The Tata group's main holding and promoter company reported a gross debt of ₹363.2 crore at the end of March this year, down sharply from ₹22,176 crore at the end of FY23. Against this, the company reported cash and equivalents worth ₹3,042 crore at the end of FY24, up from ₹1,534 crore a year ago. This translated into a negative net debt of ₹2,679.2 crore.
At its peak, Tata Sons had an outstanding debt of ₹31,603 crore at the end of March 2020 and a net debt-to-equity ratio of 0.56.
A combination of a debt-free balance sheet and a steadily growing dividend income from group listed companies such as Tata Consultancy Services, Tata Motors, Titan, and Tata Consumer provides financial firepower to Tata Sons to scale up investment in new ventures or step up dividend payouts. Last time when Tata Sons was debt-free on a net basis in FY06, it was followed by a string of large cross-border acquisitions, which transformed the group.
Historically, there is a high correlation between the Tata Sons balance sheet leverage ratio and the pace of its equity investment in various ventures.
A low leverage ratio, such as in 2005-06 and 2014-15, has been followed by a spurt in Tata Sons' equity investment in various listed and unlisted ventures. (See the adjoining charts.) For example, at the end of March 2006, Tata Sons had reported a gross debt of ₹2,316 crore and cash and equivalents worth ₹2,471 crore.
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