Two media reports said the company was considering options including a minority stake sale in the JLR unit or finding a venture partner that would jointly develop vehicles and lower costs.

The reports of a potential stake sale drove Tata Motors shares up as much as 3.7 % to 184 rupees. The stock pared some of the gains and ended up 1.6%.

"There is no truth to the rumours that Tata Motors is looking to divest its stake in JLR," a Tata Motors spokesperson told Reuters.

Tata Motors posted its biggest-ever quarterly loss in Indian corporate history of about $4 billion last month, hurt by slumping China sales.

The company also warned the Jaguar Land Rover (JLR) unit, which brings in most of its revenue, would swing to an operating loss in the year to March versus an earlier projection for breakeven, given weak sales at the luxury British carmaker.

The company may prefer to keep control of JLR, and rather seek fresh equity from investors, BloombergQuint said citing a Bloomberg report.

The discussions are at an early stage and Tata Motors has held preliminary talks with potential advisers, ET Now reported.