The Hindu : Business : FCI's bond issue oversubscribed

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Wednesday, Feb 23, 2005

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FCI's bond issue oversubscribed

By Our Special Correspondent

NEW DELHI, FEB. 22. The Food Corporation of India, the Central Government agency that procures foodgrains for the targeted public distribution system, raised Rs. 1,000 crores through its maiden bond issue that hit the market on Monday. Although the issue was oversubscribed to the extent of Rs. 9,000 crores, the FCI has permission to raise only Rs. 1,000 crores in the first tranche out of Rs. 5,000 crores it proposes to raise.

The first tranche was presented to the Union Food and Agriculture Minister, Sharad Pawar, here today by the FCI Chairman-cum-Managing Director, V. K. Malhotra, in the presence of the Food Secretary, S. K. Tuteja. This was the first instalment of the private placement of the maiden issue carrying an average rate of 7.12 per cent for a tenure of 5-10 years.

The issue is part of the FCI's long-term plan to restructure over Rs. 25,000-crore debt from a consortium of banks led by State Bank of India. It comprises five-year, seven-year and ten-year bonds (for a total of Rs. 1,000 crores) with coupon rates of 7.1 per cent, 7.2 per cent and 7.3 per cent respectively.

"If the banks do not further drop their interest rates on the borrowing by the FCI, then we may take this route to raise money,'' Mr Pawar said.

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