Companies under consideration for financial support are Tata Motors and Tata Power, as their revenue was among the worst hit due to the coronavirus pandemic and worldwide lockdowns
Tata Sons is looking at raising up to $1 billion – in rupee and dollar – to infuse fresh equity into group companies particularly impacted by the COVID-19 pandemic.
The Tata Sons board “discussed possible avenues and options available” to conduct the capital raise at its meeting on July 17, sources told Mint. A final decision however, is still awaited.
Moneycontrol could not independently verify the report.
Companies under consideration for financial support are Tata Motors and Tata Power as their revenue was among the worst hit due to the coronavirus pandemic and worldwide lockdowns, they said.
Follow our LIVE Updates on the coronavirus pandemic here
As per a CLSA report, Tata Motors, which clocked Rs 9,894 crore worth losses in the March quarter, had “no equity value left” in May, the report said. It pointed out the rising debt levels and limited hope for recovery (in passenger or commercial vehicle segments) due to continued disruption because of COVID-19.
Tata Power, in July, told exchanges it is “working on a strategic turnaround plan” which would include raising Rs 2,600 crore from Tata Sons via rights issue, thus increasing the latter’s stake by 10 percent. It added the plans to “strengthen fundamentals” through a mix of restructuring and divestment to improve the company’s balance sheet.
To this end, Tata Power recently sold three ships for $212.8 million, besides the $110 million from divesting stake in South Africa’s Cennergi. It is however facing set-back in Gujarat where the government has revoked a prior order allowing pass on of additional coal procurement costs.
Follow our full COVID-19 coverage here