Money & Banking
Corporates given one more year to pre-pay foreign loans

With rupee losing about 25% in the last one year and increasing redemption costs, several companies with FCCBs on their balance sheets are keen to retire these loans

 

Mumbai: The Reserve Bank of India (RBI) has extended the scheme for corporates to get rid of their overseas loans by pre-paying them as weak rupee increases their debt obligation, reports PTI.

The pre-payment of foreign currency convertible bonds (FCCBs) "shall come into force with immediate effect and the entire process of buyback shall be completed before 31 March 2013 after which the scheme lapses," an RBI circular said.

With rupee losing about 25% in the last one year, the redemption costs of overseas loans availed by Indian corporates has increased significantly.

Under these circumstances, several companies with FCCBs on their balance sheets are keen to retire these loans.

For example, Suzlon and Educomp are amongst the ones who are under the process of retiring their FCCB obligations.

Last month, drug firm Strides Arcolab had redeemed outstanding foreign currency bonds worth $80 million.

"On a review, it has been decided to continue the scheme of buyback of FCCBs subject to certain modifications," it said.

Indian firms can now buyback the FCCBs at a minimum discount of 5% on the book value utilising their foreign currency funds under the automatic route, as against 8% earlier, it said.

In case the Indian company is planning to raise a foreign currency borrowing for buyback of the older FCCBs, all foreign exchange regulations relating to foreign currency borrowing should be complied with, it added.

The extension of the window allows greater freedom and leeway to Indian companies. FCCBs witnessed a huge surge during 2006-07. However, the global economic meltdown on 2008-09 impacted most of the companies.

Recently, rating agency Standard & Poor's said that 56 Indian companies, which have to pay back $5 billion worth of foreign debt this calendar year, could see their interest burden going up by $700 million if they chose to reschedule these obligations.

These companies had issued these FCCBs between 2006 and 2008 (and mostly in 2007), before the Lehman fall when the stock prices where at record high, and the rupee was trading at 48 to the dollar.

Most of these bonds are denominated in the US dollar and hence the mounting worries.

The report said the recent rupee fall has added to the woes. Most of the FCCBs that mature in 2012 were issued in 2007-08, when the rupee was at about 42 to a dollar. The rupee has lost more than 30% against the American currency since then.

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SC dismisses Cox & Kings plea on super luxury train

IRCTC said the agreement with Cox & Kings was terminated due to breach in the agreement and poor occupancy rate of the train whose services were launched at an estimated cost of Rs35 crore

 

New Delhi: The Supreme Court dismissed an appeal by a UK travel company Cox & Kings contesting the decision to terminate a joint venture agreement with the Indian Railway Catering & Tourism Corporation Ltd (IRCTC) for operating super luxury tourist train 'Maharaja Express', reports PTI.

In its appeal, Cox & Kings challenged the Delhi High Court order upholding the decision of IRCTC to terminate the agreement for operating the train.

A bench of justices Altamas Kabir and J Chelameshwar while declining to interfere with the high court order, however, said the disputing parties were at liberty to approach the Arbitration Tribunal to resolve their disputes.

IRCTC had maintained that the agreement was terminated due to breach in the agreement and poor occupancy rate of the train whose services were launched at an estimated cost of Rs35 crore.

The train launched in 2010 is dubbed as India's equivalent to the Orient Express of Europe, with a passenger capacity of 88, promises to offer an unforgettable ride with kaleidoscopic view of the landscape through its panoramic window and deluxe carriages with contemporary amenities, crisscrossing through Delhi, Agra, Ranthambore, Jaipur, Bikaner, Udaipur, Vadodara and Mumbai.

Cox & Kings had said the termination of the agreement was illegal and claimed that it has invested more than Rs15 crores.

The Delhi High Court had rejected Cox & Kings plea following which it appealed in the apex court.

Dismissing the appeal, the apex court said, "It is no doubt true that the petitioner has invested large sums of money in the project, but that cannot entitle it to pray for and obtain a mandatory order of injunction to operate the train once the lease agreement/arrangement had been terminated.

The court said it was unable to accept the submission that the agreement was akin to a partnership.

"Such submission had been rightly rejected by the Division Bench," Justice Kabir writing the judgement said.

