"The equity stake of the Tata Group companies is expected to be go up to 57 per cent by March 31, 2002, mainly on account of the conversion of cumulative convertible preference shares (CCPS) through a Rs 90-crore rights issue, Tata Finance managing director Dilip Pendse told The Financial Express. Amongst the Tata Group, Tata Industries is the principal shareholder along with Tata Engineering in Tata Finance.Besides the proposed rights issue, the company is making a Rs 25-crore private placement to banks and financial institutions. Consequently, the net worth of Tata Finance is being increased by Rs 115 crore.

The exact pattern of equity structure will be ascertained post-conversion of CCPS in March 2002. "The offer document of the rights issue has been submitted to the Securities and Exchange Board of India (Sebi)," he said, adding that a clearance is expected soon.

The private placement is expected to come through in February. The company's board has already approved the proposals on January 4.

Giving details of the current shareholding pattern of Tata Finance, Mr Pendse said Telco dealers have a 14 per cent equity stake in the company, financial institutions and banks together hold about four per cent and 35 per cent is held by public. Assuming that the Tata Group holds 57 per cent stake post-conversion in March 2002, the stake of public will drop to 29 per cent, Telco dealers to 12 per cent and institutions and bank around three per cent.

"The current exercise is also in line with Tata Group's philosophy of holding majority stake in every business venture," he added.

Mr Pendse also said that Tata Finance may also pick up a 10 per cent equity stake in the proposed joint venture between Tatas and AIG in the insurance sector later. The group plans to pick up 74 per cent equity stake in the joint venture, whereas the balance 26 per cent will be held by the insurance major AIG.

Tata Finance will undertake retail distribution of general and life insurance through its existing network and may also involve its subsidiaries in the exercise, he added.

Tata Finance family consists of global on-line financial services provider Tata TD Waterhouse Securities, merchant banking arm Tata Finance Merchant Bankers and its forex arm Tata Finance Amex Ltd.

The other subsidiaries of Tata Finance are: Niskalp Trading & Investment, TT Forex Ltd, Tata Homefinance Ltd and Tata Share Registry Ltd. The company is in the process of floating a new venture for travel related services, Tata Travels Ltd.