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Our Bureau

Mumbai, Aug. 20 Tata Motors on Wednesday decided to prune its proposed Rs 7,200-crore Rights Issue in light of adverse conditions in the capital markets. This issue was planned to part-finance the acquisition of the Jaguar and Land Rover brands.

As part of its decision, the company has decided to scrap its proposed Convertible Preference Share issue of Rs 3,000 crore. Instead, in its place, the company has now proposed to divest some of its investments, preferably as inter-group sales wherever feasible, at prevailing market prices over the next six to eight months.

“The funds released from such future divestments, together with those already sold during the current financial year, will form part of the resources to be raised for repaying the bridge loan taken for the JLR acquisition,” the company said on Wednesday.

The Board in its meeting on Wednesday reviewed the earlier fund raising proposal in view of the “current situation in the capital market and the change in the level of prices in the stock markets since May 2008.”

According to Tata Motors’ 2007-08 annual report, the value of the company’s investments (trade and in subsidiary companies, excluding those in mutual funds and bonds) was Rs 4,034.51 crore as on March 31, 2008 (compared to Rs 2,281.55 crore in the previous year).

The investments include Tata Steel — Rs 395.73 crore, Tata Motors Finance (subsidiary) — Rs 1,150 crore, Tata Technologies — Rs 224.10 crore, TAL Manufacturing Solutions — Rs 150 crore, Telco Construction Equipment Co — Rs 119.50 crore, Tata Daewoo Commercial Vehicle Co — Rs 245.41 crore, Fiat India Automobiles Pvt Ltd — Rs 601.59 crore.

The Board of Directors said, “With a view to keeping the increase in the share capital as low as possible, the board decided to restrict the Rights Issue to only two simultaneous and unlinked securities — issue of Ordinary Shares and issue of ‘A’ Ordinary shares with differential voting rights.” In place of the issue of Convertible Preference shares, it proposed to divest some of its investments.

The company’s shares have dropped by nearly 33 per cent on the NSE — from Rs 635.55 on May 28 (when it announced its fund-raising programme) to Rs 424.75 on Wednesday.

More Stories on : HCV/LCV/Tractors | Rights Issue | Tata Motors Ltd

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