Last night Tata sheepishly announced it had scrapped a £365 million rights issue that was to refinance an expensive bridging loan taken out to fund the £1.15 billion acquisition of Land Rover and Jaguar. For weeks the company had insisted to a growing band of naysayers that the issue would go ahead as planned. But investors had never liked the idea of Tata selling more shares – and hence diluting their holdings in the company – to fund the deal. A 25 per cent fall in the value of Tata's stock since May, when the rights issue was first mooted, made the plan a non-starter.

It could be worse: Tata Motors, unlike many other Indian companies which have turned to the market for cash this year only to be spurned, has fallback options. It can sell the slug of sister company Tata Steel it owns, for a start – a move that could make up most of the shortfall left by the rights issue u-turn. But the financing difficulties give credence to the idea that the Land Rover-Jaguar deal risks becoming a gutsy move made to look foolhardy through plain bad luck. After all, the scarcity of cheap credit that led Tata to resort to the rights issue in the first place is also hitting well-off consumers - the kind who buy Land Rovers and Jaguars.

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