The sharp fall in the rupee since June 30 is expected to increase the repayment costs of foreign currency convertible bonds (FCCBs) by Rs 4,145 crore for 35 companies that are facing redemption in eight months.
The pressure will be more for 15 firms as redemption costs will be higher than their cash flow in the next one year, according to a study by the Business Standard Research Bureau. FCCBs are used by an entity to raise funds in a currency other than the issuer’s home currency.
The study shows that 16 companies, which face redemption in three months, will have to provide an additional Rs 1,927 crore before the end of March 2012. These firms have outstanding FCCBs worth Rs 9,474 crore ($1.49 billion). If yield-to-maturity premium is added, the outstanding is Rs 10,694 crore ($2 billion). With the rupee depreciation, the outstanding soars to Rs 12,743 crore.
The 35 firms have outstanding FCCBs worth $3.25 billion, which increase to $4.42 billion, including yield-to-maturity premium.
| OUTFLOW | |||||
| Maturity | Balance $mn | YTM Outstanding** | Impact* Rs cr | ||
| $mn | Rs cr | ||||
| Gati | Dec ‘11 | 15.00 | 22.18 | 99.08 | 20.15 |
| Rajesh Exports | Feb ‘12 | 15.00 | 22.23 | 259.04 | 35.55 |
| Karuturi Global | Feb ‘12 | 39.14 | 55.29 | 246.86 | 50.21 |
| Era Infra | Jan ‘12 | 50.20 | 74.77 | 265.43 | 53.99 |
| Subex | Mar ‘12 | 93.80 | 131.32 | 585.62 | 119.12 |
| Financial Tec | Dec ‘11 | 90.50 | 133.16 | 594.56 | 120.93 |
| Orchid Chem | Feb ‘12 | 117.42 | 165.00 | 747.52 | 152.04 |
| Reliance Com | Feb ‘12 | 925.30 | 1202.89 | 7085.81 | 1441.25 |
| *Rupee lost 22.2 per cent over average value of 44.65 in March 2011 ** Based on YTM premium for FCCBs investor YTM: Yield-to-maturity | |||||
The outstanding in rupee terms aggregated to Rs 15,057 crore, but rises to Rs 21,600 crore due to yield-to-maturity premium. The outstanding amount, including currency depreciation, reaches Rs 25,867 crore, which is almost double that of the trailing 12-months profit earned by these firms.