Tata Power to raise Rs 2,600 crore from Tata Sons via preferential issue

Tata Power board approves setting up of renewables InvIT

Company News: Private power producer Tata Power on Thursday said the company’s board had approved an increase in its promoter Tata Sons’ stake to 45.2 per cent for Rs 2,600 crore. Tata Power’s board also approved setting up an infrastructure investment trust (InvIT) for its renewable business on Thursday. The move, the company said, is part of a strategic turnaround plan.

The company in its statement said Tata Power would raise Rs 2,600 crore through a preferential issue to Tata Sons at a price of Rs 53 per equity share. The issue price for the equity shares has been fixed, representing 15 per cent premium to Wednesday’s closing price. Pursuant to the equity issue, Tata Sons’ shareholding will increase to 45.21 per cent, from 35.27 per cent. Consequently, Tata Group’s shareholding will increase to 46.86 per cent, from 37.22 per cent.

In its statement to the BSE, Tata Power said, “The board of directors of Tata Power has approved issuance of 490,566,037 equity shares on a preferential basis to Tata Sons for an aggregate consideration of Rs 2,600 crore.” The issue is subject to approval and Tata Power will seek shareholder approval at its annual general meeting on July 30...

N Chandrasekaran walks into Tata corner room

King-size headaches face new chairman, with no quick or easy solutions in sight

N

latest News | Chandrasekaran, new chairman of Tata Sons, walks into the corner room in Bombay House on Tuesday. Amid uncertainties at almost all group companies due to global challenges, litigation and legacy issues. 

Chandra, who will succeed the ousted Cyrus Mistry, will have to take an immediate call on loss-making Tata Teleservices. The company requires fresh fund infusion of Rs 10,000 crore by the financial year starting April 1. This is apart from Tata Tele facing the prospect of losing another $1.2 billion to NTT Docomo, which has sued Tata Sons in US, UK and Indian courts to force the latter to buy back its 26.5 per cent stake in Tata Teleservices. 

With the Reliance Jio launch and Idea-Vodafone merger, fringe players like Tata Tele would face more heat and Chandra will have to decide how much more of Tata Sons’ money should be poured into the company, said an analyst.

The legacy issues, noted by Mistry in several letters after his ouster to Tata Sons’ board members, would continue to dog the group in the coming years. There are no quick solutions for these, say analysts. 

One example is the decision Chandra will have to make on Tata Steel, losing substantial money in its British operations. The latter is in talks for a merger with Thyssenkrupp to cut the losses. A recent ballot by British worker unions has paved the way for pension reform that could lead to a merger with the German giant.

Tata Motors is another big hurdle, though the company is taking several steps to revive its passenger car business in India. A border tax promised by US President Donald Trump could upset the finances at its Jaguar Land Rover arm, as the company does not have any plant in the US, say analysts.

 

"Apart from managing the companies, how Chandra takes care of the Tata satraps and their friends would be a key challenge," said a former official. Mistry had complained on former chairman Ratan Tata's friends having signed profitable deals with Tata companies resulting in huge losses to, for instance, Tata Capital and Tata Power. The Tatas have denied the allegations. 

The good news for Chandra will be that Tata group numbers look good at the consolidated level. These are among the best financial ratios and one of the lowest leverage ratios in the country's top family-owned conglomerates. The bad news is that if Tata Consultancy Services (TCS) and Tata Motors’ JLR are excluded, the picture becomes hazy for group finances| READ MORE..