Tata group companies raise $660 mn as overseas debt to fund operations

Tata Group companies, including holding firm Tata Sons Pvt Ltd, have tapped the overseas debt market to raise funds worth $660 million to fund their operations in the first half of the ongoing financial year as demand for the group’s products surges.

According to Reserve Bank of India (RBI) data, Tata Sons raised $167 million to refinance its old overseas loans while Tata SIA Airlines raised $279 million to import aircraft.

Tata Capital Financial Services raised an additional $215 million for on-lending purposes.

The group companies are tapping the overseas markets even as cost of funds are now far higher after the US Federal Reserve undertook 11 consecutive rate hikes, including four in 2023.

Bankers said the group’s good track record in repaying debt on time has helped it raise funds at competitive rates from overseas.

Tata SIA Airlines plans to increase its fleet size to 70 aircraft from 63 before its planned merger with Air India. The funds raised by the company will be used to pay for aircraft lease and other corporate expenses.

Total lending book of the group’s financial services firm, Tata Capital, on a consolidated basis, grew by 29 per cent to Rs 119,573 crore as on March 31, 2023, from Rs 92,889 crore on March 31, 2022. It was driven by growth in home loans and personal loan/business loans.

The share of retail loans increased to 54 per cent of the aggregate portfolio on March 31, 2023 from 52 per cent on March 31, 2022. The loan book has further grown by 6 per cent on a quarterly basis in Q1FY24.

In the ongoing festival season, the company expects to increase its retail loan book and fundraising. The fundraising by group companies comes on the backdrop of rising demand for their products and the companies are preparing to expand capacity.

The Tata Group joins other conglomerates, which are raising funds from overseas. For instance, the Adani Group is planning to raise $4 billion to produce low-cost green hydrogen. Reliance Industries and its subsidiary Reliance Jio have also raised overseas debt worth $2 billion last month. Reliance plans to raise $1.8 billion from local markets via bonds. The Hinduja Group is in talks to raise $850 million for the acquisition of Reliance Capital.