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Desi debt is sweeter

Wipro finds that $28 million is cheaper to come by
in India than abroad. Thanks to the battered rupee.

Consequently, the company has shelved its plans for external commercial borrowing, opting instead to raise Rs 1 billion in domestic debt.

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Wipro Corporation, earlier this year, had said it proposed to raise $28 million, or Rs 1 billion, through external commercial borrowings.

The company has now changed its plans after Indian banks have lowered their prime lending rates.

Wipro is currently evaluating other debt instruments. Beside lower interest rates, the high premium of 7.5 per cent on the foreign loan due to the volatility of the rupee vis-a-vis the dollar has made domestic debt more attractive for the company.

"Had we raised money overseas it would have cost us about 14 per cent. Today, domestic debt is cheaper, however, we are still talking to a number of banks,'' S C Senapaty, vice-president, Wipro Corporation, has said.

He said the debt would be used to retire high interest borrowings. In 1996-97, Wipro Corporation paid interest of Rs 610 million. During the year, it reported revenues of Rs 16.14 billion.

Senapaty claims that this year the company is expected to report sales of Rs 18.43 billion with profit before tax of Rs 1.13 billion. By 2000, growing at 28 per cent annually, he expects Wipro will post profit before tax of Rs 3.88 billion.

The Credit Rating Information Services of India Limited is evaluating the company's debt programme. Senapaty has refused to comment on the company's commercial paper programme.

- Compiled from the Indian media

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