The Hindu Business Line : Rupee depreciation increases Tata Comm’s indebtedness

New Delhi, Feb. 12 Depreciation of the rupee since April 2008 has resulted in an increase in Tata Communication’s indebtedness by about Rs 500 crore. This has been disclosed by the Department of Telecom in a proposal considering the company’s request to raise funds to meet expansion plans.

Analysts said that since 55 per cent of the company’s business comes from overseas markets, fluctuation in the value of rupee has an equal impact on its debt, income and international assets.

“Any company that has international borrowings would have experienced a similar impact due to the rupee depreciating from under Rs 40 to Rs 48 in the last year. However, Tata Communications as a global company has more than half its revenues from its international operations and the value of that business (in rupee terms) has also “appreciated” (on a like to like basis) by 20 per cent during the same period,” said a market analyst.

Seeks nod to raise funds

Tata Communications had written to the Government seeking permission to raise money because the company’s fund position was reaching a “critical stage”. The company had told the Government that it required the money to carry out its expansion plans including bidding for the upcoming auction for the broadband wireless spectrum.

Tata Communications had asked the Government to relax the shareholders’ agreement that puts a cap on the total indebtedness of the company. The company has approached the Department of Telecom since the Government holds 26 per cent stake in Tata Communications. “Tata Communications has approached its promoters, including the Government of India, for enhancement of borrowing limits to the levels permitted under the Companies Act. The proposal is under consideration and does not directly impact its existing business or announced investment plans,” said a spokesperson for the company.

Sources said that the Government has not agreed to the proposal entirely. It has allowed the company to raise up to Rs 1,412 crore even as it is taking legal opinion on whether the shareholders agreement can be amended to allow the company to raise additional funds. “The legal opinion is required on how to go about it and up to what extent the limit is to be raised,” said a DoT source.

More Stories on : Telecommunications | Forex

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Egyptian outsourcing cos keen to set up base in India

Tata Comm to invest $430 m in Asia Pacific

Rupee depreciation increases Tata Comm’s indebtedness

Hexaware says promoters have not sold or pledged any stake

Infotech, Mitsubishi Heavy sign pact

Cisco to continue relationship with Satyam

Perot to move more work to India

Cisco security initiative for Bangalore

IBS launches new iFly suite for global airline sector

Airlines told to give fare break-up on Web sites

IT cos look to push campus hiring closer to pass-out date

‘Adverse fallout of one company must not impact entire IT industry’

‘Expansion by MNCs could fuel IT deals in short term’

‘We’ve put out the fire, ensured financial stability’

‘Top brass should be first to take pay cut, if needed’

‘Raju’s second brother too has big role in Satyam fraud’