REACHING OUT

Mumbai, June 19: The $22-billion (Rs 96,273 crore) Tata group is widening the scope of its operations in financial services.

Its apex holding company — Tata Sons Ltd — has formed a wholly-owned subsidiary called Tata Capital Ltd which plans to offer capital market services, housing finance, assets and vehicle financing, and retail finance. It will also enter the area of merchant banking and manage private equity investment.

A press statement issued by Tata Sons said these activities would be undertaken either by subsidiary companies or divisions of Tata Capital, depending on regulatory requirements.

Several Tata companies offer a range of financial services, including Tata AIG insurance companies, Tata Asset Management Company (which manages the Tata Mutual Fund) and Tata Investment Corporation. Tata Sons has a substantial direct holding in all of them and they will continue to remain separate entities.

The statement did not say how much the Tatas planned to invest in the new company and a spokesperson for the group also refused to amplify on this aspect.

There are some areas where there will be overlaps with existing group companies or divisions as in that of vehicle financing. Tata Motor Finance, an arm of Tata Motors, has provided finance for over 28 per cent of all passenger cars sold by Tata Motors last year. It is understood that the present structure will continue.

Tata Capital’s plan to enter housing finance marks the group’s return to this segment after a gap of almost four years. Back in May 2003, the group exited the field when the Industrial Development Bank of India agreed to buy Tata Homefinance Ltd, a wholly owned subsidiary of Tata Finance Ltd, for Rs 50 crore.

Tata Finance was subsequently merged with Tata Motors. Apart from Tata AIG General Insurance and Tata AIG Life Insurance, other companies that are engaged in financial services within the group include Tata Asset Management, Tata Financial Services and Tata Investment Corporation.