Tata Sons will invest Rs 14.32 billion in the rights issue of Tata Projects, its engineering and construction subsidiary, as part of the company's Rs 25 billion fundraising plan. The board and shareholders approved the rights issue on Thursday, according to regulatory filings. 

Founded in 1979, Tata Projects operates in energy, industrial infrastructure, urban development, and services. Tata Sons currently holds a 57% stake, with the remaining shares owned by other Tata Group entities, including Tata Power and Tata Chemicals. Following the rights issue, the company is considering a potential stock market listing.

 

According to Crisil, Tata Projects is expected to generate Rs 3-4 billion in cash accruals in FY25 and had an unencumbered cash balance exceeding Rs 6 billion as of June 30, 2024. The company also has Rs 10 billion in unutilised credit, further strengthening its liquidity position. 

Tata Sons will fund its investment in Tata Projects through dividends from Tata Consultancy Services (TCS), which recently announced a special dividend of Rs 66 per share and an interim dividend of Rs 10 per share for the December quarter. With previous interim dividends, Tata Sons is set to receive Rs 249.31 billion from TCS in the first nine months of FY25. 

These funds will also support Tata Sons’ investments in Tata Capital’s rights issue and Tata International. The group plans to list Tata Capital by September, aiming to raise up to $1.5 billion through an initial public offering. 

(Business World)