Tata Motors is again announcing fixed deposit (FD) scheme to raise up to Rs 1,500 crore. The company will be launching the scheme for shareholders and the public. Tata Motors chairman Ratan N Tata at the annual general body meeting of the company in Mumbai informed shareholders, “We will just be announcing the revised FDs scheme.”
Addressing the reporter after Tata’s AGM with shareholders, Tata Motors chief financial officer C Ramakrishnan said, “Till now we have raised around Rs 2,500 crore through the existing FD scheme. After the new accounting norms that came into effect from April 1, the cap on borrowings through fixed deposits has gone up from Rs 2,700-Rs 2,800 crore to Rs 4,000 crore. So now we can raise additional funds through the deposit scheme.
The revised scheme will open for shareholders and public on Wednesday.”
Currently Tata Motors is giving 8.75 per cent interest on deposits of Rs 20,000 for a period of three years. The company’s aim to launch FD scheme was to raise funds to repay the $2.3 billion bridge loan after the possession of Jaguar and Land Rover in 2008. Later on company reduced the interest rates on cumulative fixed deposits of Rs 20,000 for three years from 12 per cent to 8.75 per cent.
The industry officials informed that Tata Motors is likely to increase the rate of interest up to a competitive level of Mahindra Finance’s ongoing scheme. Mahindra Finance is offering 10 per cent interest on a minimum deposit of Rs 10,000 for a period of three years. However most of the public and private sector banks have recently reduced their deposit rates. India’s top two banks - State Bank of India and ICICI Bank are offering interest rates around 7.25 per cent to 7.5 per cent on fixed deposits with five-year maturity.
An analyst with Mumbai-based brokerage informed Tata Motors is likely to invest the funds being raised through FD scheme, to meet the capital expenditure and technology up-gradation requirements of the company and JLR
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