Tata Motors gets board nod to raise Rs. 10 billion
Livemint, 28 May '20
Tata Motors said it will raise Rs. 10 billion (US$ 132.4 million) by selling non-convertible debentures or NCDs, as automakers continue to raise capital amid a squeeze on cash flows due to the lockdown.
"We wish to inform you that the Board approved Committee has today approved allotment of 10,000 rated, listed, secured, redeemable, non-convertible debentures E29-A series of face value Rs. 1,000,000 each, at par, aggregating Rs. 10 billion on private placement basis," the Mumbai-based company said in a regulatory filing.
Tata Motors said all the 10,000 NCDs will be allotted to the State Bank of India at an interest rate of 8.80% per annum. The debt instruments are proposed to be listed on the wholesale debt market segment of BSE and NSE.
Earlier in May, the company aborted a plan for a similar-sized NCD issue citing 'higher cost expectations from the market participants due to the tight money market conditions".
Market analysts said automakers have been raising capital lately via issuance of debentures to ensure liquidity as revenues fall sharply amid near zero sales the lockdown.
Other companies in the automotive industry which have raised funds via NCDs include Mahindra & Mahindra, TVS Motor Company and Motherson Sumi Systems.