Tata Sons ends debt support for new businesses, focus on independent financing
Tata Sons has directed the management of all group companies, especially new businesses such as Tata Digital, Tata Electronics and Air India, to independently manage their debts and liabilities, discontinuing the practice of providing letters of comfort and cross-default clauses to lenders, officials aware of the development told ET.
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All future capital allocation into these new ventures will be via equity investments and internal accruals, Tata Sons told lenders concerning the holding company's new financing approach.
Tata Sons voluntarily surrendered its certificate of registration with RBI last year, after it repaid more than ₹20,000 crore in debt to remain unlisted.
Going forward, funding for its new businesses will largely be sourced from dividends and support from Tata Consultancy Services (TCS) — the biggest listed company within the salt-to-software conglomerate, said officials aware of the plans.
Tata Sons has told lenders that in each segment-such as steel, power, chemicals or technology-the leading listed company will act as a holding entity, and not the holding company of the group, said people aware of the new financing approach.
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