Pharma company Lupin is looking at acquisitions abroad for its expansion plans this fiscal and has raised $100 million for the purpose.
After the rechristening of Telco to Tata Motors in 2003, one of the auto-maker's earliest decision was to settle its high-cost debts of around Rs 500 crore with the proceeds from foreign currency convertible bonds, or FCCBs. The company had raised $100 million and repaid the debt.
The rising credit costs in tight financial markets have hit India Inc's plans to raise funds through external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs). The borrowings through this route dipped to $ 862 million in February 2008. Indian companies raised $ 2.24 billion in November 2007, $ 2.26 billion in December 2007 and $ 1.88 billion in January 2008, according to the Reserve Bank of India data. The total ECB flow in Apr-Dec 07 was $ 16.3 bn.
What could compound the problem is that many of these firms do not account for the debt. In other words, they are not providing for the borrowings on an annual basis over the life of the instrument. According to a study by a leading brokerage, accounting for the loan and the interest would, on an average, knock off at least 12 per cent of the profits in FY09 and about 10 per cent in FY10.
Anil Ambani Group firm Reliance Communications said it has bought back foreign currency convertible bonds (FCCBs) worth Rs 121.22 crore (Rs 1.21 billion).
Following the announcement, share prices of Wockhardt rose 3.02 per cent on the Bombay Stock Exchange (BSE) from Rs 104.20 to close at Rs 107.35 on Friday. An extraordinary general meeting of the members of the company has been convened on January 19, to consider and approve the plan.
Indian companies that raised large sums of foreign funds to finance growth and acquisition plans during the bull run in the stock markets are in a Catch 22 situation. The conversion price of their foreign currency convertible bonds is several times higher than their current market prices.
SpiceJet will get $20 million from MacRitchie Investments, Singapore (a wholly-owned subsidiary of Temasek Holdings) and Istithmar, a UAE-based private equity firm.
Mid-sized Indian IT companies are increasingly adopting the Foreign Currency Convertible Bonds route to raise funds.
The government on Wednesday said it is contemplating relaxing norms governing external commercial borrowings to enable Indian corporates access higher foreign capital at low cost.
Foreign currency convertible bonds (FCCBs) are proving to be a double-edged sword with large premiums simply vanishing on account of bear markets and the ghost of redemption at yield-to-maturity (YTM) hanging on.
To be the first firm to take advantage of new RBI ruling.
Reliance Communications, which is eyeing to acquire the country's fourth-largest mobile firm Hutch Essar, said on Wednesday it plans to raise funds through issue of securities in the international market.
The price has been cut 39 per cent to Rs 555.85 from Rs 908 per share originally after its request to redeem the bonds ahead of maturity was rejected by the Reserve Bank of India.
Low-cost carrier SpiceJet will receive about $65 million within a week as the second tranche of investment by US private equity firm WL Ross and Co and by Goldman Sachs.
Indian Hotels Company Ltd has raised $150 million through foreign currency convertible bonds issue, which was oversubscribed by more than 20 times, to fund acquisitions, expansion and modernisation in the country and abroad.
With the hardening of global interest rates, India Inc appears to be less attracted to foreign currency convertible bonds and is instead looking to public issues in global and domestic markets to raise funds.
The finance ministry is not in favour of revising norms for external commercial borrowing or hiking the limits beyond $500 million in the near future, but will allow micro-finance institutions to tap overseas markets to raise up to $5 million.
Petronet LNG Ltd, India's largest liquefied natural gas importer, will raise $100 million through foreign currency convertible bonds in June-July, which would result in its promoters ONGC, GAIL IOC and BPCL shareholding falling by 7.5 per cent.
Subex Azure, the Rs 250 crore software developer and vendor of revenue maximisation solutions
Deccan Chronicle Holdings Ltd on Tuesday said it has launched $54.02 million foreign currency convertible bonds offering.
SpiceJet Ltd., an Indian budget airline, will likely to sell a foreign currency convertible bond worth $90 million by early September to raise money for more plane purchases, a company executive said Wednesday.
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