Tata Sons Ltd on Tuesday increased its stake in the diversified conglomerate’s auto, chemicals and beverages units, as the holding company of India’s biggest corporate house seeks to strengthen its control over group firms.
Tata Sons spent a total of almost Rs 3,228 crore ($500 million) to raise its stake in Tata Motors Ltd, Tata Chemicals Ltd and Tata Global Beverages Ltd by buying shares on the secondary market, stock-exchange data showed.
Tata Chemicals and Tata Global sold shares in each other. The seller of Tata Motors’ stake couldn’t be immediately identified.
The data showed that Tata Sons bought about 3.9 crore shares of Tata Motors for Rs 1,634 crore, 4.3 crore shares of Tata Global for Rs 921 crore and 1.05 crore shares of Tata Chemicals for Rs 673 crore.
Tata Sons and other promoter group entities held a 34.73% stake in Tata Motors at the end of June. This would have risen to around 36% after Tuesday’s transaction, back-of-the-envelope calculations show. The stake of Tata Sons and other promoters would have risen to around 34.9% from 30.8% in Tata Chemicals and to 42.8% from 35.76% in Tata Global.
The transactions are part of Tata Sons’ plan to reduce cross-holdings in group companies and gain greater control of individual firms, possibly to ward off any potential takeover threat.
The move comes after Tata Sons last year sacked Cyrus Mistry as chairman. The shocking announcement subsequently led to a public and legal battle between Mistry and Tata Sons as well as group patriarch Ratan Tata.
Mistry’s family is the single-largest shareholder of Tata Sons, holding an equity stake of about 18%. But Tata Sons, now led by chairman Natarajan Chandrasekaran and majority-owned by Ratan Tata-led Tata Trusts, is also working to overcome this hurdle.
The group holding company is looking to turn into a private limited firm. It has also sought shareholders’ approval to give voting rights to owners of its preference shares; the Mistry family holds a tiny percentage of such securities while Ratan Tata and other shareholders own the majority of these shares.