Tata group firms in talks with banks to raise funds for Rs 60K capex plan

Focus is on EVs, renewable energy for new investments

The Tata group companies are in talks with leading banks and equity investors to raise funds for their capital expenditure (capex) plan of worth Rs 60,000 crore in the current financial year.

Led by Tata Motors, group companies, including Tata Power and Tata Steel, are planning to invest in electric vehicles (EVs) and renewable energy.

Tata Motors, according to company officials, is spending Rs 32,000 crore in capex, mainly to launch a series of EVs in the coming years. While its UK-based subsidiary, Jaguar Land Rover, will spend Rs 26,000 crore, the rest will be invested in the parent firm in India.

In the financial year 2021-2022, the company’s passenger business was hived off to wholly owned subsidiary, Tata Motors Passenger Vehicles (TMPVL). The EV business was also hived off to a wholly owned subsidiary, Tata Passenger Electric Mobility.

TPG Rise Fund is expected to invest $1 billion in the EV company for a 11-15 per cent stake over the next 12 months, bankers said. A majority of investments in the segment will be equity funded, thus reducing dependence on external borrowings, they said.

The group is also investing in renewable energy in association with Abu Dhabi-based fund, Mubadala Capital and Blackrock Real Assets. Both investors have picked up 10.5 per cent stake in Tata Power Renewable, which is coming out with a Rs 6,000-crore rights issue. Tata Power is spending Rs 14,000 crore in capex, and Rs 10,000 crore of this will be invested by its renewable energy subsidiary. In the next five years, Tata Power plans to invest Rs 75,000 crore in the renewable energy sector alone.

Tata Steel, which plans to reduce its debt by a billion dollars in FY23, is investing Rs 12,000 crore in capex. Of this, Rs 8,500 crore will be spent in India, and the balance in Europe. “In India, the focus will be on the Kalinganagar project and our mining activity and other sustenance capex. In Europe, it will be focused on sustenance, product mix enrichment, and environment-related capex,” Chief Executive Officer and Managing Director T V Narendran said. In addition to this, Tata Steel is spending Rs 12,000 crore on inorganic growth in India in the Nilachal Ispat acquisition.

Tata Steel’s $3.1 billion in cash and liquid investments at the end of March 2022 and estimated $6.5 billion-$7 billion in operating cash flow over the next 18 months till September 2023 should be more than sufficient to meet its $9 billion in capital expenditure, announced acquisitions, modest dividends and scheduled debt (including short term debt) repayments over the same period, say Moody’s analysts. 

Among the group’s other companies, Tata Chemicals and Tata Consumer Products are spending Rs 2,000 crore and Rs 361 crore in capital expenditure in the current financial year.

Tata’s capex plan (Rs  cr)

• Tata Motors: 32,000 
• Tata Power: 14,000
• Tata Steel: 12,000   
• Tata Chemicals: 2,000 
• Tata Consumer: 361