Indian Petrochemicals Corporation, the Reliance group company, is planning to raise $100 million through the external commercial borrowings route.
The company has mandated the State Bank of India and ANZ Investment Bank for raising the loan. The two banks have also between them underwritten the entire amount.
"The debt is being raised for corporate purposes. A large portion of this will be used to substitute high cost debt with low cost ones," sources close to the development said. Senior Reliance group and IPCL executives were in Singapore recently to participate in roadshows to raise the debt.
A spokesman for IPCL declined comment on the issue.
After becoming a part of the Reliance group, the petrochemicals major has been on a debt reduction spree. The company's total debt fell to Rs 3,327.26 crore (Rs 33.27 billion) for the year 2002-03 from Rs 3,716.29 crore (Rs 37.16 billion) in the previous year.
The company managed to reduce interest expenses excluding finance charge on lease rentals by 22 per cent to Rs 296 crore (Rs 2.96 billion) in 2002-03.
The company's long-term debt stood at Rs 1,778 crore ($374 million) in of which 23 per cent represented foreign currency denominated debt.
The high cost loans repaid by IPCL include Rs 435 crore (Rs 4.35 billion) to the World Bank, debentures of Rs 450 crore (Rs 4.5 billion), fixed deposits of Rs 33 crore (Rs 330 million), a Union government loan of Rs 36 crore (Rs 360 million) and a Rs 22 crore (Rs 220 million) loan to Standard Chartered Bank.
IPCL's attempt to $ 100 million comes when the A V Birla group flagship Grasim Industries recently raised $50 million and another group company BSES raised $100 million.
Cement major Gujarat Ambuja too is in the market to raise $75 million with greenshoe option of $25 million. Spurred on by the low cost of forex loans, Indian corporates are increasingly raising dollar loans to prepay costly rupee loans.
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