Tata Motors’ debt worries

Tata Motors that made an audacious buyout of Jaguar Land Rover two years back may have bitten off more than it can chew. Its debt numbers seem to be piling up and even as credit conditions have improved, the going may be tough.
Well, life is moving beyond the Nano for Tata Motors. The company's top management is thinking overtime to manage its multi billion dollar debt. According to sources, in the last few months the Tata group have been forced to raise money for the payments of Jaguar Land Rover, a firm they bought at the peak of the bull run.
Some analysts peg the debt figure at Rs 30,000 crore saying that the debt has been slowly rising over quarters for Tata Motors and averaging at the said amount.
Now, the group is in the market again to raise money, this time through bonds. Meanwhile, some analysts feel that the Tata group have no securities to offer and so a bond issue is the only option.

Mahentesh Sabarbad, Auto Analyst at Centrum Broking, said, “Today Tata Motors’ balance sheet is so stretched that it is apparent to me that they don’t have any securities to offer. So, they are going in for an SBI backed guarantee, which turns out to be a win-win situation for all the three parties.

The company’s current debt is double the equity of the firm and they have to not only payback bridge loan, but also worry about feeding working cap into JLR and have to take the next pension fund deficit call at JLR.

Meanwhile, struggling to find avenues to refinance the high cost debt taken to acquire JLR, Tata Motors is now hoping to tap into the increased appetite for corporate bonds. But questions over the company's ability to manage the huge debt linger.