Tata Motors seeks approval to raise Rs 3,000 cr

India's biggest automaker Tata Motors will seek shareholder's approval at the upcoming annual general meeting to raise Rs 3,000 crore through non-convertible debentures (NCD) this year.

The fund raising move is complementing to the company's previous decision to raise Rs 4,400 crore through NCD for which is secured approval from the shareholders at the last AGM.

Until May this year Tata Motors raised a total of Rs 600 crore through NCDs and plans are afoot to raise a further Rs 400 crore using the same route. The company intends to use the proceeds to fund ongoing capital expenditure and for general corporate purposes.

The borrowings of the company as at March 31, 2016 aggregate approximately Rs 15,887.25 crore, of which outstanding NCDs aggregate to Rs 5,550 crore. The company's net debt-equity ratio (on stand-alone basis) as at March 31, 2016 is 0.61:1.

"In continuation of its efforts to strengthen its capital structure, the company intends to augment the resources through a mix of internal accruals and long term borrowings. Accordingly, it is proposed to issue NCDs and/or Rupee Denominated NonConvertible Foreign Currency Bonds on a private placement basis aggregating upto Rs 3,000 crore, in one or more series/tranches during the 12 month period from the date of this Annual General Meeting, with an intention to finance, inter alia the repayment of certain NCDs/term loans from banks and to fund part of the ongoing capital expenditure during the next 12 months as also for general corporate purposes," Tata Motors stated in a filing with the Bombay Stock Exchange.

Tata Motors has lined up a capital expenditure of Rs 3,500-4,000 crore for the current financial year which would entail the production and launch of new products such as Nexon (compact SUV), Hexa (lifestyle SUV) and a compact sedan codenamed Kite 5.

Rivals Mahindra & Mahindra is also seeking shareholder's approval at the upcoming AGM to raise Rs 5,000 crore through issuance of securities on private placement basis in domestic and/or international market.

Tata Motors