Tata Engineering is planning on a rights issue of Rs 980 crore (Rs 9.80 billion) to partly finance the capital expenditure programme of Rs 1,307 crore (Rs 13.07 billion), which would be incurred by the end of 2003-04.
The funds are required for financing its ongoing capital expenditure, product development, investments for strategic alliances to be incurred over the next three years and also for debt restructuring.
These funds will be partly financed by a rights issue of convertible debentures and non-convertible debentures, both with detachable warrants, the company said in its annual report.
The company has also decided to raise a part of its fund requirement for pre-payment of expensive debt to the extent of Rs 500 crore (Rs 5 billion) over the next one year, through the issue of securities.
This is being envisaged "in view of the significant liquidity in the markets, low interest rates, improved performance of the company and the positive outlook for the Indian automobile industry", the company has said in its explanatory statements in the fifty-eighth annual report 2002-03.
The issue of securities would be converted into ordinary shares as and when the company proposes to increase the subscribed capital of the company.
Besides, the company as part of its future growth strategy is planning to incur about Rs 1,500 crore (Rs 15 billion) over the next three years towards capital and product development expenditure for commercial vehicles and passenger cars.
The company aims to modernise its existing plant and machinery and improve plant productivity besides quality and reliability improvements of its products.
The board has proposed a change in the company's name to either "Tata Motors Ltd", "Tata Automobiles Ltd", "Tata Auto Ltd", "Tata Automotives Ltd", or such other names to truly reflect its business of automobiles.
The company was incorporated in 1945 as "Tata Locomotive and Engineering Company Limited" with the objective of manufacturing locomotives and boilers.
Later, it changed its name to "Tata Engineering an Locomotive Company Ltd" as it produced commercial vehicles, construction equipment and other engineering products.
However, in 1970 it exited locomotive business but continued its name as `Telco'.