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Tata Motors steps on the gas, to raise $500 M
By siliconindia
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Tuesday, 09 March 2004, 20:30 IST
MUMBAI: Tata Motors, the country’s largest truck maker, has lined up aggressive plans to mop up about $500m (Rs 2,260 crore) in the overseas markets to meet its “long-term growth plan” for the commercial vehicle and passenger car units. The company’s board of directors, which met on Monday, approved a proposal to raise the additional long-term resources “by issue of appropriate securities in the international markets, on terms to be decided by the board/committee of the board in due course, reports Economic Times.
“The said funds are being raised to meet the capital and product development expenditure related to the company’s growth projects in its commercial vehicle business unit and passenger car business unit, refinancing its recent acquisition of Daewoo Commercial Vehicle Company in South Korea and for such other corporate purposes as may be permitted under applicable laws,” Tata Motors said in a statement.
“It is just an enabling resolution. At this juncture, it would be too early to comment on details like the issuing instrument, timing of the issue and the amount. The powers have been delegated to a committee of the board to take a decision in this regard,” according to the company’s executive director (finance and corporate affairs) Praveen Kadle.
Tata MotorsÂ’ shares rose 0.15% to close at Rs 534.85 on the BSE.
Last year Tata Motors had raised $100m by way of foreign currency convertible bonds. In November Â’01, it had raised Rs 1,000 crore by way of a rights issue.
Tata Motors, which is witnessing robust sales of commercial vehicles and its passenger car models — compact car Indica and mid-size sedan Indogo — expects the trend to continue. “Our sales volumes have been particularly good since the beginning of the calendar year. We are confident that the trend will continue in the coming months,” Mr Kadle said.
During April-February Â’04, Tata Motors reported a 45.4% rise in overall sales to 2.8 lakh units, up from 1.9 lakh units in the previous year. While commercial vehicle volumes shot up 42.8% to 1.34 lakh units, cumulative sale of passenger cars surged 39% to 1.25 lakh units.
Last month, the company struck its maiden overseas acquisition deal, buying out Daewoo Commercial Vehicle Company (DWCV), the truck-making arm of failed South Korean chaebol Daewoo Motors, for $102m (Rs 465 crore).
Apart from getting a foothold in the South Korean market, where DWCV has a 26% marketshare, company officials say the acquisition will open up new markets including China, South-East Asia, Africa and the Middle East. Besides, Tata Motors is also working on plans to source heavy trucks — in the range of over 200 horse power — from DWCV to effectively take on Volvo and augment its presence in the top-end of the domestic market.
On the passenger car front, Tata Motors has already joined hands with British car maker MG Rover and is selling the Indica in UK and the European markets. While the target is to sell 1.5 lakh Rover-branded Indicas over a five-year period, the company plans to double its passenger car exports to over 5,000 units in the current fiscal.