With Tata Motors rights issue being planned, the company seeks to raise INR 7,500 from existing shareholders. The actual quantum, price and timing of the issue is yet to be ascertained and will depend on market conditions.
The company has already informed BSE (Bombay Stock Exchange) of this decision and will seek shareholders approval through postal ballot. Shares raised will be both ordinary shares and shares with differential voting rights. In the meanwhile, Tata Motors slipped by 2.6 percent on Wednesday, ending at 589.15 on the BSE.
Tata Motors has first issued shares with differential voting rights in 2008 after it took over Jaguar Land Rover (JLR). This decision comes after it was decided that JLR will no longer be able to fund the company due to their own growth and expansion plans in the offing. As on 30th September 2014, consolidated debt of Tata Motors stood at INR 60,773.67 crores out of which INR 17,046.49 crores were from domestic operations. Over the past three years, JLR has been paying annual dividend of £150 million to Tata Motors and with these funds being brought to a halt, Tata Motors is evaluating its own funding options.
Tata Motors has seen a host of new launches in the past few months which included the Zest sedan in August 2014 and Bolt hatchback earlier this month. Upcoming launches under the able leadership of Mayank Pareek include Kite siblings, Tata Safari Storme facelift and Pelican small car. JLR also plans 50 new models over the next five years so as to cement its position in the luxury car segment.