Tata Sons has begun the process of revamping the group to reduce cross-holdings within the group. This is part of Tata Sons’ new Chairman N Chandrasekaran restructuring exercise to simplify the group’s shareholding. Under this plan, Tata Sons will buy out shares held by group companies in other group entities.

While Tata Sons, on Saturday, said it will acquire Tata Steel’s 2.85 per cent share in Tata Motors, there could be more such deals. Tata Steel, for example, holds stakes worth over ₹16,000 crore in 13 other listed Tata entities, including Tata Power, Tata Motors, Tata Consultancy Services, Tata Sponge Iron and Titan.

Under the restructuring plan, Tata Sons will hold shares in these companies directly, and not through Tata Steel. Tata Steel’s debt at the end of March stood at ₹83,014 crore. The stake in Tata Motors, which Tata Sons will now buy, itself is around ₹3,800 crore as per the share price on Friday.

When contacted, Tata spokesperson declined to comment on the further buyouts.

Several other group’s flagship companies such as Tata Steel, Tata Chemicals, Tata Investments and Tata Power own shares of other group companies. Tata Power with debt of ₹48,000 crore has investments in group companies worth around ₹1,389 crore.

Tata Motor’s share in other entities is valued at about ₹₹8,800 crore, while Tata Chemicals holds shares worth around ₹3,915 crore.

According to Kotak Institutional Equities, reduction in cross-holdings within the Tata Group could result in significant value unlocking.

Earlier, Nusli Wadia, then an independent director on the boards of Tata group firms, had said the cross-holding structure locked up value for companies like Tata Motors.

Related Topics
comment COMMENT NOW