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Tata Motors To Raise Rs 4,700 Crore to Reduce Debt

By Motortrend India Staff   |   29 June,2010

India’s largest maker of trucks, Tata Motors is planning to raise a sum of Rs 4,700 crore through a combination of equity, convertible bonds, debentures and warrants to reduce debt and fund expansion.


The Indian auto major will start seeking the shareholders’ approval for the fund-raising, Tata Motors said in a regulatory filing on Monday. The company added that the fund will be raised both in Indian and overseas market.


As of March 2010, Tata Motors had a net debt of about Rs 18,800 crore, and now it has reduced its debt-to-equity ratio to 2.05 from 4 in March 2009. But, Tata wants to bring down this ratio further in the upcoming months. The company requires about 2,500 crore to meet its capital expenditure.


A major portion of the debt was taken to finance the $2.3 billion acquisition of the British brands Jaguar-Land Rover (JLR) in 2008. Last year, Tata had raised $750 million by selling its GDRs and convertible notes and repaid some of the debt taken for the JLR.


In the earlier months of this year, Tata Motors returned debt worth $345 million by converting foreign currency bonds. It also accumulated $250 million by selling a 20% stake in group firm Telcon to its JV partner Hitachi Construction Machinery.


Additionally, the company needs an extra £600 million for its JLR expansion plans.



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