The Tata group is considering divesting a 26 per cent stake in Tata Autocomp Systems, the closely held holding company of the group's automobile components business, and is in advanced talks with major private equity firms. These include Warburg Pincus, Newbridge Capital and Citigroup.

The road ahead

The stake will be sold to at least two equity funds Taco is also looking at the possibility of tapping the capital markets for funds The Tatas, through Tata Industries and Tata Motors, hold 100 per cent in Taco

The idea was to offload up to a 26 per cent stake to at least two equity funds, sources involved with the talks told Business Standard. JM Morgan Stanley is advising the Tatas on the deal.

Taco is also looking at the possibility of tapping the capital markets for funds.

The Tata group's public relations agency, Vaishnavi, said the group was not in a position to officially comment on the issue at this point.

The Tatas, through Tata Industries and Tata Motors, hold 100 per cent of Taco's equity. This company, in turn, holds equity in about a dozen automobile component arms, all joint ventures with different multinationals in different product areas.

These include strategic equity alliances with Owens Corning (US), Johnson Controls (US), Toyo Radiator (Japan), Yazaki Corporation (Japan), Ficosa (Spain), CHKK (Japan), Sungwoo (Korea), and Knorr Bremse (Germany).

The group's long-term aim is to offer a one-stop solution to automakers, both in the Indian and world markets. The recession in the automobile sector has slowed down Taco's business as well.

Taco has five strategic business groups -- manufacturing, engineering, supply chain management, electronics and after market operations.

It is also looking at setting up an automobile component assembly plant in Thailand as a bridgehead to the rapidly growing economies of south-east Asia.

India is emerging as the automobile component hub for global players and has the potential to manufacture components cheap. Manufacturers like Sundaram Clayton and Bharat Forge, for instance, are among the top producers of components in the world, and have earned accolades for their attention to quality.

Besides, a host of international component manufacturers like Delphi, Visteon, Bosch and Lear Corporation have set up operations in India to cater to the local and export markets.