Tata Engineering will be issuing close to 76 lakh fresh equity shares in thescheme, sources said. This works out to about three per cent of thecompany's equity base of Rs 256 crore. Sources said the company has drawn upa proposal to issue ESOPs based on the Securities and Exchange Board ofIndia (Sebi) guidelines. The Tata Engineering board cleared the proposal forissuing ESOPs on May 29.

The scheme, once finalised, will be put up before the company's shareholdersat the annual general meeting to be held on July 25.

The company had taken the approval of its shareholders last year to issueESOPs as an enabling resolution. The permission had lapsed this year.Each option granted shall entitle an eligible employee to apply for acertain number of equity share of Rs 10 each at a fair market pricedetermined by company's board and guidelines of Securities and ExchangeBoard of India (Sebi). Tata Engineering `s Rs 10 paid-up share currentlytrades around Rs 122 on the bourses.

ESOP once issued would entitle the employee to opt for conversion intoequity after a certain period.

The information technology companies have adopted the ESOP route to rewardas well as retain human talent. The IT companies have gone in for multipleESOPs over the past couple of years. Infosys, in fact has already issuedESOPs thrice in the past few years.

Among the manufacturing companies -- SRF Limited and Apollo Tyres haveannounced plans to issue ESOPs.

Telco has posted a lower profit after tax of Rs 71.2 crore for the yearended March 2000 against Rs 97.46 crore reported last year. This is despitea 36 per cent growth in Telco's net turnover and a three-fold rise in otherincome. Telco's net sales during 1999-2000 increased to Rs 8,791.79 crore,up from Rs 6,542.91 crore reported last year.

A higher interest outflow of Rs 404.74 crore against Rs 309.57 crore lastyear affected the bottom line. Further, investment in its passenger carbusiness also hit the bottom line. The car project is expected to break evenat the end of 2000-01.