Tata Sons, the holding company of the Tata group, has pledged an additional 1.17 crore (11.7 million) shares of Tata Consultancy Services, valued at Rs 562.5 crore (about Rs 5.63 billion), at a time when the group's debt is expected to cross more than Rs 100,000 crore (Rs 1,000 billion) by the end of fiscal year 2009.
The pledged shares of the country's largest software company now stands at 12.06 crore (120.6 million), representing around 12.33 per cent of the company's total equity.
On February 12, Tata Sons had disclosed that it had pledged over 10.89 crore (108.9 million) shares, representing a 11.14 per cent stake in the company. Despite the news, TCS gained 2.62 per cent on the Bombay Stock Exchange. The share closed at Rs 519.8.
Tatas' total debt could cross Rs 100,000 crore (Rs 1,000 billion) by the end of this month, according to Kotak Securities, a domestic brokerage. The group's debt has more than doubled in the current financial year. Last year, it was around Rs 30,000 crore (Rs 300 billion). It now stands at Rs 70,000 crore (Rs 700 billion). This is a result of the group's aggressive capital expenditure plans and past acquisitions, says the report.
The total debt of five entities -- Tata Motors, Tata Steel, TCS, Tata Power and Tata Communications -- which account for 90 per cent of the group's revenues, is estimated at Rs 91,000 crore (Rs 910 billion), the report says.
However, the Tatas's funding challenges were manageable and the debt obligations could be met through the free cash flow generated at various group companies and proceeds from the stake sale by Tata Sons, the report concluded.
