The power utility's board of directors, during their meeting on Thursday, approved the fund raising proposal.
The approval is for raising funds up to Rs 2,000 crore by way of a rights issue of equity shares of face value of R1 each, subject to all applicable statutory and regulatory approvals.
In a filing on BSE on Friday, Tata Power said a committee of the board would decide on the terms and conditions of the rights issue including issue price, issue size and other related matters.
Tata Power has an operational capacity of more than 8,560 MW while projects having capacity of over 840 MW are under execution. Besides many projects are being looked at by the the company. Last week, the Central Electricity Regulatory Commission (CERC) has allowed the company compensation as well as higher tariff for electricity generated from its 4,000 MW Mundra power project in Gujarat.
The plant has been seeing significant losses due to rise in cost of imported Indonesian coal, which is used to fire it.
The company reported a consolidated net loss of R74.91 crore in the three months ended December 2013. During the same period, the company's total income from operations touched R8,700.02 crore.