The Hindu Business Line : Ennore Foundries to go in for $15-m ECB

ENNORE Foundries Ltd has decided to go in for an external commercial borrowing for $15 million (Rs 65 crore), as part of its debt-raising programme for the Rs 165-crore Greenfield expansion project. The company is putting up a 50,000-tonne grey iron foundry project.

Explaining the rationale behind the choice of ECB, Mr K. Sridharan, Executive Director-Finance, Ashok Leyland (Ennore Foundries' parent company), told Business Line that the company could take the benefit of lower interest rate while not needing to take a cover for exchange rate fluctuation.

"A 2-3 per cent saving in interest rate is possible," Mr Sridharan said, adding that since Ennore Foundries would be exporting, it would have a natural hedge against exchange rate fluctuation.

He, however, said that the company decided to cap overseas borrowings at 50 per cent of the total debt of the project, so that it could keep any benefit arising out of a favourable exchange rate, when exports take place.

Mr Sridharan said that ICICI Bank had been given the mandate for arranging the ECB. The funds would be raised within the next three months.

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