Tata Motors fund raising plan may focus on local market

Tata Motors will discuss options to raise long-term capital funds in its board meeting scheduled next Monday.

While there is still no clear indication on the likely figure to be raised, sources say the money will largely be used for local programmes. This is because the funding for Jaguar Land Rover has been ‘virtually wrapped up' and the bigger task on hand is to address key issues in the local market.

The silver lining in the cloud is that the fiscal has started on a brighter note quite unlike the early part of 2009-10 when the truck segment was plummeting. This time around, there is brisk demand for cars and commercial vehicles which augurs well for the company.

New avenues

Despite this relatively comfortable position, sources say Tata Motors would have to aggressively pursue new avenues in the compact car segment while strengthening the base for the Nano. There have been talks doing the rounds of a new car positioned between the Nano and Indica.

Investments would be needed at the truck plants in Pune and Jamshedpur as well as in the Ranjangaon car and powertrain facility where Fiat is the partner in the joint venture.

In fact, commercial vehicles could end up being top priority not only because the market is back on track but also due to the fact that there is growing competition in this space. For instance, the Ace which completes five years soon, has rivals from the stables of Mahindra & Mahindra and Piaggio.

The heavy truck segment is also seeing a fresh round of activity from the likes of Volvo-Eicher and M&M with established competitors such as Ashok Leyland also pulling out all stops in new product development.

Source: indiacar.com Source : Business Line (Online Edition) (6/24/2010)