NEW DELHI, January 13: The Rs 1,200 crore Indo Rama Synthetics proposes to convert its Rs 200-odd crore rupee loans to foreign exchange loans within the next few months. It is negotiating the terms of this conversion with IFCI at the moment. Indo Rama hopes to get the loan converted at around 2.5 per cent over the Libor rate - effectively, the loan will bear an interest of around 8 per cent, as compared to the current 16.5 per cent that the company is paying on it currently.According to the company's president (finance) Priya Brat, the forex risk will be minimal since the rupee has already depreciated quite a bit - the company is also a big exporter and its forex earnings will offset the risk of further depreciation.
The company, which is going through a cash-crunch, has already written to several creditors asking them to reschedule some payments according to Brat, they have agreed to this. Indo Rama, for instance, was to repay $2.2 million to the IFC (US), along with an interest amount of $1.1 million
in December. Similarly, $2.5 million due to an equipment supplier, IKB, in November and December has been rescheduled. Both sets of payments, according to Brat, will be made within 6 weeks.
According to the company, its problems were aggravated by the slowdown in demand in the current year as well as the sharp fall in global prices, especially after the south-east Asian currency crash. So, while it stepped up production of both staple fibre and yarn to meet the festival demand, consumers continued to stay away. As a result, its unsold stocks rose, from 16,000 tonnes in August to around 24,000 tonnes at present.
More important, global prices for PFY fell from around $1,000 per tonne a month ago to around $800 at present.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
