Foreign Debt Crisis Management

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  • Topic: Reliance Anil Dhirubhai Ambani Group, Reliance Communications, Companies based in Mumbai
  • Pages : 13 (3768 words )
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  • Published : October 19, 2012
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International Financial Management (IFM)

Individual Project Report

Title of the project- Foreign Debt crisis management of RCOM

Batch–PGCBM -21
Centre –DAKC, Mumbai
Name- Rajesh Kumar Verma
Email- rkv3466@gmail.com, rajesh.kr.verma@relianceada.com
SMS No- 110387
SID- RB12044
Table of Contents

1. Introduction
2. Purpose of the assignment
3. Gratitude to Professor and support staff
4. Introduction of IFM Assignment topic- Foreign Debt Crisis Management of RCom 5. Company Profile
6. Assignment analysis and study

A. Reliance Communications has secured loans from a host of Chinese banks to refinance $1.18 billion B. RCom has filed a prospectus with the Singapore Stock Exchange and plans to divest as much as 75% stake in Flag Telecom to raise about $1 Billion i) Background of Reliance Globalcom (Flag Telecom) ii) Cable network of Flag Telecom

iii) Solutions offered by Reliance
iv) Strategic Move by Reliance to fight with debt crisis

C. Reliance Communications has put on hold the initial public offering of its undersea cable unit Flag Telecom in Singapore D. Impact of heavy debt on company's financial credit worthiness and impact of rupee devaluation on overseas loan E. The impact of the high-debt levels has been further compounded because of the steep depreciation of the rupee 7. Impact of Un-hedged foreign currency debts due to rupee devaluation 8. Conclusion

INTRODUCTION

As a student of International Finance Management (IFM) I am glad to learn the concepts, principles and methodologies of the subject. I am a Telecom professional and working with Reliance communications at Mumbai, I wish to present my IFM assignment on the Debt crisis management by RCom and impact of un-hedged exposure aspects of RCom – a major Telecom Service provider in India.  

PURPOSE OF THE ASSIGNMENT

The purpose of this assignment is to comply with the comprehensive assignment as part of academic curriculum.

GRATITUDE TO THE PROFESSOR AND SUPPORTING STAFF

I am extremely grateful to our professor Dr H K Pradhan for sharing his invaluable guidance, experience and mentoring. I am also very thankful to Mrs. Nitu Prasad and the various coordinators for helping us in completing my course.

Introduction of IFM Assignment topic – Foreign Debt crisis management of RCOM

The topic of assignment is to study the debt crisis management and impact of un-hedged exposure aspects of RCom – a major Telecom Service provider in India.

RCom has entered in high-debt levels i.e Rs 35000 crore and it has been further compounded because of the steep depreciation of the rupee, where nearly three-fourths of Loan is in foreign currency.

RCom has implemented refinancing strategy for the loan outstanding by Industrial and Commercial Bank of China (ICBC), China Development Bank (CDB), Export Import Bank of China (EXIM), and other banks. This strategy will be benefited from extended loan maturity of seven years and attractive interest cost of about 5 per cent and the loan would be used for refinancing the entire redemption amount of FCCB.  

In this assignment, I have studied the financial crisis management part which is managed by the company with some strategic move of loan refinancing and a smart move of fund raising through listing of Flag telecommunication at Singapore and set an indicative price range for the Singapore initial public offering of its undersea cable unit (Flag Telecommunication) that could raise as much as $1 billion and help to reduce its debt load. I have also studied the impact of heavy debt on company's financial credit worthiness and impact of rupee devaluation on overseas loan taken from China and loss incurred due to huge exposure of un-hedged transactions.

COMPANY PROFILE

Reliance Communications...
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