Tata Sons to tap in-house funds for growth

Mumbai: Tata Sons is recalibrating the conglomerate's funding plans and seeking to bolster its cash reserves to fund new business ventures and support the financial needs of group companies. This strategic move hinges on utilising dividends from Tata Consultancy Services (TCS) and other profitable group companies, and avoiding external borrowings, officials close to the matter said.

Tata Sons generates a large share of its income from dividends paid by group companies where it holds substantial stakes, from 8% to 71.74%. The market value of its listed investments is currently at ₹15.8 lakh crore. Notably, Tata Sons, the holding entity for companies under the group, earned a dividend of ₹24,931 crore from TCS for the first nine months of the current fiscal year.

TCS accounted for 84%, or ₹18,947 crore, of Tata Sons' total dividend income last fiscal, followed by Tata Steel, Tata Motors, and other group companies.


Tata Sons has also strengthened its balance sheet by fully repaying its debt. During FY24, Tata Sons' dividend income fell 35% to ₹21,528.9 crore, while it repaid its entire borrowings of ₹20,274 crore and had net cash of ₹2,679 crore compared to a net debt of ₹27,753 crore in FY20.

Tata Sons did not comment.

"Not all companies will require funds at the same time. And many of the listed group companies have enough heft to manage their own balance sheets and Tata Sons may step in for support if required, for say inorganic acquisitions or so. Tata Sons has a very strong balance sheet and can fund future plans with its reserves as and when needed," said an official close to the matter.

Tata Digital, Tata Electronics, and Air India, which are in the building-up phase, will gain in scale and turn into financially strong businesses over the next three years, Tata Sons chairman N Chandrasekaran had told ET in an interview last year. They are expected to be among the group's top 10 businesses in the next three years.

"The company has invested in its new and existing businesses based on their requirement for capital, growth, and deleveraging their balance sheets," Tata Sons said in its annual report. Tata Sons' total investments in unlisted equity shares of its subsidiaries, associates, and joint ventures increased by ₹9,822 crore to ₹70,732.5 crore in FY24, a 16% increase from a year ago.

Historically, Tata Sons maintained significant debt on its balance sheet to support group ventures, a practice typical of large holding companies.

The group's planned capital infusion into emerging business areas and key priorities-such as semiconductors, defence, electric vehicles, and Air India-is expected to surpass $120 billion in the coming years. Earlier estimates had projected around $90 billion in capital deployment by 2027. A major portion of these investments will be allocated to capital-intensive initiatives like semiconductors and Air India, representing the largest domestic investment commitment in the conglomerate's history.