Mahindra plans $100 mn foreign borrowing

Farm equipment and utility vehicle maker Mahindra & Mahindra (M&M) is looking at raising $100 million from the overseas markets to fund its expansion plan.

The board approved raising additional long term resources up to $100 million yesterday, with a right to retain additional 15 per cent subscription by the issue of foreign currency convertible bonds and /or other appropriate securities in the international/domestic market.

Bharat Doshi, executive director and chief financial officer, said, "We are looking to augment our presence in auto, tractor and auto components sector. The resources are raised to fund our organic and inorganic growth in the respective areas. Part of the funds will be used for investment in research and development and product development." Doshi added that if the entire $100 million is eventually raised through FCCBs, the equity dilution will not be more than 8 per cent.

Last year, Mahindra & Mahindra's cash position was at Rs 400 crore. The company is known to be developing new models in the competitive utility vehicles segment, including a completely new platform.

The company has convened an extraordinary general meeting to seek shareholders' approval on April 29. The automobile major will also raise the limit for holdings by foreign institutional investors from 24 per cent to 35 per cent of its paid-up capital.