Tata Motors Struggles to Raise Cash

Tata Motors Ltd., the maker of Jaguar cars and Land Rover sport-utility vehicles, must repay a $3 billion loan and aims to introduce the world's cheapest car this year. It is struggling with both. The Indian carmaker needs to raise cash by June to repay a bridge loan taken to fund last year's purchase of Jaguar and Land Rover from Ford Motor Co. The $2,500 Nano car, already delayed, is crucial to revive falling demand in the carmaker's home market. The global credit crunch has forced Chairman Ratan Tata to reconsider a plan to raise $600 million from investors abroad. Instead, the company is offering small investors up to 11 percent interest for three-year deposits after raising 41 billion rupees ($840 million) through a rights offer in October. Collapsing sales at Jaguar and Land Rover in the U.S. and Europe are echoed by plummeting demand for cars and trucks in India. ``They are now fighting on three fronts: their core business is collapsing, the small car project will have to prove itself and the global credit availability is a problem,'' said Rashesh Shah, chairman of Edelweiss Capital Ltd. ``Companies don't open multiple flanks and go after every attractive opportunity. That is ambition, and that has affected them.'' Sales, Profit Tata Motors' sales, not including Jaguar and Land Rover, fell 47 percent in December, the most in at least four years, after declining 30 percent in November. Earnings in the quarter ended September dropped 34 percent. The company may post its first quarterly loss in seven years in the three months ended December, according to Macquarie Research. Moody's Investors Service and Standard & Poor's cut their debt ratings of the company in the last quarter, citing falling vehicle demand. Land Rover sales in the U.S. fell 40 percent last year and 32 percent in Europe through November, prompting the U.K. government to consider an aid package for the carmaker. ``In view of the significantly changed business environment, Jaguar Land Rover's requirements have increased beyond the original plan,'' spokesman Debasis Ray wrote in an e-mail. ``Urgent action is required to support the U.K. car industry.'' In India, Tata Motors' plan to start selling the 623-CC Nano car in the last quarter of 2008 was scuttled after the company was forced to abandon a near-complete factory in eastern India because of farmers' protests over land acquisition. A new factory is being built in the western state of Gujarat.