The main aim of this document is to analyse the following: 1) What shd be done to go for FCCB?

2) How do we go about FCCB? 3) Future expansion plans figures 4) Integrated financials analysis (xlsx) An Indian company or a body corporate, created by an Act of Parliament may issue FCCBs not exceeding US $ 500 million in any one financial year to a person resident outside India under the automatic route, without the approval from Government or the Reserve Bank. Where the amount of fund to be raised is to be USD 20 million or less the minimum maturity period should be not less than three years. If the amount to be raised is more than USD 20 million and upto 500 million the minimum maturity period should not be less than 5 years. FCCBs upto USD 20 million can also carry a call and put option provided the option shall not be exercised until minimum maturity period of 3 years has expired. ANALYSE THE CURRENT FUNDING REQUIREMENT FOR INTEGRATED SAIL AND RINL and find out the minimum maturity period It has now been decided to permit premature buyback of FCCBs. For the buyback of FCCBs out of rupee resources the RBI has fixed a minimum discount of 25% on the book value. The amount of the buyback is limited to US $50 mn of the redemption value per company wherein this window will be kept open till March 09. To Buyback FCCB out of Foreign Currency minimum discount of 15% on the book value. WHEN ARE YOU PLANNING TO BUYBACK THE SHARES? Criteria for issuing FCCB prior permission from Dept of economic affairs, ministry of finance or GOI consistent track record for a period of 3 years Issuing company should deliver ordinary shares or bonds to domestic custodian bank. Total foreign investment (shares + FCCB) made cannot exceed 51% of issued or subscribed capital

\ Transfer of FCCB by one non-resident investor to another non resident investor will not give raise to any capital gains and hence non taxable in India. Tax exercised on dividend on the converted portion of bond is subjected to deduction of tax at source @ 10% What will be the bond of equity convertible option and when do we exercise CALL option and PUT option?

Do we need to have an investor for raising FCCB? (spice jet contacting PE firm WL ross and co) Investors have the option of converting FCCB into GDRs or to shares at a later point in time coupon rate is nominal and it has to be redeemed on that particular date. Favourable factors:
Low interest rate Equity up side Investor confidence in India growth story Increasing profile of mid cap corporates FCCB : Bond component and equity component NPV of bond component future cash flows discounted at LIBOR rate Value of call option black scholes model For issuer : cost of capital = post tax coupon of bond + cost of equity