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Tata weighs sale of real estate assets

MUMBAI :

Tata Sons Ltd, the holding company of India’s largest conglomerate, is evaluating the sale of non-core real estate assets owned by its operating companies, including land, and residential and commercial real estate, two people aware of the plans said.

The company has engaged consultants to identify and value the group’s real estate assets in India and abroad, the people cited above said on condition of anonymity, adding it expects to raise at least a few thousand crores of rupees through the exercise.

“While monetization of land parcels of Tata Communications Ltd (TCL) is already underway, the group now wants to dispose of any surplus real estate that it may be holding in any of its group firms. Indian Hotels Co. Ltd (IHCL), which runs hotels and resorts, owns a large number of real estate assets, a large part of which will be put on the block,” one of the two people cited above said.

The asset sale could help Tata Sons build a cash reserve without adding debt, at a time it needs to finance its new e-commerce businesses and infuse fresh capital in loss-making Air India, which it recently acquired.

Last year, Hemisphere Properties, which holds the demerged surplus real estate assets of erstwhile Videsh Sanchar Nigam Ltd (now TCL), said the value of the land parcels that it can monetize is ₹19,000 crore, based on prevailing circle rates.

“The group is conducting an internal evaluation to ascertain the total value of real estate across companies that can be sold, and has hired consultants for a valuation exercise. The group is also exploring the possibility of transferring its real estate holdings to separate entities as part of this. The land parcels, in all likelihood, will be offered first to Tata Realty and Infrastructure Ltd for redevelopment and sold in the open market if TRIL declines to acquire them,” the second person cited above added.

The people cited above said Tata Sons may move resolutions at its subsidiaries to secure board approval for the proposed land sale. A request for comment sent to a Tata Sons spokesperson remained unanswered till press time.

The Tata group has been streamlining its real estate assets for some time. In 2019, TRIL acquired Tata Sons’ stake in Tata Housing Ltd for about ₹3,000 crore, as part of Tata Sons’ plans to restructure group companies.

To simplify its structure further, the Tata group is currently reorganizing businesses by function under various clusters to enable synergies, and the management is expected to invest significant growth capital in its new businesses. Key clusters include media and communication, digital and electronics, financial services, infrastructure, aerospace and defence, consumer and retail, and tourism and travel, according to a recent report by rating company Crisil Ltd.

In the recent past, Tata Sons invested in group companies such as Tata Motors Ltd, Tata Steel Ltd and Tata Power Co. Ltd through preferential issues and rights issues. In addition, Tata Sons also invested in new businesses such as Tata Digital and Tata Electronics.

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