Tata Sons raises Rs 633 crore by selling TCS shares

Tata Sons, the primary holding company of the Tata group, raised Rs 633.4 crore by selling 10.32 million shares of Tata Consultancy Services in a bulk deal on the National Stock Exchange. The shares, amounting to 1.05 per cent stake in India’s largest software exporter, were held by Tata Ltd, a UK-based subsidiary of Tata Sons. The shares were sold at Rs 615 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.

“With Tata Sons’ increased participation in its group companies’ investment requirements, Crisil expects the company’s capital structure to deteriorate from the present level over the medium term,” said the Mumbai-based credit rating agency in a note last month.

The company is also in the process of raising Rs 500 crore through issuance of bonds. Crisil has assigned AAA rating to the non-convertible debenture issue of the company.

“Tata Sons’ superior financial flexibility arises from its ability to raise additional funds by sale or pledge of shares of Tata Consultancy Services Ltd,” the agency had said in its note.

Tata Sons continues to directly hold 73.75 per cent in TCS. The stake was valued Rs 45,835 crore on Wednesday. Tata Sons is expected to continue to fund its participation in group companies through a judicious mix of debt and sale of investments. As the group’s primary holding company, the earnings of Tata Sons primarily come from dividends and sale of investments. Tata Sons had Rs 2,892 crore as cash and cash equivalents by the end of March 31, 2009, showing high liquidity.