Tata group is trying hard to raise more than Rs 15,000 crore to support its cash requirements. This is in addition to Rs 13,070 crore it has obtained from the sale of 26% equity stake in Tata Teleservices to NTT DoCoMo. According to news reports, Tata group has plans to obtain these funds by the sale of vehicle loan portfolio of Tata Motors, selected private equity placement, and through the public offer of debt securities.
Notably, Tata Group had taken INR 9,200 crore bridge loan in June 2008 to finance the purchase UK’s Jaguar and Land Rover (JLR) brands of luxury cars from Ford. While that loan is required to be paid by June 2009, Tata Motors will further need to invest more than hundred crore rupees into JLR to save it from going illiquid. JLR has sought financial assistance from the UK government to the order of 1 billion pound as it is facing credit crisis due to sharp fall in sales. The UK government is in still pondering whether to use taxpayer money to bail out JLR.
As an outcome of the JLR deal, Tata Motors outlook may be degraded to negative by rating agencies which will further put pressure on the company to raise cash from the market.
Tata group is planning to fulfil this cash requirement by following ways:
1. Rights Issue: Rs. 4,200 crores
2. Sale of stake: Rs. 3,000 crores
It had raised Rs. 545 crore through through two major sales: Rs. 485 crore by selling TATA Steel stake, stake in TATA Teleservices of around INR 60 crore.
3. Foreign Equity Offer: $ 500 million (Rs. 2,400 crores)
This might be a hard option to pursue in the current market conditions.
4. Public Debt Offer: Rs. 2700 crores
In November 28 2008, Tata Motors has gone to the public with a fixed deposit scheme offering as much as 12.83% to general public. According to the Companies Rules, Tata Motors can raise a maximum of Rs. 772 crore from its shareholders and another Rs. 1931 crores from the general public through the fixed deposit scheme. The last time Tata Motors went for public borrowings was in the year 1995 when it received good support. However in the current situation it might be difficult if not impossible for Tata Motors to raise the maximum possible amount from public.
5. Sale of vehicle loan portfolio of Tata Motors: About Rs. 8,000 crores
The vehicle loan pool of Tata Motors is about Rs. 8,000 crores.
About Tata Motors
Tata Motors Limited is India’s largest automobile company. In FY08 it reported revenues of Rs. 35651 crores (USD 8.8 billion). It is the leader in each segment of commercial vehicles in India. Also, it is among the top three players in the car & utility vehicle market. On global scale, it is world’s fourth largest truck and second largest bus manufacturer. Though it is a part of India’s biggest business group, Tata group, it gained world’s attention last year with its announcement of buying Jaguar and Land Rover from Ford. Also it came into limelight with the proposal of manufacturing world cheapest car: Tata Nano, popularised as ‘The people’s car’.
As an outcome of the JLR deal, Tata Motors outlook may be degraded to negative by rating agencies which will further put pressure on the company to raise cash from the market.
Tata group is planning to fulfil this cash requirement by following ways:
1. Rights Issue: Rs. 4,200 crores
2. Sale of stake: Rs. 3,000 crores
It had raised Rs. 545 crore through through two major sales: Rs. 485 crore by selling TATA Steel stake, stake in TATA Teleservices of around INR 60 crore.
3. Foreign Equity Offer: $ 500 million (Rs. 2,400 crores)
This might be a hard option to pursue in the current market conditions.
4. Public Debt Offer: Rs. 2700 crores
In November 28 2008, Tata Motors has gone to the public with a fixed deposit scheme offering as much as 12.83% to general public. According to the Companies Rules, Tata Motors can raise a maximum of Rs. 772 crore from its shareholders and another Rs. 1931 crores from the general public through the fixed deposit scheme. The last time Tata Motors went for public borrowings was in the year 1995 when it received good support. However in the current situation it might be difficult if not impossible for Tata Motors to raise the maximum possible amount from public.
5. Sale of vehicle loan portfolio of Tata Motors: About Rs. 8,000 crores
The vehicle loan pool of Tata Motors is about Rs. 8,000 crores.
About Tata Motors
Tata Motors Limited is India’s largest automobile company. In FY08 it reported revenues of Rs. 35651 crores (USD 8.8 billion). It is the leader in each segment of commercial vehicles in India. Also, it is among the top three players in the car & utility vehicle market. On global scale, it is world’s fourth largest truck and second largest bus manufacturer. Though it is a part of India’s biggest business group, Tata group, it gained world’s attention last year with its announcement of buying Jaguar and Land Rover from Ford. Also it came into limelight with the proposal of manufacturing world cheapest car: Tata Nano, popularised as ‘The people’s car’.
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