The $2.3 billion (around Rs 10,000 crore) Jaguar-Land Rover (JLR) acquisition has brought to the fore several questions on how Tata Motors will pay back the bridge loan of $3 billion it had raised for the deal.
However, if the present market value of Tata Sons, the holding company of the Tata Group, in leading group companies is taken into account, the amount to be raised by Tata Motors for the current deal is measly.
Tata Sons combined stake in TCS, Tata Communication, Tata Steel, Tata Motors, Tata Chemical and Tata Tea at the current market price is valued at more than Rs 80,000 crore.
If the group decides to partly divest its stake in these companies, it can raise the required resources at ease, as has happened in the past. Tata Sons divested a part of its TCS stake to raise resources to part-finance Corus takeover.
An auto analyst at one of the leading broking firm said, ?I think repayment will be done through a combination of debt and equity and there are fair chances for Tata Sons to shed some of its stake in group companies as it did during the Corus deal. The ratio of debt to equity should be 50:50 and, on the debt side, the Tatas may go for a public or preffential issue or private placement.?
According to a press release, the transfer of ownership to Tata Motors is expected to close by the end of the next quarter, subject to regulatory approvals.
Stocks move in reverse gear
Following the JLR deal, almost all stocks under the Tata umbrella were down on Thursday over the issue of fund-raising pressure on group companies. Investors feel that the huge fund-raising exercise and the its servicing will dent the bottomlime of group companies.
Tata Motors led the fall with stock slipping by more than 7% in intra-day trade before finally managing to slip by only 3.45%. Tata Communication also felt the pinch, sliding 4.40% while TCS fell by 2.94%. Even Tata Tea and Tata Steel were down by around 2.55% each.