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Our Bureau

Mumbai, Oct. 16 The meltdown in the stock markets had its impact on the rights issue of Tata Motors. According to merchant banking sources, the issue has received lukewarm response so far from the public shareholders. The issue is schedule to close on October 20, 2008.

Tata Motors’ shares plummeted to historic low of Rs 250.55 on Thursday from Rs 355.85 on September 29 when the rights issue opened.

The share price was hovering around Rs 840 a year ago.

From the third day of the rights issue, the share price of Tata Motors has been trading below the offer price of its ordinary rights issue at Rs 340.

The differential voting rights component of the rights issue is priced at Rs 305.

The stock was last traded at Rs 339 on October 1 and thereafter it witnessed a steady fall.

It touched 52-week low of Rs 240 before settling at Rs 250.55 on Thursday, shedding Rs 31.50 on a single day.

However, the company would be able to raise the required funds as the issue is fully underwritten. A company spokesperson said the issue of “A” ordinary shares is fully underwritten. In the case of ordinary shares, if there is an unsubscribed portion, the promoters will make arrangements to have them subscribed, he said.

An analyst said that in the current market condition, any issue would have faced the same fate. However, Tatas could get its group companies to pick up the unsubscribed portion.

Tata Motors’ rights issue is to raise Rs 4,200 crore to part-finance short-term bridge loan taken by the company to fund the Jaguar Land Rover acquisition.

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

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