Sicom To Tap Vysya Bank For $5.2 M Foreign Currency Loan

Mumbai, January 21: | Updated: Jan 22 2003, 05:30am hrs
The Mumbai-based non-banking financial company, Sicom Ltd, would go in for a foreign currency loan of $5.20 million, equivalent to Rs 25 crore, from Vysya Bank. The bank has agreed to provide the loan at Libor plus 200 basis point payable half yearly. The annual rate of interest would be 7.04 per cent.

Sicoms board, which is slated to meet on Wednesday, is expected to give its nod for this proposal. The loan would be raised under its resource mobilisation plan.

Sources told FE that the foreign exchange risk can be mitigated by taking forward cover for appropriate duration.

According to sources, Sicom last year had raised foreign currency loan of $5.18 million equivalent to Rs 25 crore from Vysya Bank at 8.82 per cent rate of interest. The loan is due for repayment after February 6 this year. Sources said that the Vysya bank had already considered Sicoms proposal and communicated that it was in favour of extending similar loan.

However, the bank had noted that due to the Reserve Bank of Indias directives regarding value of foreign currency loan at a rate not exceeding Libor 0.25 per cent, it has to re-price the loan.

Meanwhile, Ernst & Young would make a presentation to the board on Human capital entitled driving performance of Sicom.

The presentation would focus on how to expedite Sicoms recent decisions with regard to rationalisation of its staff and bring in professionalism and accountability.

Ernst & Youngs presentation largely focuses on profitability and performance. It also lays emphasis on the performance based promotions to the staff. Meanwhile, the Sicom board is expected to discuss the future course of action for its divestment. It has received only two expressions of interest from Kotak Mahindra and Videocon to pick up 26 per cent stake held by the state government (12 per cent) and Unit Trust of India (14 per cent). The leading consultant KPMG, which has been appointed by Sicom to carry out the disinvestment process, would be asked to call technical and financial bids from these bidders.

At present, state government holds 49 per cent equity while UTIs stakes are 40 per cent and the balance 11 per cent is held by financial institutions, corporates and employees welfare trust. It had taken a decision for disinvestment especially when its profit had reduced to Rs 5 crore for the year ended March 31, 2002 from previous years Rs 10 crore and its net worth dipped to Rs 192 crore.