Tata Sons, the principal holding company for the Tata group, is raising Rs 2, 000 crore through non-convertible debentures (NCDs) to support business operations and the group's investment plans.
Rating agency Crisil has assigned a "AAA" rating to the new instruments. It also reaffirmed the outstanding ratings on the company's debt programmes and bank facilities at "AAA".
The rating factors in strong financial risk profile supported by company's comfortable liquidity and a sound capital structure. These strengths are partially offset by its increased participation in group companies' investment programmes., Crisil said in a statement.
Tata Sons' business risk profile will also depend on the success of these investments. Its financial flexibility arises from an ability to raise additional funds by sale or pledge of a large portfolio of investments, mainly equity shares in its information technology services company Tata Consultancy Services (TCS).
As of January 7, 2016, Tata Sons' holding in TCS, which changed to 73.26% from 73.69% following the merger of CMC Ltd, had a market value of about Rs 3.42 lakh crore.
Tata Sons' financial risk profile is supported by its strong liquidity, reflected in cash and cash equivalents of about Rs 98.2 billion as of September 30, 2015.
The holding company's financial strength will enable it to participate in the group's expansion plans over the medium term. Crisil said it believed Tata Sons will continue to have strong financial risk profile over the medium term.
The Tata group has been expanding its business presence through both organic and inorganic routes, resulting in large funding requirements across group companies.
The company is also the driving vehicle for group's venture in growth sectors such as telecommunication, financial services, realty, retail, and aviation.
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