Tatas not to monetise its investments for fund-raise

MUMBAI: Tata Sons is not looking to monetise its investments to raise capital as it has “adequate cash flows” to support its operating companies and new growth initiatives, said chairman N Chandrasekaran on Friday.
Earnings of several operating companies — especially those in hospitality, aviation, automotive, steel and non-grocery retail — have been hit due to business restrictions in the country and outside, triggered by the pandemic, with some of them requiring financial support to strengthen their balance sheets.
“The Tata group companies, like all other companies, are facing both challenges and opportunities arising out of the pandemic and resulting economic situation, based on the industries and markets they operate in,” added Chandrasekaran. “All our group companies are progressing well responding to these challenges and opportunities and we are confident that they will emerge stronger.”
The $111-billion Tata Group, with over 100 companies, earns 70% of its revenues from outside of India. Tata Sons is in “strong financial position” with enough cash flows to support group companies, said Chandrasekaran in a one-page statement after chairing the outfit’s board meeting. TOI had reported in its June 4 edition about Tata Sons’ Friday board meeting to review strategies, including a budget allocation to operating companies. In the last three fiscal years, Tata Sons had invested about Rs 20,000 crore of growth capital in operating companies, with the highest amount allocated to Tata Motors, Tata Capital, Tata Steel and Tata SIA Airlines (Vistara).
Chandrasekaran further said that the group is focused on navigating the current situation and profitable growth. The conglomerate is likely to see a growth contraction this fiscal as the coronavirus outbreak and the economic slowdown are expected to slam consumer spending, according to analysts. If the health crisis has impacted some of the operations of the group, it has also opened a window of opportunities for the conglomerate.
The group — which makes Jaguar Land Rover luxury vehicles, sells cheap packets of Tata Salt and serves kebabs at London’s Bombay Brasserie — is betting on digital and medical equipment manufacturing to be growth drivers in the post-Covid-19 world. Global shutdowns and employees working from home have accelerated the adoption of digital services.
From being “secondary, nice-to-have options”, digital has become “primary channels”, and in some instances, the “only channels”, Chandrasekaran wrote in the FY20 annual report of TCS. This shift in consumer preferences will boost the growth of TCS, the biggest contributor to the group’s profits, and Tata Digital, the conglomerate’s new venture, which seeks to bring together its varied businesses on a single digital platform. Tata Sons, the holding company of the group, will also be allocating resources to its recently set-up medical device manufacturing unit, a venture it got into after its work with the government on Covid issues.

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