India Watch : Tata Motors’ Board to consider long-term funding options

Nikhil Gulati, Dow Jones Newswires, 23rd June, 2010

Tata Motors Limited said Wednesday its Board will meet June 28 to consider options for raising long-term funds, which analysts expect will likely help reduce the company’s debt and provide capital for its expansion plans.

In its statement to the Bombay Stock Exchange, the automaker didn’t elaborate on the fund-raising plan. When contacted, Chief Financial Officer C. Ramakrishnan declined to divulge any details.

Kaushal Maroo, an Auto Analyst with New Delhi-based Religare Capital Markets Ltd., said Tata Motors would like to change its debt profile from short-term to long-term. “It would want to switch to a time frame in which it is more comfortable to repay loans,” he said. India’s largest automaker by revenue had consolidated debt of INR188 billion ($4.07 billion) as of March 31.

An analyst with a Mumbai-based brokerage said Tata Motors earlier raised funds to repay loans for its Jaguar-Land Rover acquisition, and that it may now be looking to garner funds for expansion.

Tata Motors acquired Jaguar and Land Rover from Ford Motor Co. in March 2008 for $2.3 billion. Last October, the company raised $750 million by selling global depositary shares and convertible notes to repay debt taken to acquire the two U.K.-based luxury car brands.

“The company plans to invest aggressively in research and development work for new car models and also in setting up satellite plants for its Nano minicar,” the analyst said, asking not to be named.

Tata Motors currently makes the Nano at its Sanand facility in the western state of Gujarat and at Pantnagar in northern Uttarakhand state. The company has previously said that it wants to set up smaller plants at several locations to assemble the minicar.

[Source: Wall Street Journal]

Clive Goldthorp

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