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Tata Group to invest ₹975 crore in Pune IT City Metro Rail Ltd

MRT Online Desk Posted on: 2022-09-14 06:30:00 Viewer: 3,365 Comments: 0 Country: India City: Pune

Pune, India (Metro Rail Today): Tata Sons, the holding company of the Tata group, is investing Rs 975 crore in Pune IT City Metro Rail Limited, a special purpose vehicle that has won the contract to construct, operate, and maintain the Pune Metro Line - 3 project connecting Shivaji Nagar and Hinjewadi in the city.

Tata owns a 74% stake in Pune IT City Metro Rail Ltd; the rest is owned by Siemens Project Ventures. The Rs 7,420-crore, the 23-km project is being financed through debt-to-equity of 1.8 times and the entire debt has been tied up, and the envisaged equity commitment is supported by Tata Sons, said a banking source.

The Pune metro rail is being developed by the Government of Maharashtra and the Central Government with 50% equity each. Tata Realty and Infrastructure (TRIL), a subsidiary of Tata Sons, is making the aforementioned investment in the Pune IT City Metro Rail Ltd.

TRIL is planning to sell its recently commissioned roads and ropeway projects to raise funds and retire its own debt.

According to Bankers, Tata Sons is focusing on increasing the contribution of its digital, electronics and aviation businesses to the group’s profitability, and some of the entities like the Pune IT City Metro Rail Ltd may require funding from Tata Sons as growth capital because TRIL is focusing on retiring its debt. Tata Sons is likely to raise additional debt for these projects, apart from investing its own cash, which is expected to flow in as dividend income in the ongoing financial year.

Tata Sons, which had standalone debt of Rs 30,000 crore as of March this year, is planning to raise funds via issuing non-convertible debentures. Tata Sons is also looking at listing its satellite TV broadcasting arm, Tata Play, to raise around Rs 3,200 crore.

“Tata Sons also owns stakes in profit-making insurance companies and may look at raising funds by selling part of their stakes,” the banker said.

TRIL is expecting a boom in the infrastructure sector mainly due to the Indian government’s increased impetus on infrastructure development, especially under the Parvatmala initiative for ropeways.