Mumbai, Mar 16: Tata Sons has sought the approval of the financial institutions to charge a subscription fee from group companies for using the `Tata' name and logo.Bombay House sources said that proposals detailing the whys and hows involved in the charging of the subscription fee and issues relating to the setting up of a Tata brand equity fund have been put forward for institutional clearance.
"The institutions have been approached on the matter given the fact that they happen to be major equity stakeholders in various Tata companies. We also want to make the whole scheme transparent to the institutions," said senior Bombay House sources.
The scheme, put forward to the institutions recently, is a three-tier one, and cites the methodology for charging the fee from group concerns for using the `Tata' name and logo, the image-building exercise to be undertaken, and the finer aspects of a code of conduct to be entered into between Tata Sons and its various group concerns in the process.
"We expect theinstitutions to revert back to us shortly," said Tata Sons officials. Tata Sons is acting, in this case, as a nodal operator for the large number of Tata group companies in which the institutions have big stakes.
In fact, institutions account for a majority of the shareholding in most Tata group undertakings. For example, in the largest private sector Indian steel company, Tata Steel, the institutions - led by Life Insurance Corporation - hold nearly a 50 per cent stake. The introduction of the subscription fee was sought to be made last year, but was postponed due to some degree of adverse public opinion. That is why Tata group topnotchers are in the process of securing blanket approval for such payouts by all the companies.
It has been argued that the payouts are essential to ensure strengthening of the Tata brand in the face of mounting multinational challenge in a liberalised environment. It has been pointed out that since the inception of the Tata group, the name of the Tata family has become one ofthe most recognisable brands across a number of key business areas.
Tata Sons' equity is held by sundry Tata companies, a number of trusts, and the Tata family, apart from Shapoorji Pallonji Mistry, a strategic investor. The group-holding company has already bolstered its equity through a rights issue to these investors two years ago. It itself plans to hike stakes in group companies over time.
Tata Sons' sole source of revenue at the moment (apart from dividend income from investments in various companies, including those in Tata group entities) is the fast-growing Tata Consultancy Services (TCS).
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
