Tata Sons will infuse Rs 6,500 crore into Tata Motors in a move aimed to boost investor confidence in the company. This infusion is part of a Rs 10,000-crore fundraising process by Tata Motors that has seen an erosion of its market value as well as rating downgrades from global firms.
Tata Sons will receive preferential shares and warrants at Rs 150 each. Rest of the Rs 3,500 crore will be raised through external commercial borrowings. The proceeds will be used to reduce debt and refinance some loans, as mentioned in the company in its stock filings.
PB Balaji, group chief financial officer of Tata Motors said, "The equity infusion from the promoters will help Tata Motors to largely reduce its absolute debt levels. The fundraise will help Tata Motors' stand-alone business, where the balance sheet has debt issues. Jaguar Land Rover's (JLR's) balance sheet, however, is strong, and is in no need of capital infusion currently."
As mentioned in a report in Livemint, Balaji said that the locally manufactured JLR models continued to report losses but the imported car business saw strong demand.
Meanwhile, the country's largest automobile manufacturer reported a standalone net loss of Rs 1,281.97 crore during the second quarter ended September 30, 2019, compared to a net profit of Rs 109.14 crore in the year-ago period.
Standalone revenue for the quarter decreased by 44 per cent to Rs 10,000 crore as compared to Rs 17,758.69 crore in the same quarter last year, Tata Motors said in a filing to the Bombay Stock Exchange.