Weighed down with heavy debt, Tata Motors has decided to raise about Rs 4,700 crore through the issue of securities in domestic and international markets. The funds will also be used to finance the company’s expansion programmes.
“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.
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.
Tata Motors had taken loan of $3 billion in June, 2008, to fund its acquisition of JLR. Later, it had taken a £340 million loan from the European Investment Bank for utilising on research and development on JLR and £500 million from a group of bankers for JLR operations. “The 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.”