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14
September 2016
Tata Sons'
Chairman Cyrus P Mistry has said that debt levels of some of the group
companies should be seen in the context of business growth, increasing cash
from operations, and capital projects underway which will lead to future
growth. The Total Investment &
Insurance Solutions
Mistry said
this during an interview with Tata Group's online platform -- tata.com. The
interview was published on Tuesday. The Total Investment & Insurance Solutions
When asked
about the significant debt levels of some of the group companies, Mistry
replied: "This has to be seen in the context of business growth,
increasing cash from operations, and capital projects underway which will lead
to future growth."
"As the
group has been growing significantly in the past, the total capital employed has
also grown. Proportionately, there has been increase in debt."
According to
the Tata Sons' Chairman, over the last three years, the gross debt across the
group has increased by about two per cent per annum in US dollar terms, while
cash and equivalents have grown at over 10 per cent, leading to a reduction of
3.3% in net debt in the same period.
"This
excludes our financial services businesses, where debt is integral to the
product offering and, hence, their model is different from other businesses,"
Mistry elaborated.
"As of
March 2016, the group had a net debt of about $24.5 billion. Capex has been on
average $9 billion in each of the last three years. In the financial year 2016,
cash from operations reached $9 billion a year and exceeded the capex." The Total Investment & Insurance
Solutions
Mistry
further said: "At the group level, therefore, the aggregate debt is not
something I feel concerned about."
The Total Investment & Insurance Solutions
"In
fact, such aggregations at the group level could mislead, as the companies
which have high cash generation, capex and debt are not all necessarily the
same, and resources of different companies are not fungible with one another,
as they are distinct legal entities with different shareholders."
"Of
course, for a more meaningful discussion, these numbers would require to be
viewed at each company's level." The
Total Investment & Insurance Solutions
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