Some of the Tata group companies, including Tata Steel, are under pressure to bring down their debt and are looking to monetise their investments. Selling holdings in group companies would be one more source of raising funds.
Four major operating companies of the group, Tata Steel, Tata Power, Tata Global Beverages and Tata Chemicals, have six investments worth almost Rs 7,000 crore.
Besides another 22 cross-holdings across various firms account for Rs 769 crore, based on Friday’s share prices.
“Simplifying the cross-holding structure of the group has been an ongoing process for some time,” said a senior executive at one of the operating firms.
“This could be hastened under the new leadership at Tata Sons,” he added.
The cross-holding is expected to be simplified in the next four quarters, with Tata Sons executing the trades through block deals. Tata Sons declined to comment on this.
On February 21, N Chandrasekaran took charge of Tata Sons as chairman.
Soon after, Tata Sons and NTT DoCoMo told the Delhi High Court, that they had reached a settlement concerning the enforcement of an arbitration award on the exit of the Japanese telecom major from a joint venture between the two companies.
Resolving the cross-holding could be a second major move by Chandrasekaran.
Tata Steel is expected to be the largest beneficiary of the move. The company had Rs 82,777 crore debt on its books at the end of December — 2.2 times its net worth. If Tata Sons buys its stake in Tata Motors and Tata Power, it would fetch Rs 4,173 crore.
Tata Sons will participate in the buyback offer from Tata Consultancy Services (TCS) announced last month. The most-valued company of the group and the country’s largest company in terms of market capitalisation announced a buyback of shares worth Rs 16,000 crore. Tata Sons owns 73.3 per cent in TCS, which would bring Rs 11,728 crore to Tata Sons, based on Friday’s price.
Tata Sons could use a part of the funds it receives from the TCS buyback to simplify cross-holding structure of the group.
Tata Sons will also have to settle the $1.18-billion dispute with DoCoMo. The amount has already been deposited with the Delhi High Court.