Tata Motors to consider fund raising on June 28

Auto major Tata Motors plans to raise long-term funds to restructure its over Rs 18,500 crore debt, for which a board meeting has been called on Monday.

According to industry sources, the company plans to cut down its debt "substantially" and will evaluate various ways to raise funds.

"The company is planning to raising long-term funds to restructure its debt and bring it down substantially," a source said.

When contacted, a Tata Motors spokesperson said, "Any comment must await the board meeting."

In a filing to the Bombay Stock Exchange, Tata Motors said: "... A meeting of the board of directors of the company will be held on June 28, 2010, to consider various options for raising long-term capital funds."

As on March 31, 2010, Tata Motors had a consolidated net automotive debt of Rs 18,800 crore, with a debt-equity ratio of 2.05:1. This was down from Rs 23,750 crore on March 31, 2009, when the debt equity ratio was at 4.0:1.

The sources said the company's plan is to bring down the debt-equity ratio further by the end of this fiscal.

The company, which made a turnaround by posting a huge profit of Rs 2,571.06 crore in 2009-10, had earlier said it would invest around Rs 3,000 crore during this fiscal on domestic operations, besides about 700 million pounds on its Jaguar Land Rover (JLR) unit.

Earlier in February, JLR had secured a 340 million pounds loan from the European Investment Bank for utilising on research and development.

In 2009, JLR had secured over 500 million pounds of funding, including facilities, from SBI, StanChart, Bank of Baroda, GE Capital and Bank of Ireland.

Tata Motors had taken a loan of $3 billion in June, 2008, to fund its acquisition of JLR. It acquired JLR for $2.3 billion in 2008 from US car major Ford.