Mumbai: The Jawaharlal Nehru Port Trust (JNPT) has forwarded a proposal to the Indian government to mobilise Rs 500 crore from the capital market. This is in light of the tight position JNPT faces with investments of around Rs 864 crore tied up in various securities like bonds of public sector undertakings (PSUs), banks and financial institutions.

The port, which is on course to be corporatised, is currently looking for ways to repay its World Bank loan arrears of Rs 435 crore, accumulated up to 31 March 2001. Says a JNPT official: “We recently mooted a proposal with the government to mobilise Rs 500 crore from the market through a private placement of bonds. We are expecting the government’s approval shortly.”

He says JNPT had looked at premature encashment or withdrawal of its funds invested in various securities worth Rs 846 crore. “But this can only be done at a considerable loss. So, after exploring several options, we decided to mobilise funds through private placement of bonds.”

JNPT has invested Rs 337 crore in bonds of PSUs, Rs 230 crore in the US-64 scheme and Rs 257 crore in other schemes of Unit Trust of India, Rs 80 crore in bonds of banks and financial institutions, and Rs 12 crore in TDRs of banks.

The port will suffer substantial losses if it were to liquidate its investments in these securities to part-finance its World Bank loan arrears. According to estimates, JNPT will suffer a capital loss of over Rs 138 crore if it were to liquidate its investments in the US-64 alone based on current NAV.

Premature encashment of investments made in other UTI schemes having different maturity dates is also considered improper. JNPT’s US-64 investments will mature in May 2003. Furthermore, withdrawal of funds invested in bonds of banks, financial institutions and PSUs is also ruled out before the minimum lock-in period.

Earlier, the central government had turned down JNPT’s plea to convert the World Bank loan arrears of Rs 435 crore into equity while firming up its capital structure in a corporatised set-up. It even went to the extent of directing the port to pay up the World Bank loan arrears immediately. JNPT had argued that such a huge outflow of cash would adversely affect its liquidity and profitability during the last financial year and subsequent years as well.