Sethusamudram Corp raises Rs 920cr

Sethusamudram Corporation, a special purpose vehicle (SPV) for the Rs 2,427.40 crore Sethusamudram Ship Channel Project (SSCP), has raised over Rs 920 crore via foreign currency and rupee-term loans.

The company will soon raise Rs 550 crore through zero-coupon bonds, which will be followed by an initial public offering (IPO) of Rs 227 crore next year.

"We have raised Rs 425 crore through rupee term loans from scheduled banks including Indian Overseas Bank, Syndicate Bank, Corporation Bank, HDFC and Tamil Nadu Mercantile Bank," N K Raghupathy, chairman of Tuticorin Port Trust (TPT), said.

Raghupathy said the SPV has also raised $110 million (nearly Rs 495 crore) as foreign currency loans from Deutch Bank and Ireland-based Depfa Bank.

"Sethusamudram Corporation will float zero coupon bonds to raise Rs 550 crore. UTI Bank would be the issuing bank and underwriters. The rate and time frame for the float has not been finalised," he said.

According to sources, the bond is likely to hit the market in the third quarter of the current fiscal. "The government has asked Sethusamudram Corporation to sign the loan agreement within this month," sources added.

They pointed out that the company is examining the proposal of awarding the dredging contract of Palk Strait to Dredging Corporation of India (DCI).

"Though DCI does not have sufficient dredgers, Sethusamudram Corporation does not want to engage two contractors at one channel. The company can nominate DCI as per the existing government guidelines," they said. The size of the dredging contract is estimated at Rs 300 crore.

The Sethusamudram project envisages dredging a ship channel across the Palk straits between India and Sri Lanka, which would allow vessels sailing between the east and west coast of India to have a straight passage through India's territorial waters instead of having to circumvent Sri Lanka. This would lead to a saving of up to 424 nautical miles (780 km) and up to 32 hours in sailing time.