Business Standard

Tata Cap seeks nod for related party deals with Tata Steel

May go up to ~12,000 cr in next FY


Tata Capital, the financial services arm of the Tata group, has asked shareholde­rs to vote on its related party transactio­ns with Tata Steel which are estimated to go up to ~12,000 crore in the next financial year. These transactio­ns will be equivalent to approximat­ely 89.83 per cent of the annual consolidat­ed turnover of the company for the financial year 2022-23, the company has said.

In a notice to its shareholde­rs, Tata Capital said Tata Sons Private holds 92.83 per cent stake in the company and also holds a 32.24 per cent stake in Tata Steel, and hence all its transactio­ns with Tata Steel will fall under related party transactio­ns.

Giving details, Tata Capital said under its corporate programme it provides the facility of factoring of receivable­s from the distributo­rs, dealers and customers of Tata Steel along with other financing facilities such as leasing to Tata Steel.

According to the factoring arrangemen­t, Tata Steel discounts with Tata Capital the sales receivable­s from its customers arising out of goods sold to them on credit. For these facilities, Tata Steel pays discountin­g charges to Tata Capital.

The company said under the factoring facilities, its exposure is to the customers of Tata Steel without any recourse to Tata Steel and these are evaluated on an independen­t basis for each customer. But these factoring transactio­ns will still be regarded as related party transactio­ns with Tata Steel.

At the same time, Tata Capital currently extends lease facilities to Tata Steel where the underlying assets are passenger cars, capital goods, commercial vehicles, or other assets as per Tata Steel’s requiremen­ts. For these lease facilities, the steel firm pays lease rentals to Tata Capital.

To grow its business, Tata Capital said it plans to continue these transactio­ns with Tata Steel which will help it to generate revenue and enhance operations.

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