 "Tata to pump in ₹30,000 crore for new ventures, new digital CEO on cards")
Tata Sons is pumping ₹30,000 crore (around $3.5 billion) into some of its fastest-growing and strategically important ventures, including Tata Digital, Tata Electronics, Air India, and its defence and battery businesses. The funding will come through equity infusion, reported The Economic Times, citing sources.
The Tata Sons board cleared the investment at a meeting held on Thursday. This comes on top of the $120 billion the group has already committed to new businesses over recent years.
“The capital infusion is considered part of the holding company's plan to meet requirements at the execution level, necessary to scale the new businesses for their next phase of growth,” a group executive told The Economic Times.
Defence, digital, and more in focus
The defence sector has been reaffirmed as a core strategic area, officials said, with resources being allocated accordingly. The company also plans to soon name a new CEO for Tata Digital following the recent exit of Naveen Tahilyani, who stepped down less than a year after taking over.
“A sizeable commitment has already been made by Tata Sons. Now, all further investments will be done on a priority basis and new businesses will have to earn the right to seek such investments,” said the executive.
Tata Sons believes these businesses have moved past their early-stage development and are ready to focus on execution and profitability. Tata Electronics and Tata Digital are already among the group’s top 10 ventures by size.
The target now is to bring these businesses into the top five in terms of revenue and ensure they turn profitable by FY27. “Group chairman [N Chandrasekaran] is now keeping close track of the progress of the new businesses,” an executive said.
Chandrasekaran recently stepped down from the board of Tata Chemicals. He has been at the helm of Tata Sons since February 2017 and was reappointed in 2022 for a second five-year term.
Mixed financial performance in FY25
Tata Group companies faced headwinds in FY25 after strong growth during the 2020-24 period. Revenue growth dropped to 4.9 per cent, down from 12 per cent in FY24. Net profit rose 10.7 per cent, a steep fall compared to the 28 per cent increase the previous year. Operating margins remained steady at 10 per cent, down slightly from 11 per cent in FY24.
Despite global uncertainties and sectoral slowdowns, over half the group companies posted double-digit revenue growth. Tata Consultancy Services (TCS) remained the top contributor, accounting for 51 per cent of the group’s net profit, though down from 54 per cent earlier.
However, investor sentiment took a hit, with Tata Group’s market capitalisation falling nearly 8 per cent in FY25, after a stellar 45 per cent rise the previous year.