Tata Capital seeks approval for related party deals with Tata Steel, TCS

Under the factoring arrangement, Tata Steel discounts its sales receivables with Tata Capital (TCL) arising from goods sold on credit to customers

Tata Capital (TCL), the financial services arm of Tata group, has sought approval from its shareholders to conduct related party transactions worth ₹15,300 crore in the financial year 2026 with other group firms Tata Steel and Tata Consultancy Services as part of pre-listing regulatory requirements.

 

In a regulatory filing on Tuesday, TCL, which has to be listed by September this year to meet Reserve Bank of India’s (RBI’s) norms, said it provides Tata Steel with factoring services estimated at ₹10,000 crore.

 

This is approximately 55 per cent of TCL’s annual consolidated turnover for the financial year 2023-24 and is conducted at an arm’s length basis and within the ordinary course of business.

 

Under the factoring arrangement, Tata Steel discounts with TCL, the sales receivables from its customers arising out of goods sold to them on credit. For these facilities, Tata Steel pays discounting charges to TCL.

 

Under the factoring facilities, although the exposures of the company are to the customers of Tata Steel without any recourse to Tata Steel and these are evaluated on an independent basis for each customer, these factoring transactions will be regarded as related party transactions with Tata Steel based on the definition of related party transactions under Sebi LODR and hence it is seeking shareholders’ approval.

 

TCL also provides lease facilities to Tata Steel, and Tata Steel pays lease rentals to the company. Tata Sons owns 93 per cent stake in Tata Capital and 32 per cent stake in Tata Steel.

 

Similarly, Tata Capital said its parent Tata Sons holds a 71.74 per cent stake in Tata Consultancy Services (TCS), which, as a subsidiary, is also classified as a related party to Tata Capital. As part of its broader borrowing strategy, Tata Capital raises funds through various instruments, including term loans, inter-corporate deposits, and non-convertible debentures (NCDs) and has engaged in multiple transactions with TCS, including the issuance of NCDs, procurement of IT services, purchase of hardware and software, and leasing arrangements.

 

TCL proposes to continue these related party transactions with TCS in the financial year 2025-26, with an estimated aggregate value of ₹5,300 crore, based on anticipated funding requirements and IT-related expenditures, Tata Capital said.

 

As part of its IPO plan, Tata Capital said it intends to raise the aggregate limit of non-resident Indians and overseas corporate bodies investment from 10 per cent to 24 per cent. This adjustment would enable greater participation by NRIs and OCIs in the offering while also facilitating post-listing liquidity in the company’s shares and hence it asked its shareholders to clear the proposal via a postal ballot.