Tata Motors to raise Rs 72bn for JLR deal through three rights issues

Tata Motors, which is on track to complete its acquisition of Jaguar and Land Rover by the end of June this year, will raise Rs 72 billion through three rights issues to fund the deal. This will be followed by another US$500-600 million issue of securities in foreign markets. Tata Motors will spend a total of US$2.3 billion towards acquiring JLR.

In a meeting today, Tata Motors board of directors approved a rights issue of equity shares up to Rs 22 billion, ‘A’ equity shares carrying differential voting rights up to Rs 20 billion and rights issue of five-year 0.5 percent convertible preference shares up to Rs 30 billion. With these issues, the company’s total equity capital will increase by about 30-35 percent during the current financial year.

Initially, Tata’s JLR acquisition cost will be financed by bridge loans through a syndicate of banks, and the company will later repay the banks via the newly announced capital raising schemes.

In the meanwhile, Tata Motors has posted a profit of Rs 21.67 billion for FY 2007-08, down from Rs 21.69 billion last year. The company reported a consolidated gross revenue of Rs 403.40 billion in 2007-08, a growth of 9.3 percent compared to Rs 369.22 billion in 2006-07.

Tata Motors also reports a basic earnings per share (EPS) of Rs 56.24 for its consolidated operations, as against Rs 56.43 in 2006-07. The company’s total sales volume (including exports) for 2007-08 is 585,649 units, compared to 580,280 units in 2006-07.

In the domestic market, Tata Motors commercial vehicle sales increased by 4.8 percent to 312,935 units, while passenger vehicle sales, at 218,055 units, declined by 4.5 percent.

According to a statement issued by the company, Tata Motors’ margins were under pressure during the year due to rising interest rates, constraints in availability of vehicle financing from outside sources and an unprecedented increase in input prices.

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