Tata Capital to float infra fin biz into subsidiary

KOLKATA: Tata Capital, a non-deposit accepting non-banking finance company, has decided to hive off its infrastructure financing business into a 100% subsidiary. The infrastructure financing subsidiary is likely to be formed by the end of FY11. Tata Capital has an exposure of Rs 4,000 crore in the infrastructure sector.

Tata Capital will raise Rs 2,500-Rs 3,000 crore in the next seven months of the current fiscal to support its business plans. The company has already raised Rs 1,000 crore in the first five months of FY11. It also plans to float a $100-250-million debt fund which will be raised from domestic and international investors.


Talking to newsmen on Tuesday, Tata Capital MD & CEO Praveen P Kadle said: “In the infrastructure financing sector, we offer equipment finance, project finance, working capital loans and other such facilities. We believe infrastructure financing needs more focus and therefore we are planning to float a 100% subsidiary. At present, infrastructure financing activity is being done out of a division of Tata Capital.”

Tata Capital had earned a gross revenue of Rs 1,379 crore in FY10. The company’s assets as on June 30, 2010, stood at Rs 13,000 crore. The capital base of the company is Rs 2,200 crore and it has a capital adequacy of 21.4%. Mr Kadle said that the company will leverage the Tata brand to raise further capital from the market.

Tata Capital will also enter the foreign exchange business soon. Mr Kadle said the company will apply for licences and the new venture was likely to take off by the third quarter of the current financial year. Asked if the Tata group was keen to convert Tata Capital into a banking outfit, Mr Kadle said that it was too premature to comment on this.

Tata Capital also plans to offer educational loans as this sector is booming in the country. “We have also entered into rural financing and have launched pilot projects in Maharashtra, Andhra Pradesh and Gujarat. However, we have no plans to enter into the microfinance business,” Mr Kadle added.