L&T Infra launches tax-free bonds; mulls ECB route for funds

Diversified conglomerate L&T’s infrastructure finance arm today said it is looking to broadbase fund sources and exploring external commercial borrowing (ECB) route even as the global markets remain weak.

L&T Infrastructure Finance has raised $90 million through the ECB window this fiscal and is aiming to raise more, Chairman and Managing Director of L&T Finance Holdings Mr Y M Deosthalee told reporters here. L&T Infrastructure Finance is a unit of the recently-listed L&T Finance Holdings.

L&T Finance Holdings President Mr N Sivaraman said the company has total headroom to raise up to Rs 600 crore.

Under the existing norms a dedicated infrastructure finance company like it can raise up to 50 per cent of its previous fiscal’s networth through ECB route, he said.

Mr Deosthalee conceded that international markets are in jittery at the moment but said the company will still scout for funds through the ECB route for reducing dependence on banks in a higher interest rate environment.

Up to 60 per cent of the firm’s funds are raised from banks at present while the rest comes from bonds subscribed by individuals and mutual funds.

Retail tax-saving bond issue

Meanwhile, the company also launched Rs 1,100-crore retail tax-saving bond issue with a coupon rate of 9 per cent.

The 10-year maturity bonds, which hit the market on November 25 and close December 24, can be traded on the bourses after a five-year lock-in and an individual can invest a maximum of Rs 20,000 to save income tax.

The company’s total loan book stood at Rs 8,790 crore with a 37 per cent exposure to the troubled power sector.

Stating that its entire exposure is to private sector projects, Mr Deosthalee said there is an “urgent need” to tackle issues on power generation front.

L&T Infra had raised Rs 656 crore through a similar issue last fiscal.