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Fresh thinking for underground Metro in Mumbai

Providing underground Metro in Mumbai makes sense. However, the government should seriously consider introducing BRTS if it is worried about nearly 4,000 fatalities every year on the railway system

Though the Government of Maharashtra (GoMah) through the Mumbai Metropolitan Region Development Authority (MMRDA) may not acknowledge that there is enough knowledgeable people among the citizens, it seems to be taking some cues from what is being put up in the public domain by some activists. After getting varied feedback from citizens across the society for its 33.5 km Metro Line III which goes through Mantralaya precinct, dense Girgaon areas, upper middle-class Prabhadevi, the business district of BKC, the slums around the airport terminals and the industrial areas of MIDC and SEEPZ and also experiencing stiff resistance by residents and shopkeepers of Bandra-Santacruz stretch and Charkop slums, GoMah has realized that executing infrastructure projects cannot be a cake walk. They seem to have realized that one cannot have one standard for one set of people and another, aggravating norm for others. It has realized, hopefully fully, that democracy has to be reflected on the streets too.

There are near insurmountable problems of putting up the Metro Rail in Mumbai. Let us list them out:

  1. During peak period, which extends over two sessions of four hours and a very small dip during period in between during the day, road space is practically in short supply. (This does not mean increasing road space by widening roads or putting long viaducts is an answer). Blocking a road for any duration of time means finding alternative routes of commute, which Mumbai does not have.
  2. Elevated Metro Rail, Mono Rail or road viaduct would block roads during construction leading to great inconvenience not only to the motorcar user and bus operations but also make the vulnerable pedestrian and bicyclist inconvenienced as well as subjected to risk to life and limb.
  3. Mumbai is already a dense city. It also has very dense underground utility services lines which cannot be disrupted at any cost. Elevated Metro Rail and Monorail need to have foundations for the pillars to support the spans. Foundations have to take these underground utility services into account. This has cost implications and more importantly time implications.
  4. At stations sites, not only the underground utility services problems accentuate but the entire road space gets congested by ugly structures every kilometre, spoiling whatever aesthetics the city has had. After all this, the commuter who becomes a pedestrian after the journey or is one before the journey on the Metro has to negotiate restricted pathway space with all kinds of obstructions.

 

The list can be expanded, no doubt, but recognizing such near insurmountable problems that will make living in Mumbai a curse and to tackle it intelligently, minimizing people’s hardships is what a good government should be doing.

In that direction the step has been take by GoMah through MMRDA by reconsidering the over-ground Metro Route II from Charkop to Mankhurd via Bandra to making it an underground line just as the Colaba-BKC-Airport-SEEPZ Metro Route III has been considered. They have also realized that the Dahisar-Andheri Metro Line IX must also be considered now itself, as that is the need. At no stage can the Metro be above ground for the points enumerated above.

Going underground by itself will not leave city undisturbed if one adopted conventional designs. Access to the stations must be innovatively designed and also should be placed sufficiently deep so that all construction work is done avoiding all utility service lines and by not Cut and Cover Method (CCM) but using Tunnel Boring Machine (TBM).

Frequency of Metro Rail service should be as little as one minute and three coaches per train, thus there could be considerable saving in the costs of underground stations. With coach capacity of 300, at one minute frequency, the service capacity works out to 3 x 300 x 60/1 = 54,000 pphpd (passengers per hour per direction) as against proposed six-coach train at three minute frequency giving a capacity of 6 x 300 x 60/3 = 36,000 pphpd.

 

At station locations, adjacent buildings must be acquired and access to station platforms must be from these new station buildings and not from footpaths. The persons from whom the buildings would be acquired must be provided for adequately considering what he would have benefited by being in such proximity to the Metro Rail Station. Extra space could then be used for housing some of the Metro Rail personnel and the rest commercially exploited if possible and necessary.

At 20m/day and 300 working days in a year, the number of years the 150 km Metro bore  will take 150 x 1000 / 20 / 300 = 25 years. One can deploy four TBMs and the period can be reduced to six years.

Finance will then be the main problem.

