The Hindu Business Line : Tata Motors in talks with Chinese co for tie-up — Turnover seen at Rs 15,000 cr for 2003-04

TATA Motors Ltd is expected to end fiscal 2003-04 with a turnover in excess of Rs 15,000 crore. In the previous year, its gross sales were Rs 10,837.01 crore.

The company, which held an EGM on Thursday to seek shareholders' approval to raise up to $500 million, is in discussions with a company in China for possible tie-up, Mr Ratan Tata, Chairman, said.

It is charting a growth path, involving both organic and inorganic modes. For this, Tata Motors plans to invest Rs 6,000 crore over a five-year period. Funds will predominantly be debt with a small portion of equity.

The $500-million borrowing is a part of this plan, Mr Tata said. Tata Motors is yet to decide the instrument it will employ for the purpose. The equity component will not exceed 10 per cent. The company will also look at a zero coupon instrument with a total interest cost of three per cent.

The overseas debt portion will be at a cost of 3-3.5 per cent. Low interest cost on overseas debt markets is the main reason for Tata Motors choosing to go in for a foreign borrowing, he said.

The rising steel prices did impact the company which had to incur an additional cost of Rs 325 crore on that account.

The steep rise in the company's export for FY04 was partly due to the export of 6,700 passenger cars (Indica). The company has a contract to export 100,000 Indica cars to MG Rover in five years. In the area of exports, Tata Motors is looking at geographies such as China, South Africa, Latin America and South America. However, entry into the North American is tough at this juncture, Mr Tata told shareholders. The company is not ready for an entry there.

Entering the US at this juncture could damage the company's image, he pointed out.

Responding to queries from shareholders' on the Korean acquisition, Mr Tata said, there is no plan at this point in time to set up a car plant. The Korean truck plant was profitable at the time of acquisition. It is debt free.

The acquisition of Daewoo's commercial vehicle plant will provide an opportunity to Tata Motors to expand its product range in India through import of Korean trucks and thereby help it face competition from Volvo. Similarly, Tata Motors will be able to use the Korean arm to access markets in that region for its commercial vehicles.

Tata Motors also plans to introduce its own line of buses. The company will provide the design and supervise the bus body manufacturing activity.

Mr Tata allayed shareholders' concern about attempting to make the Rs 1 lakh-car. According to him, a product positioned at that price between motorcycles and cars would give the company a 5 million vehicle-market.

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