Currently, Tata Sons holds a 40 per cent stake in Tata Autocomp Systems. (Photo: Shutterstock)
Tata Sons, the holding company of Tata Group, plans to acquire an additional 12.65 per cent stake in Tata Autocomp Systems (TACO) for Rs 2,122 crore from Tata Capital, bringing the total equity valuation of TACO to Rs 16,800 crore, according to Tata Capital’s filings.
Currently, Tata Sons holds a 40 per cent stake in Tata Autocomp Systems, while Tata Motors owns 26 per cent. The remaining stake is held by other Tata companies.
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An email sent to Tata Group on Friday did not receive a response.
The transaction is expected to be completed before the end of the ongoing financial year. In its filings, Tata Capital stated that to support business growth, maintain a strong capital adequacy ratio, and ensure smooth operations, it has entered into and may engage in various transactions with Tata Sons. These include the sale of investments, brand equity and business promotion contributions, rendering of services, and other transactions for business purposes, including lending and borrowing of funds.
“The company holds equity investment in Tata Autocomp Systems and has periodically sold part of this investment to Tata Sons in various tranches. As of April 1, 2024, the company held a 12.65 per cent equity shareholding in TACO. In June, the company sold a 5.08 per cent stake to Tata Sons for Rs 850 crore and now proposes to sell the remaining 7.57 per cent stake to TSPL for Rs 1,272 crore,” Tata Capital stated in the filing, adding that an independent valuation of TACO was conducted, and the transaction was referred to its audit committee. Tata Sons currently owns 93 per cent of Tata Capital.
As the aggregate value of the sale of investment and other transactions with TSPL during FY25 is estimated to be up to Rs 2,500 crore, which is approximately 13.76 per cent of Tata Capital’s consolidated turnover for FY24, Tata Capital sought shareholder approval for the related party transactions.
“The management provided the audit committee with all relevant details, as required by law, for these related party transactions. After reviewing the information, the audit committee granted approval for entering into material related party transactions with TSPL for an aggregate value of up to Rs 2,500 crore during FY25. The committee noted that the transactions will be conducted on an arm’s length basis and in the ordinary course of Tata Capital’s business,” the company added.
Bankers have indicated that Tata Capital is preparing for a potential listing after the Reserve Bank of India (RBI) classified the company as an NBFC-Upper Layer, which requires it to be listed by September next year. Tata Capital is also in the process of merging Tata Motors’ auto finance arms with itself.
According to an earlier RBI circular, all companies classified as NBFC-Upper Layer must be listed by September 2025. This would have required Tata Sons to list itself. However, during FY24, TSPL paid off its entire debt of Rs 21,813 crore and applied to the RBI for declassification from NBFC-Upper Layer status, ruling out any potential listing.
TACO holds strategic importance for the Tata Group as it is the holding company for the group’s ventures into the auto components sector. It was established primarily to create captive consumption and foster an ecosystem, and more recently to tap into the electric vehicle market, according to an analysis by Crisil.
According to TSPL’s annual report for FY24, Tata Sons reported a 25 per cent increase in total revenue to Rs 43,893 crore and a profit before exceptional items and taxes of Rs 41,116.51 crore. The company reported a profit after tax of Rs 34,653.98 crore, marking a 57 per cent growth over the previous year.
First Published: Sep 29 2024 | 1:01 PM IST
By Companies
Source: Companies