Tata Motors to mop up $450 mn for expansion

INDIA INC ON A FUND-RAISING DRIVE

Tata Motors today said the company would raise $450 million (approximately Rs 1,836 crore) by issuing "appropriate securities" in the international markets. The company has also kept open a greenshoe option.

The funds would be utilised to meet capital and product development expenses in projects involving the growth of both its commercial vehicle (CV) and passenger car business units apart from other unspecified corporate purposes.

"The company intends to spend the money on introducing newer products into the market (CVs and passenger vehicles combine) and also on initiatives on plants," said the spokesperson of the company.

The money raised would be a part of the Rs 12,000 crore (around $2.6 billion) the company intends to invest over the next three to four years. The investment would be made for ramping up capacities in the company's production facilities for passenger cars and commercial vehicles.

The company will also launch its vehicles in Russia and China from where it will also source its low-cost components.

The expansion is primarily aimed at meeting the projected rising national and international market demand in the future.

During the last month, Tata Motors sold 38,255 vehicles, down 4.41 per cent compared with the previous year's corresponding month. Exports too were down to 4,303 units for the same month.

However, auto companies and analysts are expecting a revival in the third quarter in at least the commercial vehicles sector, where the current downturn in sales is expected to see a slight upswing.

With a domestic market size of approximately Rs 23,275 crore and export sales of Rs 1,610 crore in FY06, the domestic commercial vehicles industry is the fourth largest manufacturer of CVs in the world.