Tata Motors to raise $1 bn in long-term funds

The company said it has ?major growth plans for expanding its position in the domestic and global markets both in the commercial and passenger vehicle business.? In tune with that strategy, the company would upgrade and enhance its product portfolio, expand manufacturing facilities and look for strategic acquisitions and alliances within the country and abroad.

While this may incur expenditure for organic growth over the next three-four years, ?the acquisition opportunities will have to be financed upfront,? the company said in a statement.

The funds will be raised through securities issued in the foreign and/or domestic market and would be partly used in financing some of the strategic plans, it said.

Tata Motors shares were down 2.28% to Rs 658.55 on Tuesday on BSE. The company?s shares have fallen 12% since the Ford?s announcement of Tata Motors as the preferred bidder on January 3. Analysts see Tata Motors? move to buy the Ford brands as positive, but arranging loans may be a problem, they say.

Says Abdul Majeed, partner PricewaterhouseCoopers, who leads the auto practice, ?Since the liquidity position in the global market is tight, money will not come in cheap.?

He said the company could strike a deal with banks ready to borrow at competitive rates, considering the cash crunch in the market and leveraged balance sheet of Tatas after the Corus deal.

Earlier this year, Ford had named Tata Motors as the front-runner to buy its luxury UK brands, and talks are going on.

?There are no major roadblocks, but these are complex and detailed discussions. There is still some work before any agreement could be announced,? said a spokesperson from Ford, adding that all parties are committed to ensuring that the final agreement is robust, rigorous and expeditious.