Tata Sons, the parent company of the Tata Group, is contemplating increasing its stake in Tata Autocomp Systems (TACO) by an additional 12.65%, with an investment of Rs 2,122 crore. If this transaction proceeds, it will raise TACO's total equity valuation to Rs 16,800 crore, according to recent filings by Tata Capital. Currently, Tata Sons holds a 40% stake in TACO, while Tata Motors owns 26%, with the remaining shares distributed among other Tata Group companies. Although the Tata Group has yet to officially confirm these reports, the deal is expected to be finalized before the current financial year ends.
Tata Capital, in its recent disclosures, mentioned that the company regularly engages in various transactions with Tata Sons to support business growth and maintain a healthy capital adequacy ratio. These dealings include selling investments, brand equity, business promotion contributions, and financial services, such as lending and borrowing. In its filings, Tata Capital stated, "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 Rs 850 crore and now proposes to sell the remaining 7.57% stake to TSPL for Rs 1,272 crore."
Tata Capital clarified that an independent valuation of TACO was conducted, and the transaction was referred to its audit committee for review. “Tata Sons currently owns 93 per cent of Tata Capital,” the filing noted.
Additionally, Tata Capital is seeking shareholder approval for related party transactions with Tata Sons valued at up to Rs 2,500 crore during FY25, which accounts for approximately 13.76% of its consolidated turnover for FY24. The company explained, "The management provided the audit committee with all relevant details, as required by law, for these related party transactions. After reviewing the information, the audit committee granted approval for entering into material related party transactions with TSPL for an aggregate value of up to Rs 2,500 crore during FY25. The committee noted that the transactions will be conducted on an arm’s length basis and in the ordinary course of Tata Capital’s business."
According to industry insiders, Tata Capital is gearing up for a potential public listing after the Reserve Bank of India (RBI) classified it as an NBFC-Upper Layer, mandating its listing by September of next year. In line with this, Tata Capital is also working to merge Tata Motors’ auto finance divisions into its operations.
