A Committee of Directors of Tata Engineering and Locomotive Company Limited at its meeting held today, approved the change in the terms of the simultaneous and unlinked Issue of Fully Convertible Debentures (FCD) with detachable warrants and Non Convertible Debentures (NCD) with Detachable Warrants on a rights basis in the ratio of one FCD for every 4 shares held and one NCD for every 10 shares held of the Company.

The FCDs would have a face value of Rs.65. The FCD would be compulsorily converted into 1(one) ordinary share of Rs.10 each on March 31, 2002 at a premium of Rs.55 per share. The FCD would carry interest @ 7% p.a. on the face value.

Every 5 (five) FCDs would have 1 (one) Detachable and Tradeable Equity Warrant which can be exercised and converted into one ordinary share of Rs.10 each at a price of Rs.120 after 18 months from the date of allotment till September 30, 2004.

The NCDs would have a face value of Rs.100 and would carry an interest of 11% p.a. payable annually. The NCD would be redeemed in three installments of Rs.30, Rs.35 and Rs.35 each at the end of the 4th, 5th and 6th year respectively from the date of allotment and would also have a put and call option at the end of 24 months from the date of allotment.

Every 2 (two) NCDs would have 1 (one) Detachable and Tradeable Equity Warrant which can be exercised and converted into one ordinary share of Rs.10 each at a price of Rs.120 after 18 months from the date of allotment till September 30, 2004.

The Company will raise approximately upto Rs.978.65 crores from the proposed Rights Issue, depending upon the extent of exercise of warrants by the investors.

The proposed Issue, subject to the necessary regulatory approvals/ process, is slated to open around September end 2001.

The proceeds of the Rights Issue would be used for essential capital expenditure and new product development programmes and repayment/ prepayment of expensive borrowings of the Company. The infusion of long term funds, by way of this Rights Issue, would also improve the cash flows and the debt equity ratio.