Tatas to invest in realty, digital with dividend booster
Will also pay AGR dues of Tata Teleservices
Tata Sons, the holding company of the Tata group, will use majority of the ~22,000 crore received as dividend from its crown jewel Tata Consultancy Services (TCS) in paying off Tata Teleservices’ adjusted gross revenues (AGR) dues.
It also plans to use the proceeds to invest in its digital, financial services, and real estate/infrastructure businesses.
According to people in the know, Tata Teleservices (TTSL), which was ordered by the Supreme Court to pay 10 per cent of its AGR dues of ~14,473 crore by March this year, has already paid the same with financial aid from the holding company.
Of its total dues, TTSL had paid ~3,558 crore as of June 30, 2020. In the last four years, Tata Sons has repaid a large part of TTSL’S bank and government dues, and also bought back TTSL shares from Docomo thanks to a generous dividend from TCS.
A source said investment in TTSL is now petering out, and will not require very high fund infusion from Tata Sons in the new financial year. "Barring the 10 per cent AGR dues which has to be paid in the next nine years, Tata Tele will now run on its steam," said an insider.
Besides investing ~1,000 crore in its financial services business and ~900 crore in Tata SIA Airlines, the Tata group has earmarked a large sum for its digital business led by Tata Digital (TDL).
TDL is busy making a Super App targeted at the Indian consumer, which will sell all Tata group products
— from airline tickets, hotels to groceries. A group source said in the last financial year, it has taken full control of Air Asia India by buying out part of Airasia Berhad’s stake.
“This year, we will be focusing on Air India acquisition but it will not be a very aggressive bid — taking into account the pandemic,” he said.
The Air India bid will be one of the big ticket investment that would require a cash chest, said an insider.
The real estate and infrastructure development by Tata Realty and Infrastructure also receives a large dose of funds from the holding company. Insiders said TRIL is developing the Pune metro rail project, while Tata Projects is constructing part of Mumbai to Navi Mumbai trans-harbour projects.
The financial services business will continue to receive funds from the holding company. In the December quarter of last financial year, Tata Sons invested ~1,000 crore more into Tata Capital Financial Services, which was in addition to ~2,500 crore invested in FY20.
Tata’s financial businesses, including housing finance arms, have already built a ~75,588-crore loan book (as of December 2020). Of this, almost 58 per cent is retail book and the company is striving to grow it further.