Tata Motors on fund raising spree

India’s largest automaker Tata Motors is on a fundraising spree as it faces increased capital expenditure for expanding its product development pipeline.

The Mumbai-based company is expected to raise an additional Rs 300 crore through the sale of bonds carrying a 9.35% coupon rate that is expected to hit the market shortly.

Apart from capital expenditure, the funds are will be also used for general corporate purposes, a Tata Motors spokesperson confirmed.

The latest fundraising will push up its total fundraising activity to Rs 13,700 crore so far this year.

Just over a week ago, Tata Motors successfully raised $750 million (about Rs 4,600 crore) in its second fund raising activity this year, for which it got $4.2 billion in orders for issue of senior unsecured notes.

This was followed by the issue of senior notes of $500 million (Rs 3,000 crore) by its two UK-based luxury brands Jaguar Land Rover. The issue was done to fund JLR's ongoing growth and capital spending plans.

In May this year, the company's wholly owned-subsidiary TML Holdings raised $300 million (about Rs 1,800 crore) through an issue of fixed-interest debt securities. Last year, TML Holdings, which also owns Jaguar and Land Rover, raised S$350 million through senior fixed notes.

Earlier in January this year JLR issued bonds to raise GBP 400 million (Rs 4,000 crore), due in 2022.

Tata Motors intends to use a bulk of the October bond sales proceeds to refinance existing external commercial borrowing (ECB) debt and to meet capital expenditure plans and investment.

The company will spend about Rs 3,500 crore – Rs 4,000 crore on capex at a standalone level this year, up from Rs 3,094 crore last year on capex, design and development of products.

With the recent launch of its compact sedan Zest, the company is gearing up to launch its next offering – the Bolt hatchback – based on the same vehicle architecture in the final quarter of this financial year. Also in the works are a new compact sports utility vehicle, a more powerful Nano, a refreshed Safari Storme, besides several upgrades in its commercial vehicle range.

Tata Motors