Tata group firms pledge shares to finance M&As, capex

Tata Sons, the holding firm of the Tata group, and a few group companies have pledged part of their stakes in Tata Steel, Tata Power and Tata Teleservices (Maharashtra) (TTML) to raise money for acquisitions and capital expenditure, according to disclosures made on Monday.

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

The pledged shares of Tata Steel would be worth Rs 1,973.55 crore at the current share price of Rs 199.55. TTML’s 942.8 million shares are valued at Rs 2,173.23 crore at Monday's closing price of Rs 23.05 a share. Tata Power’s pledged shares would value Rs 2,515.75 crore at the current price of Rs 778.75.
 

SHARES PLEDGED BY TATA GROUP
Company	Shares pledged	% of stake	Total stake (%)
Tata Steel	98.90 million	13.53	33.96
Tata Power	32.31 million	14.59	33.26
TTML	942.83 million	49.70	65.64

Of this, Tata Sons has pledged 13.19 per cent stake, about half of its total holding, of the world’s sixth largest steelmaker that would value Rs 1,923.66 crore at the current share price. The parent firm’s 7.68 per cent stake in TTML is valued at around Rs 335.77 crore. Tata Sons is the only promoter firm that has pledged its stake in Tata Power that amounts to half of the total holding.

In the disclosure to stock exchanges, Tata Steel and TTML have not revealed the dates of the transactions. Tata Power said Tata Sons pledged about 46.7 million shares on January 28 and released 14.3 million shares after two days.

Tata Investment Corporation (TIC) has also pledged 0.34 per cent stake of the steelmaker. Tata Teleservices (TTSL) and Tata Power are the other promoter firms, which pledged part of their holdings of TTML. TTSL, which recently sold its 26 per cent stake to Japanese firm NTT DoCoMo, has pledged 37.65 per cent of TTML stakes.

“Tata Sons has pledged its holdings in the group companies mainly to raise funds to support group companies in their investments. Tata Sons infused liquidity in Tata Steel when the steelmaker acquired Anglo-Dutch firm Corus. The parent has also helped Tata Motors for the acquisition of Jaguar and Land Rover from Ford. The other group companies have pledged their cross-holdings mainly to raise money for working capital and capital expenditure,” said sources in the know.

TTML in its disclosure said equity has been pledged by promoters only for providing security for borrowings of the telecom company.