Tata Motor shares jumped 16.5 percent to Rs 147.95 in muhurat trading on the BSE on Sunday. In the biggest fund infusion by Tata Sons, Tata Motors will pump Rs, 6495 crores to strengthen its balance sheet. Last week, Tata Motors’ board had approved raising of Rs 6,500 crore via preferential allotment of securities to Tata Sons.
“Though the company remains optimistic on medium to long-term growth in the Indian market, the near-term demand situation is fluid and the slowdown has come at an inopportune time when capital expenditure intensity will remain high due to continued focus on exciting products and BS-VI transition,” – Tata Motors said.
The issue price of the equity shares and exercise price for the warrants to be converted into equity within 18months from the date of allotment have been fixed at Rs150 apiece. The funds will be in use to make Tata Motors debt-free with a debt of Rs. Rs 50,000 crore.
Earlier, Tata Sons had stated that it wants to make its grip firm over Tata entities by having at least 50% stakes in them. The S&P BSE Sensex added 582 points or 1.48 percent to end the session at 39,832 levels, with Tata Motors up over 16 percent being the top gainer.
As part of the fundraising plan, Tata Motors will issue up to 20,16,23,407 ordinary shares at a price of Rs 150 per share aggregating Rs 3,024.35 crore. The company announced the date of the EGM that is to be held on November 22 and the ordinary shares and warrants will be allotted to Tata Sons within 15 days of this passing the resolution.