INSUBCONTINENT EXCLUSIVE:
amount in the next few weeks, seeking to double its cash position to Rs 25,000 crore at a time when it has hundreds of crores of bills
coming up for payment in an uncertain environment for receipts.
The plan is to raise money in different tranches and tenures from the
corporate bond market so as to match the company's liabilities at a future date just in case cash flows do not recover quickly enough, three
top industry executives told ET.
"The company had cash of about Rs 12,000 crore before this crisis
We plan to increase it to Rs 25,000 crore
This is to ensure that the business runs smoothly in a difficult environment
It is just being prudent because we still do not know the full impact the virus will have on growth, liquidity or business," said one of the
three persons cited above.
L-T did not comment.
The company plans to increase the cash in hand to Rs 25,000 crore for about a year
A part of this money has already been raised in different tenures from the bond market
The tenures range from one year to 10 years, with yields ranging from 6.60% to 8%
"The average interest rate L-T has paid comes to about 7.45% on all these bonds which is slightly on the higher side if you look at the low
returns it will generate, but this cost is necessary at a time like this," said the second person quoted above.
On Wednesday alone, the
company raised Rs 5,150 crore by selling bonds to banks, mutual funds, insurance companies and provident funds.
Axis Bank, SBI Capital
Markets, Citibank, Barclays and HSBC are helping the company raise these funds
Individual banks could not be contacted immediately.
"Companies prefer to stay in cash because their toplines are under threat in this
L-T has a treasury as big as a bank and raised money in different tenures to match payment liabilities," said the first person cited
L-T's dominant position in the engineering and construction market in India, a diversified revenue profile, adequate financial risk profile,
