Tata Sons Ltd has ruled out any immediate plans to sell assets to shore up its finances because of the coronavirus pandemic that has hammered Indian companies.
The holding company of Tata Group, in a statement on Friday, said it is well-capitalized and prepared to take on the challenges posed by the countrywide lockdown since 25 March, which has brought economic activity to a near- standstill.
“Tata Sons is in a strong financial position with adequate cash flows to support group companies and new growth initiatives. Tata Sons is not looking to monetize its investments to raise capital,” chairman N. Chandrasekaran, said in the statement after a board meeting of the company on Friday, which officials described as a routine meeting to assess the impact of the pandemic on group companies.
Group officials who declined to be named said pressing issues concerning the group were discussed but no decisions were taken pertaining to group firms, including Tata Motors Ltd that has been struggling. The automotive company’s luxury unit Jaguar Land Rover (JLR) is in talks with the UK government for an estimated £1 billion aid package to help it tide over the turmoil.
The luxury car maker said on Friday it has borrowed £560 million from five Chinese banks to ease the financial strain on the company.
Likewise, Tata Steel has struggled to maintain production levels, with capacity utilization at its mills falling to less than half in the first month of the lockdown and is seeking a government bailout for its European operations. The group also co-owns full service carrier Vistara, which has seen operations grind to a halt and is expected to report a sharp drop in revenue and profitability.
On Friday, Tata Sons said its group firms are facing both challenges and opportunities arising out of the pandemic and resulting economic situation.
“All group firms are progressing well responding to these challenges and opportunities and we are confident they will emerge stronger,” Chandrasekaran said. “The group is well poised to capture new opportunities and we are focused on navigating the current situation and profitable growth.”
According to Tata group officials, the board also discussed liquidity management steps, which the group may explore if the economic uncertainty persists in the next few quarters. “The board deliberated on companies that may need more liquidity support to push through the crisis,” said an official with direct knowledge of the matter. “The board also discussed a plan of action for cost reduction and optimisation.”