Tata Motors to Raise Rs 1000 Crores via NCDs
The Tata Motors Ltd. Board on Tuesday approved the company’s proposition to raise Rs 1000 Crores, through the issuance of redeemable Non-Convertible Debentures (NCDs) with a face value of Rs 10 Lakh each. The Indian engineering and automobile giant plans to raise the amount in three tranches of Rs 500 Crore, 300 Crore and 200 Crore on a private placement basis.
Non-Convertible Debentures or NCDs are fixed-income instruments, generally issued by high rated companies in the form of a public issue to generate long term capital. The first Tranche of Rs 500
Crores will be raised by issuing NCDs with tenure of 875 days. The remaining tranches of Rs 300 Crores and 200 Crores would be raised similarly with a total duration of 934 days and 965 days respectively.
A meeting was held by the duly authorised committee of the Tata Motors Board on Tuesday wherein the approval for the subscription on a private placement basis was agreed upon; Tata Motors revealed through a regulatory filing. The company further added that interest payable would be subject to discovery after open book bidding on the BSE platform.
Incorporated in the year 1945, Tata Motors is a 100 Billion dollar Group and has a big part to play in shaping the future of mobility in India. Shares of Tata Motors were trading at ₹84.95, higher by 1.25 per cent on the BSE.
Amid the Coronavirus Pandemic, automakers are raising capital via issuance of NCDs to ensure that liquidity is maintained as revenues have diminished following zero sales due to the imposed lockdown. Recently, Mahindra & Mahindra Ltd reiterated its plans to raise 1000 Crores through NCDs.
TVS Motor Ltd and Mothersons Sumi Systems are also planning to raise Rs 500 Crores via dept on a private placement basis. Automobile manufacturers such as Maruti Suzuki India Ltd, Hyundai Motors India, Mahindra & Mahindra Ltd, and Hero MotoCorp among many others have reported zero sales for April in the domestic market.