Tata to fuel new ventures engine with ₹30,000 crore more, to hire new digital CEO soon
Mumbai: Tata Sons is injecting fresh capital of ₹30,000 crore ($3.5 billion) into its emerging ventures, including
Tata Digital
,
Tata Electronics
and
Air India
, as well as the defence and battery units. The investment will be through equity infusion, said people familiar with the matter.
The defence business has recently been reaffirmed as a strategic priority, according to officials. The Tata Sons board approved the latest allocation at a meeting held on Thursday, said the people cited. This funding will be in addition to the $120 billion committed to new businesses in recent years.
"The capital infusion is considered part of the holding company's plan to meet requirements at the execution level, necessary to scale the new businesses for their next phase of growth," said a group executive.
Announcement of New Tata Digital CEO Soon
'A sizeable commitment has already been made by Tata Sons. Now, all further investments will be done on a priority basis and new businesses will have to earn the right to seek such investments,' the executive said.
These businesses are big focus areas and Tata Sons is of the view that their gestation period is over, and it's time for them to prioritise execution and deliver profitable growth.
It's seen as a strategic effort to maintain the group's long-term competitive edge in a rapidly changing global business landscape, amid disruptions driven by artificial intelligence (AI) and other emerging technologies.
Tata Electronics and Tata Digital already figure in the top 10 group businesses.
'The goal for the new businesses is to rank among the top five group companies by revenue and attain profitability by FY27. Group chairman (N Chandrasekaran) is now keeping close track of the progress of the new businesses,' an executive said.
The holding company will also soon announce a new chief executive for Tata Digital, which has faced challenges, including the recent exit of Naveen Tahilyani as CEO within a year of taking the top job.
In a move to sharpen his focus on these priorities, Chandrasekaran recently stepped down from the board of Tata Chemicals. Chandrasekaran, 62, took charge as Tata Sons chairman in February 2017 and got another five-year term at the helm in 2022.
How It's Faring
After strong gains during 2020-24, Tata Group companies hit speed breakers in FY25.
Revenue growth slowed to 4.9%, down from 12% in FY24. Net profit rose 10.7%, a sharp slump from the 28% surge the year before. Operating margins held steady at 10%, compared with 11% in FY24.
Some of the businesses have been cyclical, apart from the uncertain geopolitical situation and economic challenges impacting growth, said people with knowledge of the matter.
While group debt declined 6% to Rs 3 lakh crore in FY25, over half the companies still posted double-digit topline growth, signalling underlying resilience.
Tata Consultancy Services
(TCS) remained the group profit engine. It contributed 51% of group net profit, though down from 54%.
Despite operational stability, investor sentiment was less positive. The group lost nearly 8% of its market capitalisation in FY25, after a 45% gain in FY24.
The latest infusion is being routed through equity since Tata Sons voluntarily surrendered its certificate of registration with the Reserve Bank of India (RBI) last year and repaid more than Rs 20,000 crore in debt to remain unlisted.
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