Mounting losses has led Fiat India Automobiles Ltd (FIAL), a 50:50 joint venture (JV) between Italy?s Fiat SpA and Tata Motors, to pump in an additional R150 crore by issuing fresh shares. FIAL has issued 1.5 crore shares to Tata Motors and parent Fiat Group at R100 per share. The decision was taken at Fiat India?s board meeting on January 24.

The infusion of fresh equity by JV partners comes within five years of commencement of operations, dashing all initial plans to break-even by 2011-12. The unlisted firm posted losses of around R290 crore in 2009-10.

?(The board) resolved that in terms of applicable provisions of the Companies Act 1956 and the Articles of Association of the Company, 15,000,000 shares of R100 each for cash at par be and hereby allotted, 7,500,000 equity shares each to Tata Motors Limited and Fiat Group Automobiles Italy respectively ranking pari passu with the existing shares in the share capital of the company, except for payment of dividend for the financial year ended March 31, 2011,? a certified copy of the resolution passed at its meeting of board members on January 24 said. FE has a copy of the resolution.

A FIAL spokesperson said, ?The company raises money based on its needs for meeting its short and long term requirements.? A Tata Motors spokesperson declined to comment.

Sources said with mounting losses and no financial investor keen to invest in the venture the company had no option but to infuse fresh equity.

The development, however, underlines the fact that Tata Motors and Fiat Group are serious about continuing the partnership despite recently announcing that they would be setting up separate dealerships.

In 2006, Tata Motors and Fiat had announced a 50:50 JV, according to which the two companies merged their respective retail networks which included over 100 Tata dealerships and 40 Fiat outlets. The JV firm set aside R4,000 crore in putting up a unit in the Tata-owned land at Ranjangaon, near Pune to manufacture Fiat and Tata cars and engines.

The total capacity for the plant includes 1,60,000 cars and 3,00,000 engines.

?It seems that Tata Motors wants to give the JV another year. After all Fiat?s superior diesel technology could still be an attraction for the Tatas,? said Surjit Arora analyst at Mumbai-based brokerage house Prabhudas Lilladeher.

Another Mumbai-based broker, who did not wish to come on record, said that the money raised would be directed towards easing the debt-equity ratio of the company. ?Tata Motors would not give up on Fiat so early.

It has been only five years since the JV?s announcement. More importantly for Tatas it might also reassure its shareholders that the company still sees Fiat as a strategic partner,? he said. He added that approximately 75% of Tata Motors? revenues come from Jaguar Land Rover, 15% from its commercial vehicles and 10% from passenger cars.

?Tata-Fiat partnership may have something in store which would become clearer in the months ahead,? he added.