The company has requested the Department of Telecom (DoT) to consider relaxation of the provisions that puts a cap on the total indebtedness of the company vis-à-vis its networth, a move that would allow Tata Communications to raise additional funds, sources in the DoT said.

When contacted, a company spokesperson said, "Tata Communications' financial health continues to remain sound; it does not face any liquidity crunch in managing its business operations."

In a communication to DoT, the company is believed to have stated that the covenants on long-term loans are likely to be breached in January 2009 and the period from January to March is going to be a serious challenge.

The note said that the next financial year (2009-10) is going to be nearly impossible without additional non-debt funding. TCL has approached its major stakeholders the Government and the Tata Sons -- for the rights issue to raise up to Rs 1,000 crore and the more funds through debts.

"Tata Communications has sought to raise additional funds to support some of its growth and investment projects and is working with key stakeholders towards the same," the company stated.