|
| Tata Motors raises Rs 264 crore in new FD scheme |
| Swaraj Baggonkar / Mumbai Nov 18, 2009, 01:06 IST |
|
Tata Motors, India’s biggest automotive company by revenue, has so far raised Rs 264 crore through the revised fixed deposit scheme which it launched in August this year. The company is authorised to raise Rs 1,300 crore from the revised scheme.
The rate at which the market has responded to the revised fixed deposit scheme has tapered considerably, especially when compared to its previous deposit scheme, when the company amassed Rs 2,700 crore in nine months.
However, the previous amount was raised on higher payout of interest rates, which has now been revised downwards by 325 basis points to 8.75 per cent for a period of three years.
An average of Rs 300 crore per month was raised by Tata Motors in the earlier FD scheme at a time when most other company deposit schemes were floundering. It had launched the FD scheme to meet the funding requirements of the company, according to its annual report.
The company’s initial scheme launched in November last year offered 11 per cent interest rate for a period of three years on a minimum subscription of Rs 20,000. This was revised to 8.75 per cent in August keeping in line with a similar cut in FD’s offered by banks.
A Tata Motors spokesperson said: “Tata Motors had introduced a fixed deposit scheme, under which we could raise about Rs 2,700 crore. We did raise that amount. On the date of the annual general meeting (AGM) this year (August 25, 2009), we renewed our FD scheme. The company is now authorised to raise about Rs 4,000 crore. Since August 25, Tata Motors has raised about Rs 264 crore.”
Market experts say that the initial Tata Motors FD scheme was launched when liquidity in the market was very low and people preferred to save their income than spending it. Since it offered interest rate higher than most fixed deposit scheme of banks and was backed by the Tata brand name, it received a favourable response from the market.
The revised rate offered by Tata Motors is still higher than most banks, including ICICI bank, HDFC bank and State Bank of India, which provides a return of about 6-7 per cent for the comparable terms.
According to regulations, Tata Motors can carry on with the current FD scheme till the next AGM or till it meets the Rs 4,000 crore target.
Since the company cleared the $3 billion debt it had taken to buy the two UK-based brands of Jaguar and Land Rover recently, it has the option of not banking on the FD scheme heavily. It intends to use the proceeds for day-to-day operations, including meeting the working capital requirement.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
