In view of the  unstable market conditions, India's largest automobile company, Tata Motors has revised its fund raising structure for raising Rs7,200 crore in domestic long-term capital funds announced in May 2008, to part finance the Jaguar-Land Rover acquisition (See: Tata Motors to raise Rs9,770 crore to fund Jaguar-Land Rover acquisition).

The company had also planned to raise about $500 - $600 million (about Rs2,569 crore) through an issue in the overseas markets on completion of the rights issues.

After the meeting of its board of directors in Mumbai yesterday, the company said in a statement, "Taking into account the current situation in the capital market and the change in the level of prices in the stock markets since May 2008, the board of directors reviewed the earlier fund raising proposal.''

The company had earlier announced that a part of the funds required for the $2.3-billion Jaguar-Land Rover acquisition would be raised through a rights issue to the shareholders in three simultaneous but unlinked securities.

Rs2,200 crore would be raised through issue of ordinary shares and another Rs2,000 crore through an issue of 'A' ordinary shares having differential voting rights (one vote for every 10 shares).

In addition, it had also planned to raise Rs3,000 crore through an issue of a five-year convertible preference shares, which would be convertible into 'A' ordinary shares between three and five years from date of allotment.

To keep the increase in the share capital as low as possible, the board has now decided that instead of issuing convertible preference shares, it now plans to raise the required resources by ''monetising a part of its investments through a phased disinvestment of certain investments (preferably as inter-group sales wherever possible) at prevailing market prices over the next six to eight months.''

The company further added that the funds released from such future divestments together with those already sold during the current financial year, would form part of the resources to be raised for repaying the bridge loan taken for the Jaguar-Land Rover acquisition.

Tata Motors also said that the proposed rights issue was ''making satisfactory progress considering the complex information to be included in the offer document about the company, its subsidiaries and also the Jaguar-Land Rover acquisition.''

In July 2008, the company's sales declined by 3 per cent to 40,729 vehicles (including exports), from 42,098 vehicles in July last year. However, it said, cumulative sales for the company at 172,462 units, grew by 2 per cent.

The decline in sales was led by a declined of 16 per cent in its exports to 3,696 vehicles from 4,382 vehicles in July 2007. The cumulative sales from exports for the fiscal declined by 29 per cent at 12,855 units from 18,204 in the same period last year.