A piece of good news is on the way for all long-term shareholders of TATA Motors. Let's find out more about it in the article as we go ahead…
Good news is coming for all long-term shareholders of TATA Motors. If we talk about the main issue of TATA Motors, it is their debt. The company has a long-grown debt in its books which is huge. The company has now raised more debt to repay the old one.
- TATA Motors has announced raising money through off-shore bonds to repay its old debt.
- The main purpose of this strategy is to raise low-cost debt and using that money to pay off the older debt bearing high finance costs.
- The company has raised off-shore bonds worth $425 million at the rate of 4.35% which is close to around Rs. 3,000 crore.
- From this, the company will pay off its JLR debt which was around $318 million, and the rest $107 million (around Rs. 800 crores), which the company will use to meet its corporate expenses.
- These bonds are issued for 2.5 years and these bonds were oversubscribed around 5 times.
- This shows that the Institutional Investors are confident in the management of TATA Motors and they think that it is less risky to invest in these shares.
- The net automated debt of TATA Motors is around Rs. 41,000 crore (around $5.6 billion).
- The company had announced in 2020 that it will be net-debt-free by the year 2023.
This is a good thing for a company to reduce its costs, here, the overall debt of the company is not reducing but the financing cost can be marginally decreased. The business of the company is also doing well in both India and Foreign Markets as well as in the segment of electric vehicles. Hence, the investors are happy with additional good news.