TOP GEAR

Mumbai, March 11: Tata Motors Ltd today announced that it was planning to raise close to Rs 4,000 crore ($1 billion) from domestic and foreign markets, ostensibly to fund the acquisition of Ford Motor Company’s Jaguar and Land Rover brands.

In a communication to the stock exchanges, the company said the long-term resources would be raised by issuing appropriate securities in the foreign and/or domestic market in one or more tranches.

Elaborating on the reasons behind the fund-raising exercise, Tata Motors said it had major growth plans to expand its position in the domestic and global markets in both the commercial and passenger vehicle businesses.

The company said this would be achieved by upgrading its product portfolio, expanding manufacturing facilities in India, making strategic acquisitions and forging alliances. The plans for acquisitions and alliances are in India and overseas.

The acquisitions will have to be financed upfront, while for organic growth there will be recurring expenditure over the next three to four years. “The funds are being raised to part-finance overall funding requirements to meet some of the strategic plans,” the company said.

The fund-raising plan has raised expectations that Tata Motors will sew up the Jaguar and Land Rover deal within a couple of weeks. Early this year, Ford named the company as the front-runner to buy the two prestigious brands.

Although significant progress has been made since then, the deal has not been sealed as a few issues still have to be resolved, including the supply of engines. Trade unions in the UK, which have in the past supported the Tatas, reportedly want Ford Motors to retain some stake in the two companies after the sale.

Along with the Ford-Jaguar deal, the company has laid out ambitious growth plans at home across key segments.

Apart from the Tata Nano, which is slated to hit the roads in this year, Tata Motors is setting up a unit at Dharwad in Karnataka to make luxury buses. In passenger vehicles, the new generation Indica will go on sale in the latter part of 2008.

Last year, Tata Motors announced the formation of a 51:49 joint venture company with Brazil-based bus maker Marcopolo SA to manufacture and assemble fully built luxury buses and coaches in India. The unit will have a capacity of 25,000 buses annually. In commercial vehicles, reports say Tata Motors is planning to introduce at least 15 products over the next 12 months.