At this time, Tata Sons holds a 40 per cent stake in Tata Autocomp Systems while Tata Motors owns 26 per cent.
New Delhi: Tata Sons, the holding company of Tata Group, has said that it is pondering over the idea of acquiring an additional 12.65 per cent stake in Tata Autocomp Systems (TACO). It would cost Rs 2,122 crore to acquire the additional stake from Tata Capital. This will bring the total equity valuation of TACO to Rs 16,800 crore, according to Tata Capital’s filings.
At this time, 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.
However, Tata Group did not acknowledge any query about this plan though the reports say that the deal is expected to close before the end of the ongoing financial year.
Tata Capital, in its filings, 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 including 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
“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,” said 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.
According to bankers, 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.