Architect Nitin Killawala, one of the petitioners for demanding underground Metro, has presented to MMRDA at the public hearing few months back an alternative to the Line II and Line III by suggesting a route plan. Perhaps the MMRDA did see some sense in that and have begun to rethink. Whichever way it is, if the planners do hold public presentations say every six months rather than reaching only through the media, a lot could be achieved. Planners like Mr Killawala can contribute to the process of planning.

Since the finance problem cannot be sorted out overnight, the project will take time. Therefore an alternative mobility plan must be worked out and quickly implemented. Priority has anyway to be provided to walking and cycling infrastructure —Tokyo has combined cycling and pedestrians pathways and is working wonderfully well—but the Bus Rapid Transit (BRT) needs to be also prioritized.

At Rs1,000 crore per km of the underground Metro, the cost could come to Rs1,50,000 crore or if innovative methods utilized it could be brought down to Rs1,00,000 crore. On the other hand even at Rs20 crore/km, a 200 km network of BRTS will cost Rs4,000 Cr only. This can be completed in three to five years.

Thus, if Metro is going to be provided then

  1. It should be underground all over
  2. Plan for a three-coach train running at one minute frequency and make underground stations absolutely only for boarding and alighting purpose.
  3. Acquire adjoining properties where stations will be located and convert that as station
  4. Build infrastructure prioritizing facilities for walking, cycling and the BRT.  Mumbai need not wait for Metro to get completed.


(Sudhir Badami is a civil engineer and transportation analyst. He is on Government of Maharashtra’s Steering Committee on BRTS for Mumbai and Mumbai Metropolitan Region Development Authority’s Technical Advisory Committee on BRTS for Mumbai. He is also member of Research & MIS Committee of Unified Mumbai Metropolitan Transport Authority. He was member of Bombay High Court appointed erstwhile Road Monitoring Committee (2006-07).  He is member of the committee constituted by the Bombay High Court for making the Railways, especially the suburban railways system friendly towards Persons with Disability (2011 ). While he has been an active campaigner against Noise for more than a decade, he is a strong believer in functioning democracy. He can be contacted at [email protected])
 

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COMMENTS

Sudhir P Badami

4 years ago

On matter of making Railways accessible to Persons with Disability, the subject of raising platform levels has been tackled. Please read article No 47 & 48 at website https://sites.google.com/site/writingsofsudhirbadami/.
There is another article that gives ceratain details of schemes that would make travel for all, plus the PwD and Elderly, pregnant women and infirm etc safer. I will upload it soon.

Bapoo Malcolm

4 years ago

Letter to the editor sent the day before yesterday: 05 July 2012

As someone who narrowly escaped death at Dadar’s platform # 4 two days ago, this comes from the horse’s mouth. 1) The gap is too wide, no matter what the PRO says. Increasing the height by 11 cms. Is just 4 inches more. It’s too little. Think of the passengers carrying umbrellas, bags, purses. The elderly, the disabled. How can they access their special compartment if it is beyond reach? 2) The trains stop for too short a time. This has been a Dadar feature for years. The guard cannot see the full length of the train; 12 bogies on curved platforms is an impossibility. 3) There is no audible signal before the trains start, to indicate imminent movement usually followed by a very fast pick-up. That signal will save many lives. It costs little to install and was a standard fitting years back. 4) The habit of crowding the doorway, at all times, needs to be curtailed. Luggage should be confiscated if left there.
Purposeful lack of safety features is tantamount to culpable homicide. Not spending money in raising ALL platforms adequately is criminal. It may be time for a PIL.
And finally, bring back Dinesh Trivedi. We need safety first, not Mamta Banerjee. One doubts if she can board a train at Dadar!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
AND what happened yesterday!

My wife, in order to avoid the killer platform # 4 (?), the fast train one to Churchgate (Up), went to the slow train platform last night. There she fell due to failed lights and an ill surfaced platform. She is lying in bed just now, badly hurt, having been sent back from work. The hospital bill is Rs. 1,400/-, we were there till midnight.

She was told by the regulars that there had been other accidents on the spot too. Where is the PRO and his tall talk? These guys are killers, ensconced as they are in their ac offices and leaching their salaries. Ask them to send their families by cattle class. Do they dare?

Also, last Monday the entire bridge (north) was dark and many fell at the top of the stairs. I was there.

Bapoo M. Malcolm

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