Tata Sons’ Major Investment in Tata Electronics

Tata Sons has significantly increased Tata Electronics’ authorized equity capital, rising fivefold to Rs 10,000 crore in the last financial year. With a current paid-up capital of Rs 3,961 crore, this move suggests a potential new investment exceeding Rs 6,000 crore.

High Annual Investment and Secured Loans by Tata Sons:

The latest filings with the Registrar of Companies reveal that Tata Sons invested Rs 2,140 crore in equity capital in Tata Electronics in FY24, marking the highest annual investment since the company was founded in 2020. By March 2024, the company had secured loans amounting to Rs 6,311 crore.

Tata Electronics, the group’s newest venture in electronics manufacturing services, recently acquired Wistron’s iPhone manufacturing facility in Karnataka.

In February, the firm announced plans to invest Rs 91,000 crore in a plant in Gujarat and an additional Rs 27,000 crore to develop a new semiconductor body and testing facility in Assam.

Strategic Expansion in Semiconductor Manufacturing:

The company aims to establish a large-scale semiconductor fabrication plant with PSMC.

With a current capital structure of Rs 3,900 crore in equity and the rest in debt, Tata Electronics is poised for significant expansion.

The planned Rs 91,000-crore chip plant investment far exceeds their current resources, indicating substantial future fundraising.

Financial Performance and Market Position of Tata Electronics:

For the financial year 2023, Tata Electronics reported revenue of Rs 463 crore from producing components like mobile phone enclosures, alongside a net loss of Rs 531 crore.

Competing with companies like Dixon, Foxconn, and Pegatron, Tata Electronics has announced that its two major semiconductor projects are expected to generate around 47,000 direct and indirect jobs.

Future Prospects in the Semiconductor Market:

The global semiconductor demand is projected to reach $1 trillion by 2030, with domestic demand in India expected to exceed $110 billion.

Tata’s entry into semiconductor manufacturing is a strategic move to enhance global supply chain resilience and establish India as a significant player.

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