Tata Sons, the group's holding company, plans to invest Rs 1,432 crore in the rights issue of Tata Projects, the conglomerate's engineering and construction subsidiary. Tata Projects intends to solicit 2,500 crore rupees from its investors.
Established in 1979, Tata Projects is a leading engineering, procurement, and construction company in India. Its three main business segments are services, urban infrastructure, and energy and industrial infrastructure. Tata Sons owns 57% of Tata Projects; other Tata Group companies, including Tata Power and Tata Chemicals, own the remaining shares.
Tata Projects will consider listing following its rights issue, according to company officials. According to rating agency Crisil, Tata Projects expects cash accruals of between Rs 300 and 400 crore in Fiscal Year 2024–25 (FY25), in addition to an unencumbered cash balance of more than Rs 600 crore as of June 30, 2024. According to a statement released by Crisil in August, these resources should be sufficient to cover debt obligations of about Rs 544 crore and planned capital expenditures of Rs 400-450 crore for the year.
Tata Projects' liquidity is bolstered by moderate utilisation of fund-based bank limits, which averaged 64 percent over the year to June 2024, leaving approximately Rs 1,000 crore in unutilised credit, the company said.
During the first nine months of FY25, Tata Sons will use the dividend it anticipates receiving from India's biggest software exporter, Tata Consultancy Services (TCS), to invest in Tata Projects. For the December quarter, TCS has announced an interim dividend of Rs 10 and a special dividend of Rs 66 per share. Previously, it paid out interim dividends of Rs10 per share in the first two quarters. Tata Sons will receive Rs24,931 crore in dividends from TCS in the first nine months of the current fiscal year.
These funds will also help Tata Sons subscribe to Tata Capital's rights issue and invest in Tata International. Tata Capital, the group's financial services arm, plans to go public in September, with the goal of raising up to $1.5 billion through an IPO.
