Speaking to The Financial Express, L&T's senior vice-president (finance) YM Deosthalee said that the company would be exercising the call option in November 1999 for bonds worth Rs 300 crore which have been borrowed three years ago to fund various projects under implementation then. The bonds carry a coupon rate of about 17.50 per cent.

The company is planning to substitute this debt with a basket of bonds with a tenor ranging from five to 10 years. The company would structure the package in such a way that the interest rates are fixed, floating and a blend of both so as to offer flexibility and economy.

Considering the standing of L&T in the market the average ratecould be anywhere in the range of 13.50 per cent resulting in a savings of about Rs 12 crore on these bonds alone.

The company, he added, is also planning to repay forex loans to the tune of $ 15 million. These will be subsituted by domestic borrowings. Taking into account the Rs 300 crore debt swapping and the Rs 200 crore normal capital expenditure (L&T does not forsee any major capacity addition at the moment), the company would be borrowing about Rs 500 crore in the domestic market. He ruled out any possibility of forex borrowings saying that it was not attractive now.