With the dollar showing no sign of a recovery and economists predicting a recession in the US by early 2008, India Inc seems to be in a hurry to raise dollar-denominated funds to fund their expansion plans.
"Most of these plans have been announced long back. However, they were waiting for the dollar to bounce back. Since it now seems a remote possibility, they are going forward with their fund raising plans," said a Mumbai-based investment banker.
Tata Steel, which has already raised $875 million through foreign currency convertible bonds (FCCBs), is planning to further mop up Rs 9,135 crore through a rights issue that is expected to open soon.
"Tata Steel needs funds to finance the Corus acquisition. All what matters is timing the market. Perhaps, they think the time is ripe to raise funds," said Gaurav Saravgi, senior manager - investment banking, Centrum Capital.
JSW Steel is planning to raise $850 million from overseas markets for capacity expansion and Larsen and Tourbo is raising $1 billion in the current fiscal by issuing global depository receipts (GDRs).
The board of India Cements, which is slated to meet on November 19, is expected to give the green signal for the company to raise more funds. In October 2005, the company had completed an equity issue in the international markets by issuing GDRs and raised Rs 497 crore, including a premium of Rs 446 crore.
Although the list of companies waiting to tap foreign markets is quite long, action in the domestic market is not any less.
"Project execution is gaining pace and companies need to raise capital faster," said Girish Nadkarni, executive director of Avendus Advisors.
While the board of directors of Raymond has approved the issue of 61.39 lakh convertible warrants, Usha Martin's board has given its nod to infuse Rs 850 crore by issuing warrants to its promoters, thus expanding its capital project to Rs 2,100 crore.
On Tuesday, Anil Ambani-controlled Reliance Energy said it has raised Rs 507 crore through conversion of Foreign Currency Convertible Bonds (FCCBs) into equity shares. The company said that of the issued amount of FCCBs of $178.058 million (Rs 800.18 crore), bonds aggregating $112.84 million (Rs 507.09 crore) have already been converted into equity shares in the last 30 days at a price of Rs 1,006.92 per share.
"In accordance with the terms of the outstanding zero coupon Foreign Currency Convertible Bonds, the company has issued notice for early conversion of these bonds subject to necessary approvals," the company said in a filing to the Bombay Stock Exchange.
Reliance Energy had issued the FCCBs in March 2004. The bonds, with a maturity period of five years, carry a yield of 2 per cent per annum on maturity. Outstanding FCCBs amount to $65.221 million (Rs 293.09 crore), it said.
On full conversion of outstanding bonds, the net worth of the company would increase by Rs 800.18 crore to Rs 10,582 crore, Reliance Energy said.