Tata Motors Board Approves Issuance Of 2 Lakh NCDs Of Rs.1,00,000 Face Value Ahead Of Business Demerger

The global automobile giant, Tata Motors made a major announcement on Wednesday. In a significant move ahead of its much-awaited business demerger, Tata Motors announced plans to raise up to Rs 2,000 crore through the issuance of Non-Convertible Debentures (NCDs).

Following its board meeting on March 19, the Nexon and Punch maker company revealed its fundraising plan in preparation for the upcoming business split. The board's Committee approved the issuance of rated, listed, unsecured, fixed coupon redeemable NCDs as part of the fundraising effort.

The company will issue the securities on a private placement basis to eligible investors. It plans to issue up to 2,00,000 NCDs with a face value of Rs. 1,00,000 each, totaling up to Rs. 2,000 crore. The issuance will be done in three tranches: 7.65% Tata Motors 2027 - Tranche I NCDs, 7.65% Tata Motors 2028 - Tranche II NCDs, and 7.65% Tata Motors 2028 - Tranche III NCDs.

Tranche I: Up to Rs 500 Crore

The first tranche of NCDs will amount to up to Rs 500 crore. These will be issued as 7.65% Tata Motors 2027 NCDs. The debentures in this tranche will be redeemable by 2027, offering investors a fixed return of 7.65% over the duration.

Tranche II: Up to Rs 700 Crore

The second tranche will amount to up to Rs 700 crore and will include 7.65% Tata Motors 2028 NCDs. These debentures are slated for redemption in 2028, providing a fixed interest rate of 7.65%. The increased amount in this tranche highlights the company's commitment to strengthening its financial position ahead of the business demerger.

Tranche III: Up to Rs 800 Crore

The third tranche will be the largest, amounting to up to Rs 800 crore. Like the other tranches, these will also be 7.65% Tata Motors 2028 NCDs. This tranche further solidifies the company's plans to raise significant funds to support the upcoming demerger and future operations.

Demerger Completion In FY26

Tata Motors is moving ahead with its business demerger, which is expected to be completed by the third quarter of FY26. The demerger is set to take effect in the period from October to December 2025, with the appointed date for the operational separation slated for July 1, 2025.

In January 2025, the company confirmed that key activities related to the separation are progressing as planned, with no objection certificates from stock exchanges and SEBI expected soon which it will be filing with NCLT. Speaking to the media, the company said, "Key activities related to the operational separation are progressing as planned."