Tata Motors, the Indian group that owns Land Rover and Jaguar, has approached shareholders to ask for permission to raise a £1.5 billion war chest to use on further acquisitions. Potential targets include Hummer, the struggling off-road carmaker that General Motors has put up for sale.

In a notice sent to shareholders, the company said it was scouting for further deals similar to the acquisition of the two British luxury marques, which it bought from Ford for $2.3 billion (£1.2 billion). "The company has major growth plans for expanding its product range and presence in the domestic and global markets in commercial and passenger vehicles, including through strategic alliances and acquisition opportunities," it said.

Tata Motors outlined plans to raise as much $1 billion from overseas debt and stock markets – about $500 million of which will be through equity. It is also asking shareholders for permission to raise its borrowing limits by about £1 billion

The new fundraising moves come on top of three rights issues launched last month, which will raise $1.7 billion to finance the Land Rover-Jaguar purchase. At that time it said it would raise up to £300 million more through an overseas float.

At the time, analysts reacted negatively to the prospect of existing shareholders' stakes being diluted through the issue of new shares. Some suggested, however, that Tata, India's largest maker of heavy trucks, had little choice but to tap the stock market. Balaji Jayaraman, an analyst with Morgan Stanley, said: "Tight credit market conditions made raising debt an expensive proposition."

Expensive financing risks rubbing the sheen from Tata's acquisition of Jaguar and Land Rover. The company has been forced to take out an expensive bridging loan to fund the purchase and its bankers have been working hard to limit the cost of capital as the Indian group moves into the bleakest market conditions seen in years.

Tata, which has never before sold luxury cars, is under pressure from the higher cost of raw materials.

Its full-year figures showed that net income fell to 5.36 billion rupees in the three months to the end of March, compared with 5.77 billion rupees for the same period a year earlier. The company this week gave warning of "challenging times ahead".

Full-year profits rose at the slowest pace in at least five years, weighed down by factors including lacklustre demand in India amid high interest rates and worries over the economy's growth prospects.

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