International Fund Raising

“Issues & Options” May 31, 2010

 Fund raising through ECBs

No. of ECBs: 680 No. of ECBs: 410 No. of ECBs: 539 No. of ECBs: 214
Average : $37.93 Mn Average : $51.71 Mn Average : $24.10 Mn Average : $47.48 Mn

Funds raised through ECBs

 Fund raising through FCCBs

No. of FCCBs: 75 No. of FCCBs: 20 No. of FCCBs: 19 No. of FCCBs: 5

Average : $100.33 Mn Average : $74.23 Mn Average : $195.87 Mn Average : $98.01 Mn

Funds raised through FCCBs

 Fund raising through ADRs and GDRs

No. of ADRs & GDRs: 15 No. of ADRs & GDRs: 4 No. of ADRs & GDRs: 13 No. of ADRs & GDRs: 9
Average : $175.79 Mn Average : $26.12 Mn Average : $264.94 Mn Average : $23.76 Mn
 FDI Flows in India: 2006 to 2010 YTD

Notes:
Figures for 2009-10 are for the period April-December
 FII Flows into Equity Markets: 2006 to 2009

Notes:
FII Flows into Equity Markets includes aggregate volume of Inflows
 Overview of FCCBs

1. Convertible bonds denominated in foreign currency issued

by listed Indian companies outside India

2. Conversion is not mandatory and the conversion price is

subject to SEBI guidelines

3. Redemption

4. Coupon Rate

5. Yield to Maturity (YTM)

6. Venus Remedies : Winding-up Petition

7. Regulatory Framework:
a. FCCBs (with Mandatory conversion): FDI guidelines
b. FCCBs (without Mandatory conversion): ECB guidelines
 Overview of ECBs

1. Debt instruments denominated in foreign currency :

Generally in USD, GBP, EUR, JPY or CHF

2. “All-in-cost” capping:
a. For maturity 3 to 5 years: LIBOR plus 150 bps
b. For maturity above 5 years: LIBOR plus 250 bps

3. Refinancing of ECBs permitted if:

a. The fresh ECB is at lower cost
b. Maturity period of repayment not changed

4. Though the coupon rate of ECBs prima-facie appears very

less in comparison to the interest rate on the domestic bank
loans, the borrowers have to carefully assess the terms of
ECBs
a. Especially relating to the foreign exchange fluctuation risk
 Introduction of FCCB Buyback

15th November 2008

Introduces Buy-back / Pre-payment of

Foreign Currency Convertible Bonds (FCCBs)
 FCCB Buyback : Automatic Route

Automatic Route

1. Buy back value of FCCBs should be at a minimum

discount of 15% on the BV

2. Funds to be used for this purpose will be either

existing foreign currency funds held or out of fresh
ECBs
 FCCB Buyback : Approval Route

Approval Route

1. Buy back value of FCCBs should be at a minimum

discount of 25% on the BV

2. Funds to be used for this purpose shall be internal

accruals; and

3. Total amount of buy back shall not exceed US$ 50

Mn
 FCCB Buyback : Approval Route (Revised)

Approval Route revised

1. Total amount of buy back permitted shall not exceed
US$ 100 Mn out of internal accruals, subject to:

• Min. discount: 25% @ Redemption value US$ 50 Mn

• Min. discount: 35% @ Redemption value US$ 50 – 75 Mn
• Min. discount: 50% @ Redemption value US$ 75 – 100 Mn

2. Recently, RBI issued notification to consider further

buy back of FCCBs (only under approval route) till 30th
June 2010
 SMC Capitals : Thanks You!

Thank You
SMC Capitals Limited
Corporate Office
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INDIA
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For Merchant Banking Queries, Contact: Jagannadham Thunuguntla, Equity Head

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Disclaimer : This report is for information purposes only. Due care has been taken in compilation of the report to ensure that the
information is accurate to the best of our knowledge and belief. The information contained in the report has been obtained from
reliable and publicly available sources. SMC Capitals Ltd, makes no representations or warranties regarding the accuracy or
completeness of such information and expressly disclaims any and all liabilities based on such information or on omissions there
from.