What is the purpose of India Hotels raising funds via rights issue?

Indian Hotels, which operates the Taj Hotels franchise on behalf of the Tata group, is planning to come out with a Rs.3,000 crore rights issue. This will be one of the biggest fund raising efforts by the Tata Group. The funds will be utilized to bankroll Indian Hotel’s capital expenditure, to give direction to its growth plans as well as for repayment of debt, which has burgeoned sharply in the last one year.

Just to continues on the subject of debt, between FY20 and FY21 the net debt of IHCL (net of cash and marketable securities) was up 67% at Rs.3,110 core. This called for an urgent need to raise equity to repay debt and to improve the ratio. The final terms and conditions of the rights will be finalized in consultation with the managers to the issue. Taj will expand its portfolio of properties by 36% to a total of 300 properties globally over next 3-5 years.