Rediff On The Net, Infotech: NIIT for $18 million external commercial borrowing


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December 9, 1997

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NIIT for $18 million external commercial borrowing

Software major NIIT launched a restructuring programme in 1997-98 to cut down its interest costs. The company is currently negotiating with financial institutions and banks to lower its cost of funds raised at high rates in previous years.

An 'external commercial borrowing' issue of $18 million is in the pipeline and a domestic NCD issue of Rs 250 million is also in the offing.

T O D A Y

• The Seer Hunter
• Largest optical disc unit
• Export to Japan will rise
• NIIT for $18 million ECB

Besides, talks are on with the Industrial Credit and Investment Corporation of India to restructure older term loans raised at an average rate of 17 to 18 per cent.

Approvals for the ECB issue will be sought soon while a Credit Rating and Investment Services of India Limited rating of 'AA' has already been received for the NCDs.

Company President and CEO Vijay Thadani has said that interest cost in 1997-98 should be lower by at least 6 per cent through the above measures. With the general reduction in lending rates, a domestic debt issue was more attractive.

However, the substantial export earnings offer a natural hedge against the steep rupee depreciation witnessed recently. For the current year the company is looking at a capital expenditure of Rs 400 million which will mainly be funded by internal accruals.

The fresh borrowings are mainly to repay the older loans and thereby reduce the cost of debt.

Despite the borrowings, the company does not foresee any significant rise in the debt-equity ratio, which for 1996-97 is 0.49:1.

NIIT is the sixth largest information technology company in India, which in the last few years has been consistently showing a 50 per cent CAGR in revenues.

The company is the third largest software exporter in the country after TCS and Wipro. It is also the first to have measured its performance by way of the economic value added model concept.

NIIT has divided its operations into 125 teams with each team focused on EVA. According to Thadani, investment decisions in the future will only be considered if they result in value addition to the company.

In the past, at least two investment decisions were changed where the value addition was negative.

Earlier:

NIIT begins new incentive scheme

- Compiled from the Indian media

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