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Raising of Long Term Capital Funds Press kit

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28 May, 2008

At the Board Meeting of the Company held today, the Board, inter alia, decided to raise an amount of about Rs.7,200 crores through three simultaneous but unlinked Rights Issues of the following securities:-

1. A Rights Issue of Equity Shares upto Rs.2,200 crores;

2. A Rights Issue of ‘A’ Equity Shares carrying differential voting rights (1 vote for every 10 ‘A’ Equity Shares) upto Rs.2,000 crores;

3. A Rights Issue of 5-year 0.5% Convertible Preference Shares (CCPs) upto Rs.3000 crores, optionally convertible into ‘A’ Equity Shares after 3 years but before 5 years from the date of allotment.

In view of the normal time taken to complete the procedures and documentation involved in making Rights Issues, the precise terms of the above issues (e.g. ratios on which these securities would be offered, the offer price and the conversion price of the CCPs) will be decided when the issues are ready to be made. The issues are subject to such approvals and clearances as may be required and may undergo some changes during this process.

On completion of the above Rights Issues, it is also proposed, as already announced earlier, to raise about $ 500/600 million through an appropriate issue of securities in the foreign markets on terms to be decided at that time.

On the above basis, it is presently estimated that the total equity capital of the company would increase by only about 30% to 35% through these issues during the current financial year. The incremental dividend on this increased capital would represent about 10% of the Company’s net profit for the Financial Year 2007-08. If the CCPs are converted between 2011 and 2013, the equity capital would then increase by only about 12% at that time, depending on the conversion price and if not converted, the CCPs would be redeemed (with the back-ended premium) in 2013.

The above fund raising proposals will be mainly used for financing the Jaguar-Land Rover acquisition (through a wholly-owned subsidiary of Tata Motors in the U.K.) which is expected to be completed shortly at an acquisition price of US $ 2.3 billion. Though the initial acquisition cost will be financed through bridging loans provided by a syndicate of banks, these loans would be fully repaid through the above mentioned capital raising schemes.

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