Tata Sons to borrow $2 billion from overseas market to repay existing debt

After getting ridden with a debt of around Rs 10,650 crores ($1.5 billion), the principal investment holding company of Tata Group called Tata Sons is planning to take financial help worth $2 billion from overseas market.

The Tata Sons currently owes a net debt of approximately $1.5 billion from Tata Teleservices and Tata Teleservices Maharashtra.

Intriguingly, the six-year long loan/aid is the first offshore syndicated facility taken out by Tata Sons since FY 2007. Even though, it is quite plausible that the yet-to-be borrowed funds would push the debt by 50%, the company’s debt equity ratio will remain below one. As a result, giving the company enough ambit to raise funds.

Earlier, Tata Sons made an initiative to raise funds for the purpose of repaying the loan taken from its subsidiaries but did not succeed. In 2018, the company raised over $750 million through Reserve Bank of India’s special dispensation for repaying its loans.

However, the amendments in the RBI guidelines of 2018 pertaining to the NBFCs, granting them access to loans from foreign markets, indebted Tata Group, being a core investment company with the RBI, can avail the help now.

Ergo, around 66% of Tata Sons’ share capital is held in public charitable trust. It additionally equity stakes in major group companies including flagship Tata Consultancy Services Ltd, Tata Steel Ltd, Tata Motors Ltd, Tata Power Company Ltd, Tata Chemicals Ltd, Tata Investment Corporation Ltd, TTSL, Tata Capital Ltd, Tata Sky Ltd, Tata Projects Ltd, among others.



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