One more list of FCCB / ECB

This is what Fitch ratings believe

A total of 59 Indian companies face redemption of USD7bn in foreign currency convertible bonds (FCCB) during 2012. Fitch Ratings believes that about 63% of the amount due is likely to be repaid from a combination of internal accruals and fresh borrowings. Of the balance 17% is expected to undergo restructuring (mostly time extensions) while the remaining 20% is likely to default with ensuing restructuring, possibly having significant distressed debt exchange (DDE) features

Just look at the various companies, redemption amount and when it is due.

Stock	FCCB due on	Redemption Amount [USD mn]
.	Likely to be redeemed
.	Reliance Communications Ltd	1-Mar-2012	1181.51
.	Tata Motors Ltd	12-Jul-2012	623.5
.	Tata Steel Ltd	5-Sep-2012	471.15
.	JSW Steel Ltd	28-Jun-2012	391.84
.	Bharat Forge Ltd	28-Apr-2012	57.03
.	Likely to be redeemed [Companies likely to get refinancing option]
.	Jaiprakash Associates Ltd	12-Sep-2012	523.56
.	Tulip Telecom Ltd	26-Aug-2012	140.17
.	Strides Arcolab Ltd	27-Jun-2012	116.04
.	Educomp Solutions Ltd	26-Jul-2012	110.75
.	Man Industries India Ltd	23-May-2012	64.63
.	Pidilite Industries Ltd	7-Dec-2012	51.84
.	Everest Kanto Cylinder Ltd	10-Oct-2012	49.98
.	Grabal Alok Impex Ltd	5-Apr-2012	28.43
.	Rajesh Exports Ltd	21-Feb-2012	25.46
.	Ruchi Infrastructure Ltd	3-Feb-2012	18.78
.	Micro Technologies India Ltd	23-Jul-2012	18.63
.	Uflex Ltd	9-Mar-2012	11.45
.	Kalindee Rail Nirman Engineers	7-Mar-2012	3.3
.	Likely to be redeemed [Companies may secure high cost local funding to redeem]
.	Orchid Chemicals & Pharmaceuticals	28-Feb-2012	167.64
.	Rolta India Ltd	29-Jun-2012	134.77
.	Plethico Pharmaceuticals Ltd	23-Oct-2012	109.44
.	Karuturi Global Ltd	19-Oct-2012	55.07
.	Sharon Bio-Medicine Ltd	4-Dec-2012	23.3
.	Websol Energy System Ltd	1-Nov-2012	22.05
.	Kamat Hotels India Ltd	14-Mar-2012	19.6
.	Surana Industries Ltd	20-Jun-2012	18.12
.	Aarvee Denims & Exports Ltd	11-Apr-2012	5.92
.	Easun Reyrolle Ltd	5-Dec-2012	5.7
.	Suryajyoti Spinning Mills Ltd	17-Feb-2012	3.51
.	Tantia Constructions Ltd	18-Jul-2012	3.44
.	OK Play India Ltd	24-Jul-2012	0.35
.	Will have to restructure
.	Suzlon Energy Ltd	12-Jun-2012	306.87
.	Firstsource Solutions Ltd	4-Dec-2012	240.13
.	Suzlon Energy Ltd	11-Oct-2012	175.84
.	Prime Focus Ltd	13-Dec-2012	78.99
.	Prithvi Information Solutions	27-Feb-2012	76.1
.	Moser Baer India Ltd	21-Jun-2012	61.45
.	Hotel Leela Venture Ltd	25-Apr-2012	60.98
.	Moser Baer India Ltd	21-Jun-2012	59.93
.	Great Offshore Ltd	12-Oct-2012	40
.	Suzlon Energy Ltd	11-Oct-2012	32.8
.	Shree Ashtavinyak Cine Vision	22-Dec-2012	27.34
.	Shri Lakshmi Cotsyn Ltd	27-Sep-2012	14.46
.	Fear of Significant Distress
.	GTL Infrastructure Ltd	29-Nov-2012	320.55
.	Subex Ltd	9-Mar-2012	85.16
.	Subex Ltd	9-Mar-2012	53.05
.	XL Energy Ltd	23-Oct-2012	46.6
.	Gayatri Projects Ltd	3-Aug-2012	42.34
.	Indowind Energy Ltd	22-Dec-2012	30
.	Pokarna Ltd	29-Mar-2012	17.34
.	Murli Industries Ltd	6-Feb-2012	8.23
.	Threat of Default
.	Sterling Biotech Ltd	16-May-2012	183.84
.	Pyramid Saimira Theatre Ltd	4-Jul-2012	122.56
.	KSL and Industries Ltd	19-May-2012	111.58
.	3i Infotech Ltd	27-Jul-2012	93.86
.	Zenith Infotech Ltd	17-Aug-2012	46.7
.	3i Infotech Ltd	3-Apr-2012	36.3
.	ICSA India Ltd	28-Apr-2012	32.74
.	KLG Systel Ltd	27-Mar-2012	31.63
.	ICSA India Ltd	10-Mar-2012	30.01
.	Ankur Drugs & Pharma Ltd	27-Dec-2012	26.6
.	Gemini Communications Ltd	18-Jul-2012	205
.	Pioneer Embroideries Ltd	28-Apr-2012	16.41
.	GV Films Ltd	23-Oct-2012	16.38
.	Wanbury Ltd	23-Apr-2012	14.41
.	Wanbury Ltd	17-Dec-2012	12.66

What does this all mean?

Reliance Communications Limited has already tied-up funding sources for redeeming its FCCB, others in the top 5 are expected to redeem bonds by combining internal accrual, fresh FCCB issuance and low-cost ECB. Large companies are always able to manage somehow.

There is a possibility that many companies will default unless they have tied up liquidity support. Even if they get access to liquidity, it will not come cheap and as a result: the interest burden will be big overhang on company's performance. So, Be careful before you put in money in stocks which are lower down in the list. And also keep an eye on all the names to avoid any ugly surprise.

Many Indian companies resorted to the FCCBs as a convenient way to raise cheap debt during 2005 and 2008 on premise that stock prices only go one way and that is up. But last 3 years of volatility has put lot of companies at risk and with USDINR all over the place…it's turning out to be nightmare for many of these companies and its investors. Fitchratings came out with interesting report on the subject.

Thanks and Regards 
 
Rohit Saxena

Phone No: 09899365905
Mail Id: simmi9sep@gmail.com

Losers say it is hard and impossible, but winners say it is hard but not impossible."