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Tatas promise cash burst in five years

Mumbai, Aug. 24: The Tatas continue to stun: after announcing the $677-million buyout of Energy Brands Inc of the US yesterday, the group said today that it intends to invest Rs 1,20,000 crore ($25.8 billion) over the next three to five years in its various business ventures.

The sum will not only be invested in the group’s existing businesses like steel, telecommunications, power, automobiles, beverages and chemicals, but it could also see Bombay House entering several new or “emerging areas”.

Kishor Chaukar, director of Tata Sons, the group’s holding company, said some of the sectors where the conglomerate may enter include biotechnology, alternative medicine, energy and utilities (water management).

“These are the areas in which we believe the companies can contribute value for money for its customers and investors across the sectors,” Chaukar said. He added that while each of the group companies would be coming out with a definite investment plan, the Tatas would be fully supporting any expansion plan.

“The holding company will be supporting the business model and the investment plans, while the group companies will be raising funds,” he said. He, however, did not give the detailed break-up of these investments or how they will be financed.

In the recent past, some of the well-known Tata group companies have come up with ambitious expansion plans. Tata Motors’ small car project is one such prime example. Meanwhile, Tata Steel alone is expected to make an investment of Rs 70,000 crore in the next decade, constituting the largest investment in the Tata group.

The Tatas are not alone in drawing up grand investment plans over the next five years. Mukesh Ambani, Kumar Mangalam Birla and Anil Ambani, who head powerhouses, could well be investing a cumulative amount of over Rs 3,50,000 crore over the next five years in various lines of businesses if their plans, which are now on the drawing boards, fructify.

Each of them has ambitious plans.

After a break-up of the Reliance empire, Mukesh is in the midst of unveiling a massive exercise into retailing. At the recent annual general meeting of Reliance Industries Ltd (RIL), he revealed that Reliance Retail will have to invest more than Rs 25,000 crore in the years to come. Retail is only one spoke in Mukesh’s wheel. He is now in the process of setting up a Rs 27,000-crore refinery at Jamnagar adjacent to RIL’s refinery. This project apart, while there are special economic zones, other lines of business such as oil and gas exploration and petrochemicals will also draw in huge sums of money. Sources close to the group aver that in the next five years, an investment of up to Rs 1,50,000 crore could be made.

Anil, the younger brother, isn’t too far behind. He is getting ready to put in huge sums of money in power, telecommunications and financial services, not to mention other emerging areas such as entertainment and urban infrastructure. In power alone, Anil recently revealed that Reliance Energy Ltd is pursuing generation projects aggregating to a total capacity of 16,000 mw with a projected investment outlay of Rs 60,000 crore in gas-based, hydro and thermal power projects.

Although the Dadri power project is making slow progress because of contentious issues with the Mukesh camp on gas supply and pricing, Anil is also bullish on telecommunications where he proposes to invest more than Rs 15,000 crore in the years to come.

Meanwhile, Kumar Mangalam Birla, who heads the Aditya Birla group, will also invest heavily into areas like non-ferrous metals, cement and other knowledge-based industries. Sources close to the group aver that money will also be put into Idea Cellular, where Birla recently acquired a significant stake from the Tatas. Incidentally, Idea Cellular has obtained the authorities’ nod to venture into Mumbai. It is now learnt that Birla may soon venture into retailing as well.

Banks are already reporting a 30 per cent surge in demand for credit as India Inc, led by these conglomerates, prepares to make major capital investments in the next few years. If the plans fructify, the banks can look forward to the continuance of robust credit growth over the next five years.

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