Tata Capital Financial Services And Tata Cleantech To Merge With Tata Capital

Tata Capital's subsidiaries, Tata Capital Financial Services (TCFSL) and Tata Cleantech Capital (TCCL), are merging with their parent company to strengthen their capital base and increase their asset size. However, approval from the National Company Law Tribunal and the Reserve Bank of India (RBI) will be required for the merger.

Tata Capital announced that the merger would create a unified entity with a stronger and broader capital and asset base, allowing for more efficient and competitive operations. Consolidating businesses will simplify the organisational structure, improve efficiency, streamline operations and decision-making, and enhance customer experience.

The RBI has identified Tata Capital as an upper-layer NBFC, subject to enhanced regulatory requirements based on specific parameters and scoring methodology. The top 10 NBFCs, ranked by asset size, always fall within this category as per RBI guidelines. The move aims to ensure stability and reliability in the financial sector and safeguard investor and customer interests.

About The Company

Here is a brief introduction to the two subsidiaries of Tata Capital:

Tata Capital Limited

Tata Capital Limited is a registered core investment company that holds various financial services of the Group, such as Tata Capital Financial Services Limited (TCFSL), Tata Capital Housing Finance Limited (TCHFL), and Tata Cleantech Limited (TCCL). TCL also has strategic and private equity investments in some companies. Tata Sons Limited owns 94.55% of TCL as of March 31, 2022. Tata Investment Corporation Limited, TCL Employee Welfare Trust, and others own the remaining Tata Capital unlisted shares

The company's net profit in FY2022 for 2022 was Rs. 83 crore, compared to Rs. 47 crore in FY2021. For H1 FY2023, the company's standalone net profit was Rs. 94 crore. In FY2022, TCL reported a consolidated PAT of Rs. 1,801 crore, up from Rs. 1,245 crore in FY2021. 

Tata Cleantech Capital Limited

Tata Cleantech Capital Limited (TCCL) is a Systemically Important Non-Deposit, and  Non-Banking Financial Company (SI-ND-NBFC) registered with the Reserve Bank of India. It is a  joint venture that was created in September 2011 by Tata Capital Limited (TCL) and International Finance Corporation (IFC).

TCCL offers financial and consulting services for infrastructure projects, including renewable energy, energy efficiency, waste, and water management. As of September 30, 2022, the portfolio of Rs. 9,445 crore included projects for solar power (including rooftops) (49%), wind power (18%), power transmission (5%), and others (29%). In H1FY2023, the company reported a net profit of Rs. 130 crore upon a total income of Rs. 453 crore, compared to a net profit of Rs—100 crore on a total income of Rs. 340 crore in H1FY2021.

The Shareholding Pattern Of Tata Capital

We have retrieved the latest shareholding pattern for Tata Capital and  we hope you will find it informative:

Category	No. of Shareholders	No. Of Shares	% of Paid Up Capital
Tata Motors Limited	1	3,03,00,600	72.48
Alpha TC Holdings Pte. Ltd.	1	37,46,505	8.96%
Tata Capital Growth Fund I	1	18,73,253	4.48%
Tata Motors Finance Limited	1	8,11,992	1.94%

The Key Financial Indicators Of Tata Capital 

Financial indicators of Tata Capital for the years 2021 and 2022 are in the table provided below:

Tata Capital Limited (consolidated) (In Rs. crore)	FY2021	FY2022
Net Interest Income	3,516	4,202
Non-interest Income	1,398	1,081
Credit costs	1,704	2,042
Operating Expenses
Profit before Tax	1,615	2,348
Profit after Tax	1,245	1,801
Net Worth	10,807	12,836
Total Assets	82,930	102,386
Return on Assets	1.5%	1.9%
Return on Equity	12.4%	15.2%
Gearing (times)	6.4	6.7
Gross NPA/stage	2.5%	1.9%
Net NPA/stage 3%	0.9%	0.6%
(Net NPA/stage 3) / Net Worth	6.2%	4.0%

Advantages Of Purchasing  Tata Capital Unlisted Shares

We all know the benefits of investing in equity: the potential for high returns. But investing in unlisted shares also has many advantages: 

Diversification Of Risk 

Unlisted shares can complement a portfolio and offer similar returns to listed shares. They may also go public in the future, providing substantial upside. Evaluating valuation metrics and investing in undervalued stocks with significant earnings growth potential is essential.

Low Liquidity Leading To Undervaluation

Unlisted shares are less liquid and attract a limited community of long-term investors. Due to lower demand and participants, valuations are generally lower. Identifying undervalued stocks requires expertise.

Lower volatility 

Shares with low liquidity have less volatility, but can be high-risk investments if chosen incorrectly. Unlike listed shares, they do not fluctuate daily, and their supply and demand are not tracked daily. However, this stability reduces the financial stress that comes with investing.

Final Word