Steel major Tata Steel today said its board has approved raising Rs 12,800 crore through a rights issue to finance organic and inorganic growth plans.
The board in its meeting today also approved a proposal to expand the capacity of Kalinganagar plant by 5 million tonne per annum (MTPA) to 8 MTPA with a total investment of Rs 23,500 crore, the company said in a statement.
The board also reviewed the financial strategy of the company in the light of organic and inorganic growth strategy of the company and approved financial plan to raise capital for the plan.
"The Board approved issuance of equity and equity linked instruments including ordinary shares of the company by way of a rights issue to existing shareholders on record date for an amount not exceeding Rs 12,800 crore...," the statement said.
Tata Steel said that following the successful implementation of the phase 1 of the Kalinganagar Project in Odisha, "the board approved the next phase of expansion of capacity in Kalinganagar by 5 MTPA from 3 MTPA to 8 MTPA (million tonne per annum)".
An amount of Rs 23,500 crore will be required for the project which the company aims at completing within 48 months from the date of commencement of construction, it said.
The total capacity of Tata Steel India operations following the expansion will be 18 MTPA. At present, Jamshedpur unit has a capacity of 10 MTPA and Kalinganagar, for which the decision was taken, is a 3 MTPA plant.
The mode of finance for the work will be "through a combination of debt and equity" and the project configuration and costs includes investments in raw material capacity expansion, upstream and midstream facilities, infrastructure and downstream facilities including a cold rolling mill complex, it added.
The decision was taken keep in view the requirement of automotive, general engineering and other value added segments, Tata Steel said.