India: Tata plans rights offer for capital

TATA Motors, India’s biggest carmaker, said yesterday that it planned to raise as much as 75 billion rupees (R14.2bn) in a rights offer to boost capital. The company will offer six shares for every 109 held at 450 rupees apiece, according to an exchange filing. That is a 15 percent discount to Tuesday’s closing price. Holders of the so-called differential voting rights will be offered stock in the same proportion at 271 rupees apiece. Tata has said it expected to spend about 40bn rupees annually at its India business over the next two to three years, and as much as £3.7bn (R65.5bn) a year over the same period at its Jaguar Land Rover unit on product development and expansion. The stock offering will help to partly fund its plans. “Tata has priced the issue conservatively,” Piyush Jain, an analyst at Morningstar Investment Advisor, wrote in a note. “The higher dilution relative to our expectations is not materially significant to cause any change in our fair value estimate of 700 rupees per share.” Shares of Tata rose 1.8 percent to close at 541.85 rupees in Mumbai trading. The benchmark Standard & Poor’s BSE Sensex index fell 0.2 percent. The carmaker’s board also approved the buy-back of non-convertible debentures valued at 12.5bn rupees. – Bloomberg