Tata Motors to cut debt by raising Rs 4,700 crore

Tata Motors, one of the largest car maker in the Indian market, has decided to raise Rs 4,700 crore through the medium of equity, convertible bonds, debentures and warrants to reduce debt and fund expansion. For the process of fund raising the company will seek the approval from its shareholders.

At the Board Meeting of the Company held on Monday, the Board, inter alia, decided to seek Shareholders’ approval through a Postal Ballot for raising funds equivalent to about Rs.4,700 crores through a combination of issue of Ordinary Shares, ‘A’ Ordinary Shares, Convertible Bonds, Debentures, Warrants or other equity linked instruments in the domestic and/or international markets in one or more tranches.




The major chunk of this debt was utilized in financing the acquisition of brands Jaguar and Land Rover (JLR) in year 2008. At that time the company had taken a short term loan of $3-billion, which was used in financing the acquisition as well as in meeting the requirement of its working capital. The company had sold some of its GDRs and convertible notes to repay the debt taken at the time of purchase of JLR.

The company has reduced its debt to equity ration to 2.05 as against the ratio of 4 in March 2009, and it aims to further decrease this debt-equity ratio to 1 by year 2012. Tata Motors had a net debt of about Rs 18,800 crore by the end of the last fiscal. The company plans to meet its capital expenditure need of around 2,500 crore by cash flows.

Source:- Tata Motors to cut debt by raising Rs 4,700 crore - New Cars