New Delhi, Oct 12: Noida Toll Bridge Company is luring investors to its 14 per cent FCDs with the promise of a dividend in its first full year of operations. The 14 per cent FCDs are to converted into equity shares at the end of 36 months from the date of allotment, i.e., in 2002 -- around the time when the commercial operation is expected to go onstream. For the FCD investor, this translates into a double bonanza. For the first three years, he will earn an interest of 14 per cent guaranteed by IL&FS and soon after conversion he will reap the dividend benefit. It is not surprising, therefore, that 2 foreign funds have picked up a stake of 16.34 per cent each in Noida Toll Bridge Company through the FCD route.Says managing director Pradeep Puri, ``American International Group and the Asian Infrstructure Mezzanine Capital Fund have taken up equity partnership in the Noida Toll Bridge Company lured by the attractive terms of the FCD, both pre and post-conversion.'' According to Puri, the fact that the company will be in a position to declare a dividend in the very first year of full operations (i.e., FY 2003) has weighed heavily in the minds of the foreign funds. ``Early dividend is possible in view of the innovative depreciation policy being followed by the company. In sharp contrast to the traditional methods of providing for depreciation (straight line or written down), we have been allowed by the government to follow the shrinking fund method.''
According to Puri, the Noida Toll Bridge Company will not have to provide for depreciation at one-go once commercial operation starts. This is due to the fact that interest accrued on the deep-discount bonds (for the entire tenure of the bond) will be treated as depreciation from the start. This means that the company will have more distributable profits in FY 2003. The company hopes to have a dividend payout of Rs 3.99 crore in FY 2003, which goes up to Rs 17.35 crore in the next fiscal. This means a dividend of 32 paise for a Rs 10 share in the first year and Rs 1.4 in the next fiscal.
``Considering that most infrastructure projects have a long gestation period and, thererfore, rewards accrue much later, the immediate dividend payout by the Noida Toll Bridge Company is sure to lure investors,'' adds Puri.For American International Group, Noida Toll Bridge Company is its first investment in any Indian infrastructure project. It's 16.34 per cent stake translates into an investment of around Rs 20 crore. The fund is sponsored by the AIG Group Inc.
The Asian Infrastructure Mezzanine Capital Fund, the other foreign fund which has acquired a stake in the Noida Toll Bridge Company, is sponsored by Prudential Insurance Company of America, one of the largest insurance companies of the US. AIMCF is an infrastructure direct investment fund in which institutional investors from the US, Japan and other countries in Asia have committed capital.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.