Tata Trusts' direct holding in group firms to shrink to Rs 1.8 billion

Tata Trusts will be left with a Rs 1.8 billion direct holding across four Tata Group firms once it sells its 7 per cent stake in Indian Hotels to Tata Sons. The stake is worth around Rs 10 billion.

The highest stake, worth about Rs 820 million, will be in Tata Steel. Tata Motors and Tata Chemicals will be left with stakes worth Rs 660 million and Rs 257 million, respectively. The remaining stakes will be around Rs 44 million in Tata Power and Rs 20 million in Tata Investment Corporation.

“There is an ongoing exercise being undertaken to simplify complexities across the Tata Group, including the removal of cross-holdings,” said a Tata Sons spokesperson.

Tata Sons’ Chairman N Chandrasekaran has been vocal about simplifying cross holding within group firms since he took over last February. Investors have been demanding a simpler holding structure within the group to get clarity on valuation. 

Last June, Tata Sons bought a 2.85 per cent stake in Tata Motors, worth Rs 38 billion. The simplification process is expected to get over soon as Tata Trusts have a miniscule holding in Tata Group's firms. 

Tata Trusts, a group of charitable trusts own a 66 per cent stake in Tata Sons, acts as the primary holding company for Tata Group. Cross holding within group firms have been a legacy issue that has bothered investors. “In a crisis situation this will provide the company boards clarity on ownership,” said Shriram Subramanian, managing director, InGovern.