Money will, however, not be a problem with Tata Sons as it enjoys the current steel upcycle, consistent performance of TCS and impressive market capitalisation growth of its operating companies. The market value of its investments is over Rs 12 lakh crore as against its debt of Rs 25,396 crore, placing Tata Sons in a comfortable position. This also allows it to raise capital by monetising its investments.
Recently, the holding company of the Tata Group has spent considerable amounts to buy BigBasket, 1MG and Tejas Networks, among others, and plans to spend more to outfight competition. Some trackers of Tata Sons, however, have reservations and feel that aviation, known to be a capital-guzzling and money-losing venture, could pull the salt-to-software conglomerate down. Internally, Bombay House, Tata Group’s headquarters in Mumbai, has estimated that the business will not make profit for five years till 2025, when global passenger traffic is expected to return to pre-Covid level. Tata Sons’s existing airline startups — AirAsia India and Vistara, in which it has invested more than Rs 6,000 crore since commencement of operations — have lost over Rs 9,000 crore till date.
Tata Sons may have to shell out money equivalent to its Air India bid to restructure the carrier, which will be the second-biggest purchase under Tata Sons chairman N Chandrasekaran. But, an industry person pointed out, “A lean cost structure is key to script a success in aviation.”