Tata Motors today said it plans to raise about Rs 4,700 crore through the issue of securities in domestic and international markets to fund the company’s expansion programmes and reduce debt.
At a meeting held today, the company’s board decided to seek shareholders’ approval to raise the funds, as well as to increase its borrowing limit to Rs 30,000 crore from Rs 20,000 crore.
“The board, inter alia, decided to seek shareholders’ approval through a postal ballot for raising funds equivalent to about Rs 4,700 crore,” Tata Motors said in a statement.
The auto manufacturer will raise the amount through the issue of ordinary shares, convertible bonds, debentures, warrants or other equity-linked instruments in the “domestic and/or international” markets in one or more branches, it added.
“The above fund-raising proposals will be for meeting the company’s growth plans, as well as for reducing the debt on its balance sheet,” the statement added.
The company, however, did not mention any timeframe to raise the funds, saying, “The timing and structure of the issues will be decided depending upon market conditions post shareholders’ and other approvals.”
As of March 31, 2010, Tata Motors had a consolidated net automotive debt of Rs 18,800 crore with a debt-equity ratio of 2.05:1. In comparison, the car-maker had reported a higher net automotive debt of Rs 23,750 crore on March 31, 2009, when the debt equity ratio was 4:1.
Earlier last year, Tata Motors had raised USD 750 million through the issue of fresh shares in international markets and convertible notes, mainly for repayment of debts from its Jaguar Land Rover acquisition.
The company, which made a turnaround by posting a huge profit of Rs 2,571.06 crore in 2009-10, had earlier said that it would invest around Rs 3,000 crore during this fiscal on domestic operations, besides about 700 million pounds for the Jaguar Land Rover (JLR) unit.
Earlier in February, JLR had secured a 340 million pounds loan from the European Investment Bank for utilising on research and development.
Subsequently, in 2009, JLR secured another 500 million pounds of funding, including loans from SBI, StanChart, Bank of Baroda, GE Capital and Bank of Ireland.
Tata Motors had taken loan of USD 3 billion in June, 2008, to fund its acquisition of JLR. It acquired JLR for USD 2.3 billion in 2008 from US car major Ford.