Tata Sons to Invest ₹2,122 Crore for 13% Stake in Tata AutoComp

Tata Sons, the holding firm for Tata Group, said it is mulling buying the remaining 12.65% stake in Tata Autocomp Systems also referred to as TACO. The remaining stake will cost ₹2,122 crore to be acquired from Tata Capital. As such, the total equity valuation of TACO will rise to ₹16,800 crore, from what Tata Capital has filed.

Currently, Tata Autocomp Systems has 40% holding in the company while Tata Motors owns a 26% stake. The balance is held by some other companies belonging to Tata group.

Tata Group, though, remained tight-lipped about any question related to the proposal, though the reports said the deal is likely to be sealed even before the end of the existing financial year.

Tata Capital has been showing a list of transactions with Tata Sons, and may well have several other transactions including sales of various investments, brand equity and business promotion contributions, services rendered and other commercial transactions for its business purposes and lending and borrowing of funds.

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"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% equity shareholding in TACO. In June, the Company sold a 5.08% stake to Tata Sons for ₹850 crore and now proposes to sell the remaining 7.57% stake to TSPL for ₹1,272 crore," Tata Capital stated in the filing".

"Independent TACO valuation was done, and the deal was mailed to its audit committee. Tata Sons owns 93% of Tata Capital today," said Tata Capital.

The related party transactions with TSPL, being ₹2,500 crore more or less, that is, 13.76% of the Tata Capital's consolidated turnover from FY 24, required shareholder consent, as the aggregate value of the sale of investment and other transactions with TSPL during the year stood at around ₹2,500 crore.

All particulars, as required under the law, were furnished to the management before entering into these related party transactions, and the audit committee, after due consideration of these details, approved the material related party transaction with TSPL up to an aggregate value of ₹2,500 crore in FY25. The committee observed that the said transactions will be carried out on an arm's length basis and in the ordinary course of Tata Capital's business, the company added.

According to bankers, it is gearing up for a possible listing after Reserve Bank of India classified Tata Capital as NBFC-Upper Layer. Such firms need to be listed by September next year. On top of this, it is merging Tata Motors' auto finance arms with it.".

Tata Group is an Indian multinational conglomerate that wants to gain interest in the businesses such as aviation, steel, power, chemicals, and information technology. Jamshedji Tata founded the Tata group in 1868. Today, it is one of the largest private sector companies of India.

Apart from active business sectors, the company has ventured into renewable energy and infrastructure development. It is only after the acquisition of several global companies that Tata Group of companies gained international recognition.

More than 100 companies make up the group, spread across seven business sectors, including communications and information technologies, engineering, materials, services, energy, consumer products, and chemicals. The company has more than 70 manufacturing facilities spread across six continents.