Tata Motors rights: LIC to wait till last day

The largest domestic insurer, the Life Insurance Corporation of India (LIC), today said it will wait till the last date of the Tata Motors' Rs 4,145-crore rights issue before deciding to participate in the offer. The decision comes after the automaker's stock fell below the offer price amid a global meltdown in equities.

LIC, which also owns 11.13 per cent in Hindalco Industries, refrained from participating in the Birla group company's Rs 5,047-crore rights offer after the company's shares fell below its offer price. The insurer currently holds about 11.48 per cent in Tata Motors.

"LIC ensures that the policyholders' money is safe and always invests with a long-term perspective. It will watch the market condition, and assess the stock movement of Tata Motors till the closing day of the rights issue," a top official close to the development said.

The Tata Motors' rights issue, which closes on October 20, is offering a part of the rights shares at Rs 340 per share, and a separate set of shares with differential voting rights at Rs 305 per share. Sources said that JM Financial has underwritten about 67 per cent of the differential voting rights component of the issue, while the Tatas have agreed to underwrite 100 per cent of the voting shares.

On the BSE, the Tata Motors stock closed at Rs 282.05 today, down 5.64 per cent from its previous close.

Commenting on the Hindalco's rights offer, a LIC official said, "The decision to refrain from participating in the offer doesn't mean that LIC will not invest in Hindalco in future."

The Hindalco stock fell to Rs 80.65 on Friday, the closing date of the company's rights issue.

The rights issue was floated at an offer price of Rs 96.