Reliance Defence and Engineering Limited (Reliance Defence), an Anil Dhirubhai Ambani Group company, plans to raise up to Rs. 1,200 crore via a rights issue to augment long-term resources and retire debt. The company informed the stock exchanges that a decision to the effect was made at its board meeting on Friday.
The price and the entitlement ratio will be decided after consultations with bankers and advisors to the issue, the company said in its regulatory filing to the BSE.
"The proceeds of the issue would enable RDEL (Reliance Defence) to exit from the corporate debt restructuring (CDR) and strengthen its financial position. Further, the resources would equip RDEL to undertake strategic business from the ministry of defence in line with the 'Make in India' programme," it said.
Meanwhile, the company has applied for approval to make defence equipment at its special economic zones (SEZs) in Mihan near Nagpur in Maharashtra, and Pithampur near Dhar, Madhya Pradesh.
"The proposals of Reliance Defence Ltd for grant of industrial licences for manufacturing of defence products... is placed before the BoA (Board of Approval) for a decision," the Commerce Ministry said in a note, reported PTI.
The request will be considered at an inter-ministerial meeting on April 28, the agency added.
The company was formerly known as Pipavav Defence and Offshore Engineering Company Limited.
The company's losses for the December 2015 widened to Rs. 293.60 crore on a turnover of Rs. 50.54 crore. It had incurred a loss of Rs. 70.46 crore for the December 2015 quarter and Rs. 170.22 crore for the September 2015 quarter.
The Reliance Defence stock closed at Rs. 68.05 on Friday, up 1.04 percent from its previous close.