, in complete loss.

The new chairman is taking aggressive steps to make group firms agile and  focusing on returns on investments. 

With Tata Sons buying back shares in other listed companies, the shareholders of these listed companies would have less reason to complain about returns from these investments. The listed companies also own 14 per cent stake in unlisted Tata Sons, which is estimated to be worth Rs 70,000 crore. 

Tata Sons is also investing Rs 12,000 crore more in Tata Teleservices and buying back its former partner, NTT DoCoMo’s stake in the arm for $1.2 billion.

Last month, Tata Sons participated in the buyback offer of Tata Consultancy Services to raise Rs 10,300 crore.