Tata Steel is reportedly planning to sell its 5.5% stake in sister company Tata Motors.
As per reports, the steel manufacturing arm of Tata Group is expected to execute the stake sale worth Rs 5,500 crore in "one or two tranches".
Surprisingly, the buyer is none other than its parent company Tata Group, a section of media reported quoting sources.
Tata Steel also seems to be contemplating to "sell cross holding across Tata Group companies". The company is expected to undertake debt refinancing to reduce interest charges.
However, Tata Steel told CNBC-TV18 that the reports on stake sale in Tata Motors to Tata Group were "speculative".
"The company is committed to making disclosures to regulators and the investing community," it said.
Tata Motors, which will announce its earnings for June quarter on Friday, is struggling to increase its revenues due to declining volumes in China. China is the largest market for Tata Motors' Jaguar Land Rover (JLR).
Tata Motors earns more than 80% of its revenues from JLR sales. A drop in business volumes in China, which accounts for 20% of total JLR sales, weighed heavily on its profits in the March quarter last financial year (2014-15).
The company profit slumped by 56.19% to Rs 1,716.50 crore in the January-March quarter compared to Rs 3,918.29 crore in the same quarter a year ago (2013-14).
"Overall the environment and the numbers for Tata Motors doesn't look good for the next couple of quarters," said Sudip Bandopadhyay of Destimoney Securities.
Owing to the weak outlook, share prices of Tata Motors have fell sharply by about 32% since the beginning of April this year.
