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Money > Reuters > Report July 2, 2001 |
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Telco to sell investments, retire debtStruggling Indian truck and car maker Tata Engineering and Locomotive Company plans to raise Rs 3 billion this year by selling investments and will use the money to retire costly debt, a financial daily said on Monday. "Funds from the sale of the investments will be used to pre-pay part of Telco's high-cost debt, amounting to Rs 5 billion," The Economic Times reported. Telco is paying 14 to 16 per cent per year in interest on that debt, versus its average cost of funds of 11 per cent, added the report, which cited Telco senior vice-president Praveen Kadle as a primary source. Telco reported a loss of Rs 5 billion for the past year to March. Its commercial vehicle sales fell 19.8 per cent to 82,718 in the financial year to March, while utility vehicle and car sales fell 13.2 per cent to 71,880. This year has been no better so far. Its commercial vehicle sales for May plummeted 40.9 per cent from a year earlier. Regarding the investments to be sold, the paper said that Telco had already raised Rs 1.45 billion by selling its investment in US-64, a mutual fund run by the Unit Trust of India, the country's largest mutual fund manager. The report said Telco was also planning to sell holdings in non-core businesses and real estate. It quoted Kadle as saying the company would retire $63 million of Yankee bonds in the current year as the interest rate is higher than domestic rates. Yankee bonds are dollar-denominated bonds issued in the United States by foreign companies, institutions and governments. The report also said Telco would receive Rs 850 million in the July-September quarter for selling its 14 per cent stake in DaimlerChrysler's Indian unit. Telco will raised another Rs 120 million by selling its stake in Float Glass India to Asahi Glass Co of Japan, the newspaper said. A Telco spokesman confirmed the details of the report when contacted. The spokesman also added that Telco was looking to sell stakes in three fully owned subsidiaries -- HV Axles, HV Transmissions and Telco Automation Ltd. The report said Telco had invested Rs 2.25 billion in three unnamed companies which it said Telco planned to sell stakes in during the current year. Telco shares were up 1.52 per cent at Rs 63.50 in early trading on Monday on the Bombay Stock Exchange. The BSE benchmark index was up 0.44 per cent.
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