Top Tata group companies are on a fundraising spree from both local and international markets as they expect the economy to pick up in the second half of the current financial year.
After Tata Sons, which plans to raise $2 billion, Tata Projects is looking to mop up nearly Rs 1,000 crore from local institutions to fund its infrastructure projects and retire old loans.
The company had bagged a contract to build a part of India’s largest sea bridge – Mumbai to Navi Mumbai sea link project – in December 2017.
Tata Projects is a subsidiary of Tata Sons, the holding company of the Tata group, and all loans will be guaranteed by the parent, said a banking source. The funds will be used by Tata Projects for its working capital requirements and to scale up operations in the coming quarters.
The fundraising comes on the backdrop of Tata Sons planning to raise $2 billion in overseas loans and subsidiary Tata Capital Financial Services planning to raise upto $1.5 billion for on-lending in India.
Tata Realty and Infrastructure, another subsidiary of Tata Sons, is in talks with banks to raise Rs 1,800 crore as commercial paper for investment in real estate sector and to retire old loans.
“There is an increased focus on infrastructure projects in the Tata group as several government contracts are up for grabs and other private sector companies are unable to bid for them due to the liquidity crisis. Tata Projects is looking for opportunities in engineering, procurement and construction (EPC) projects,” the banking source said. The company has an order book of Rs 48,500 crore as on May this year and plans to bid for infrastructure projects on its own instead of bidding via joint ventures.
A Tata Projects spokesperson declined to comment.
In December 2017, the company had bagged the Rs 5,612 crore project to design and construct part of the Mumbai trans-harbour link, in a joint venture with Daewoo of South Korea.
The project involved construction of a 7.8-km long bridge across Mumbai harbour. The other half of the Mumbai trans-harbour sea-link project was bagged by L&T. Under its new group chairman, Tata Projects has undergone a restructuring of its operations and is focusing on urban infrastructure and services.
A top Tata group official said with the Centre seeking investments in infrastructure sector projects, including in the freight corridors, Tata Projects is expected to be the vehicle for such projects.
This comes at a time when ordering for highways continued to be weak for the third consecutive quarter but is expected to pick up with the central government planning to invest Rs 15 trillion in roads and highways over the next five years.