Sardar Sarovar Nigam for early redemption of bonds

The Sardar Sarovar Narmada Nigam Ltd (SSNNL) is planning to insert call option for early redemption of the bonds in order to reduce the interest burden by replacing high-cost bonds.

"We are planning to seek bond holders' permission to insert a clause for call option in the bonds, which will give us the right for early redemption of the bonds," said H K Patel, chief general manager, resources and credit, SSNNL.

The deep-discount bonds of Rs 3,600 each issued by SSNNL in 1993 were to mature on January 11, 2014, with a maturity value of Rs 1.11 lakh a bond totalling an average interest of over 17 per cent. But SSNNL is planning redemption of the bond as on January 11, 2005, by paying Rs 25,000 against each bond of Rs 3,600.

SSNNL will raise the dam height to 110 metres after the Supreme Court order recently. It will be invest over Rs 300 crore in the next three months.

SSNNL is planning to reduce the interest cost by replacing high-cost debts with lower interest loans.

SSNNL has called a meeting of the bondholders on May 28 to seek their permission by passing a special resolution for inserting the clause of call option.

"After the meeting, once the special resolution for inserting the clause is passed, another notice will be served to exercise the call option and redemption of the bond," said Patel.

Over 4.76 lakh deep-discount bonds of Rs 3,600 each were sold in 1993 and over 98 per cent of the bondholders are individual investors.

If the bonds are redeemed at the end of the 11th year as on January 11, 2005, SSNNL will have to pay around Rs 1,700 crore, while if the bonds were to be redeemed on maturity as on January 11, 2014, SSNNL will have to cough up over Rs 8,000 crore.

SSNNL officials said while the Saurashtra branch of the Narmada main canal is being completed as per schedule and will reach Kutch district in a year and a half from now, water will actually flow into the canal by gravitational force only when a height of 138 metres is achieved.

But even as construction of the Saurashtra branch canal proceeds, 20 more rivers will be connected to the Narmada main canal, thus irrigating thousands of acres of land.