Ifci Ready To Lend Chandra $500 M
Industrial Finance Corporation of India (IFCI) is positively inclined to go ahead with a request for a Rs 500 crore loan put up by media baron Subash Chandra for his ambitious satellite telephony project .
A top source in the bank said: "We are going ahead with the project but there are some conditions which need to be agreed to. We are in an advanced stage of negotiations with them. As this is the first such project of its kind which we are financing there are lot of details which need to be worked out and appraised."
Chandra came to the limelight with his Zee group of channels. The telephony project is one of his biggest gambles ever.
The total investment in the project is estimated at $1 billion. It was supposed to have come on stream by 1998. But the project has got delayed due to numerous reasons which include changes in partners and change in the financing structure of the project.
Sources in the bank said that IFCI has asked Chandra's ASC Enterprises to firm up the remaining portion of the loans (total loan component of the project is around Rs 2,000 crore) through other Fis and institutions.
It has also queried Chandra on certain technical parameters, including possible problems which might arise in the supply of cellular phones needed for the project. The phones are being developed specifically for the project and are not available off the shelf.
Bank sources have also queried whether the total investment required can be benchmarked with any similar project in any part of the world. "What we want to know is whether the project cost of $1 billion is right."
However bank sources point out that the project is viable even if 20 per cent of the projected subscribers pick up the phones.
The telephony project is being set up as a joint venture with an approved foreign equity of $75.95 million which will constitute 49 per cent of the total equity in the company.
Lockheed Martin Systems which will supply the satellite for the project will invest $50 million in the project which would constitute 14 per cent of the joint venture's equity.
Another 35 per cent of the equity will be brought through an NRI |OCB venture Afro Asian Communications Mauritius through which Chandra and his associates will put in $124.3 million.
In India, apart from Chandra the Essar group has also committed to bring in equity to the project of around $25 million. It is also hoping to rope in state owned Videsh Sanchar Nigam Ltd. Chandra has also recently got a clearance from the government to own the satellite for the project from India.