Rs 5,000-cr bond issue plan may be hit
The strike at Jawaharlal Nehru Port Trust (JNPT) may well impact the budget nod to raise Rs 5,000 crore through tax-free bonds, industry trackers have said.business Updated: Mar 30, 2012 23:06 IST
The strike at Jawaharlal Nehru Port Trust (JNPT) may well impact the budget nod to raise Rs 5,000 crore through tax-free bonds, industry trackers have said.
While the strike may not impact the long-term performance of the company or the proposed bonds, the strike taint is bound to influence investor mood, they say.
JNPT had planned to raise funds through tax-free bonds last year, which was shot down. However, the decision to increase the quota for tax-free bonds to Rs 60,000 in the current fiscal came as a shot in the arm.
"Investors' response may be subdued due to the ongoing controversy as they may not want to put their money in a company that is struggling with land issues," said Sanjiv Choudhary, partner, KPMG India.
Company officials however held a different view. "The protests do affect the operations of the port, but JNPT is a profit-making entity and we are the single biggest port in the country, so the bond issue will not be impacted by the protests," a senior JNPT official told HT.
The company had sought to raise Rs 1,600 crore through tax-free bonds, in view of the prevailing high borrowing costs.
While a formal approval is to come within a few months, the finance ministry is understood to have given in-principal approval already.
Industry experts say that strikes and such social issues impact operations only briefly. JNPT, being backed by the government, could be perceived as a safe investment option. "Bond issuance is impacted by the performance of a company, and incidents such as the short-term strike in JNPT will not affect its performance in the long run," said Madan Sabnavis, chief economists, CARE Ratings.
JNPT that accounts for 60% of India's container cargo is facing opposition from PAPs and workers at JNPT, for non allotment of developed land in lieu of their plots taken for developing the port in 1984. Earlier the PAPs had also opposed the privatisation of JNPT. "The protest would continue till we get what is rightfully ours and we will go on strike again if the government goes back on its promise," DB Patil, who spearheaded the three-day protest, recently said.