The Tata group companies are reportedly in talks with leading banks as well as equity investors to raise funds for their planned capital expenditure (capex) worth a massive Rs 60,000 crore in the current financial year 2022-23.
Tata group¡¯s Rs 60,000 crore capex plan is expected to include Tata Motors¡¯ Rs 32,000 crore, Tata Power¡¯s Rs 14,000 crore, Tata Steel¡¯s Rs 12,000 crore, Tata Chemicals¡¯ Rs 2,000 crore and Tata Consumer¡¯s Rs 361 crore, as per Business Standard report.
The group companies, led by Tata Motors, and 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, is expected to spend Rs 26,000 crore, while the rest will be invested in the parent firm in India itself.
In the previous financial year 2021-2022, the company¡¯s passenger business was hived off to wholly owned subsidiary Tata Motors Passenger Vehicles (TMPVL). The EV business too, was hived off to a wholly owned subsidiary Tata Passenger Electric Mobility.
The report mentioned that TPG Rise Fund is expected to invest $1 billion in the EV company for 11-15% stake in next one year, bankers said as per the report, adding that a majority of investments in the segment will be equity funded, hence reducing dependence on external borrowings.
For the uninitiated, TPG is a US-based private equity firm.
The group is also expected to invest in renewable energy in association with Abu Dhabi-based fund Mubadala Capital and Blackrock Real Assets. Both these investors have reportedly picked up 10.5% stake in Tata Power Renewable, which is coming out with a massive Rs 6,000-crore rights issue.?
Also, Tata Power is spending Rs 14,000 crore in capital expenditure, and Rs 10,000 crore out of this shall be invested by its renewable energy subsidiary. And in the next 5 years, Tata Power is planning to invest a massive amount of Rs 75,000 crore in the renewable energy sector.
Earlier this week, CEO of Tata Steel, which plans to reduce its debt by a billion dollars in FY23, had mentioned that the company will be making a capital expenditure of Rs 12,000 crore in India and Europe.
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As per the report, Tata Steel had $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. This is expected to 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, according to credit rating firm Moody¡¯s analysts.?
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