In a regulatory filing, submitted by Tata on June 28, 2010, the company said that it would seek approval of its share holders to collect the fund. The timing has not been fixed yet. Money will be collected both from
Jatin Chawla, analyst, India Infoline said, “Debt reduction is the main purpose of the fund-raising,.....A portion of it will be used for capex too.”
Tata Motors, by the end of March 2010, incurred a debt of rs.18,800 crores. A large portion of this debt is related to the company’s $2.3 billion acquisition of Jaguar-Land Rover in 2008. Tata took $3 billion short term loan for the acquisition. In October 2009, Tata Motors raised $750 million by selling GDRs and convertible notes to repay some of the debts. Now, the company intends to cut its debt-to-equity ratio in the next eighteen month.
It also needs about Rs.2.500 crore for capital expenditure.
On June 29, 2010, share prices of Tata Motors touched an intraday high of Rs.787.00 and low of Rs.781.50. In total 29,766 shares were traded. Yesterday, share prices closed at Rs.78.50 gaining Rs.18.50.