According to newspaper reports, ICICI Limited is picking up a 23.7% stake in Elbee Services, a courier company. The move is a part of a larger financial restructuring exercise under which ICICI is converting its US$ denominated debt into a rupee loan of Rs 114 m.
ICICI is India's second largest financial institution, with a major presence in almost all areas of financial services. The company has an asset base of Rs 585 bn.
ICICI has opted to covert the preference shares that it held in Elbee. It is apparent from this move that there were problems related to the redemption of preference shares as well as the servicing of the dollar denominated debt. The company's move could be possibly aimed at 'evergreening' the loan. This could be to avoid an adverse fall out on the bottomline of the company.
ICICI has been aggressively cleaning up the non-performing assets (NPAs) in its books ahead of its proposed American Depository Receipts (ADR) issue, slated to open later this year. The company, which has been oft criticised for the high level of NPAs it carries on its books, had recently announced concrete measures to contain them.
Analysts had rated the stock as a 'BUY' as they consider the stock to be undervalued even though the economic conditions are not conducive for growth.
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