Fccb of Jaiprakash Associates

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Foreign Currency Convertible Bond (FCCB) Crisis in India Inc. Case study of Jaiprakash Associate
FINANCIAL MANAGEMENT
(FM) Assignment
EPGDIB 2011-2013

Submitted To: Dr. Sheeba Kapil Faculty IIFT, New Delhi

Submitted By:GROUP No. 12 Anil Kumar Dwivedi (Roll No. 11) Ashok Durga (Roll No. 19) Deepak Garg (Roll No. 23) Neha Aggarwal (Roll No. 44) Vinod Gupta (Roll No. 73)

FCCB Crisis in India Inc. Group# 12
(EPGDIB 2011-13)

EXECUTIVE SUMMARY
This Objective of this Project Report was to study "Foreign Currency Convertible Bond Crisis in India Inc. based on Case study of Jaiprakash Associate”. This report is based on our own work carried out during the course of our study under the supervision of Dr. Sheeba Kapil.

Details of the candidates are as follows: GROUP# 12 NAME
Anil Kumar Dwivedi Ashok Durga Deepak Garg Neha Aggarwal Vinod Gupta

ROLL NO.
11 19 23 44 73

Page 2

FCCB Crisis in India Inc. Group# 12
(EPGDIB 2011-13)

Table of Contents
1. 2. INTRODUCTION ............................................................................................................................... 4 FCCB An Overview........................................................................................................................... 5 2.1. 2.2. 2.3. 2.4. 2.5. 2.6. 3. 4. 5. REGULATIONS ......................................................................................................................... 6 ELIGIBLE BORROWERS ............................................................................................................ 6 AMOUNT AND MATURITY ....................................................................................................... 7 TAXATION ON FCCB ................................................................................................................ 7 BENEFITS OD FCCB .................................................................................................................. 8 DISADVANTAGES OF FCCB ...................................................................................................... 8

FCCB Redemption Pattern in India.................................................................................................. 9 FCCB CRISIS ................................................................................................................................... 15 Case Study of FCCB on Jai Prakash Associate................................................................................ 18 Some Facts ................................................................................................................................. 19 Some Numbers Games ............................................................................................................. 19 The Real Issue............................................................................................................................ 20

6. 7.

SUMMARY ..................................................................................................................................... 20 REFERENCES .................................................................................................................................. 20

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FCCB Crisis in India Inc. Group# 12
(EPGDIB 2011-13)

1. INTRODUCTION
The equity market has witnessed a dramatic change. Two years ago, stocks flared up merely on talks of companies issuing foreign currency convertible bonds (FCCBs). Now investors shiver on thinking about the FCCB exposure of Indian companies. At that point, FCCBs were considered a very convenient and quick way of raising funds for organic and inorganic expansion. It was possible to raise funds through FCCBs at competitive interest rates compared with interest rates prevailing in the Indian market.

The massive plunge of the stock market and the rupee depreciation against the US dollar has completely changed the equation for FCCB-issuing companies. This unexpected turn of...
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