CESC to hike borrowing limit to Rs 3,800 crore

Our Corporate Bureau

Mumbai, Dec 3: The cash-strapped RPG Group public utility concern CESC is planning to hike its borrowing limit to Rs 3,800 crore. In order to meet a part of the company’s working capital requirements and for retirement of high cost borrowings of the company, ICICI has sanctioned a term loan amounting to Rs 660 crore. This has been done by restructuring three loans of Rs 120 crore, Rs 80 crore and Rs 225 crore sanctioned earlier for meeting the company’s fund requirements.

A consortium of 16 bankers has also sanctioned an amount of Rs 226 crore for working capital facilities, according to the company’s latest annual general report.

The Kolkata-based CESC has proposed an ordinary resolution at the coming annual general meeting whereby the borrowing limit is to be hiked to Rs 3,800 crore from the existing levels of Rs 3,300 crore. According to the company, this is mainly in view of the company’s future fund requirement towards capital expenditure and expenditure to be incurred in the normal course of its operations.

The fresh loan of Rs 660 crore to be sanctioned by ICICI is to be secured by hypothecation of movable properties and also by the mortgage of immovable properties of the company in a form acceptable to ICICI. The company’s banking consortium includes ABN Amro Bank, Allahabad Bank, American Express Bank, Bank of Baroda, Bank of India, Corporation Bank, HDFC Bank, ICICI Bank, Indian Bank, Indian Overseas Bank, Standard Chartered Bank, Standard Chartered Grindlays Bank, State bank of India, HSBC, UCO Bank and Union Bank of India.

CESC had registered a Rs 172 crore loss for the financial year ended 2000-01 as against Rs 71 crore for the preceding fiscal. The company’s application for revision of tariff for 2000-01 and 2001-02 have been recently cleared by the West Bengal Electricity Regulatory Commission. However, the net tariff increase allowed has been only to the tune of three per cent. The board would have been happier with a higher increase as during the long wait of three years since the previous tariff in October 1998, CESC has faced a much higher all round increase in cost of its operations, according to the company.