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Tatas may buy Tidco's 27% stake in Titan

Reeba Zachariah in Mumbai

The Tata group is weighing the option of making an offer to buy out the stake of Tamil Nadu Industrial Development Corporation in Titan Industries, the country's largest watchmaker.

The Tatas are also open to the option of bringing in a strategic partner for Titan if they are to buy Tidco out of the venture. Senior group sources said, "We have been sounded out by several investors for a partnership in Titan."

The group currently holds a 26.99 per cent stake in Titan. Tidco holds a slightly higher stake, 27.88 per cent, in the company.

Titan is planning a rights issue to rein in its high debt-equity ratio of 2 and its outstanding debt of over Rs 4.22 billion.

"It appears Tidco may not participate in the issue, the details of which are still being worked out. In that case, it presents us an opportunity to buy out Tidco," the sources said.

"It is a matter of concern that Titan has a high debt-equity ratio. It needs to modify this through an infusion of fresh equity and retire a corresponding amount of debt," they added.

Titan's plan of infusing capital has been delayed for quite some time and the Tatas are weighing various options and proposals for Tidco and will set a time-frame to decide on the best way out.

"The Tatas do not have any problem in subscribing to the rights issue. It is for Tidco to decide on whether it is keen on the venture," the sources pointed out.

The Tatas are keen on buying out Tidco's stake as the focus of the group's businesses has shifted from being product-driven to brand-driven.

Tidco's nominees to Titan's top management have seen a few changes. Chairman A L Mudaliar, who was the Tidco nominee, stepped down during the last financial year, but even his successor, A Gowrishankar resigned recently.

So Titan does not have a chairman, who has to be appointed by Tidco on mutual consent. The other Tidco nominees on the Titan board include R Vijay Kumar and Madhavan Nambiar.

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