Tata trusts to enter stock markets

MUMBAI: With the government enabling trusts to invest in securities including bonds and shares of listed companies, the trusts controlled by the Tatas, India’s second largest business conglomerate, with its large corpus plans to invest a part of its funds in the stock market.
The Tata trusts hold 65.8% stake in Tata Sons, the holding company of the Tata Group which has a presence in industries from salt to software.Among listed Tata entities, the trusts’ most significant holding is in Indian Hotels Company, which runs the Taj chain. The Tata trusts holds 13.1% stake in IHCL and is valued at nearly Rs 2,000 crore, based on the stock’s closing price on the BSE.
The new rule would also enable trusts to participate in IHCL’s proposed rights issue, thus allowing it to maintain its holding in the hotel chain. Also, Tata trusts can now buy Tata group companies shares, thus enabling the Tata group’s overall consolidation strategy.
There are two principal trusts operating under the Tata umbrella, the Sir Dorabji Tata & Allied Trusts and the Sir Ratan Tata Trust. Over 75% of the trusts’ funds come from dividends on the shares it owns in Tata Sons and the remaining come from its other investments. The wealth it accrues from this asset supports an assortment of causes, institutions and individuals in a wide variety of areas. In 2006-07, the Sir Dorabji Tata Trust disbursed more than Rs 86.05 crore to NGOs, individuals, while the Sir Ratan Tata Trust disburses between Rs 32 crore and Rs 35 crore every year.