Tatas to invest in realty, digital arms with TCS dividend booster

Will also pay Tata Teleservices AGR dues

Tata Sons, the holding company of the Tata group, will use the Rs 22,000 crore dividend received from its crown jewel, Tata Consultancy Services in paying Tata Teleservices adjusted gross revenues (AGR) dues, and invest in its digital, financial services and real estate/infrastructure businesses.

According to sources, Tata Teleservices, which was ordered by the SC to pay 10 per cent of the AGR dues of Rs 14,473 crore by March this year, has already paid the same with financial help from the holding company. Out of its total dues, TTSL had paid Rs 3,558 crore as of June 30, last year. In the last four years, Tata Sons has repaid a large part of Tata Tele's bank and government dues and bought back Tata Tele shares from Docomo with help from a generous TCS dividend. 

A source said investment in Tata Tele is now petering out and will not require very high fund infusion from Tata Sons in the new financial year. "Barring the 10 per cent AGR dues which have to be paid in the next nine years, Tata Tele will now run on its steam," said an insider.

Apart from investing Rs 1,000 crore in its financial services business and Rs 900 crore in Tata SIA Airlines, the Tata group has earmarked a large sum for its digital business led by Tata Digital Ltd. TDL is busy making the Super App targetted at the Indian consumer which will sell all Tata group products - from airline tickets, hotels to groceries - under one app. A group source said in the last financial year, it has taken full control of Air Asia India by buying out part of Air Asia Berhad's stake. "This year we will be focusing on Air India acquisition but it will not be a very aggressive bid - taking into account the pandemic," he said. The Air India bid will be one of the big ticket investment which would require a cash chest, said an insider.

The real estate and infrastructure development by Tata Realty and Infrastructure Ltd is also receives a large dose of funds from the holding company. Insiders said TRIL is developing the Pune metro rail project while Tata Projects Ltd is constructing part of Mumbai to Navi Mumbai trans harbour projects. 

The financial services business will continue to receive funds from the holding company. In the December quarter of last financial year, Tata Sons invested Rs 1,000 crore more into Tata Capital Financial Services Ltd which was in addition to Rs  2,500 crore invested in fiscal 2020. Tata's financial businesses, including housing finance arms, has already built a Rs 75,588 crore of loan book (as of Dec 2020). Of this, almost 58 per cent is retail book and the company is striving to grow it further.