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Last Updated : May 21, 2013 02:05 PM IST | Source: CNBC-TV18

Loan refinancing to save $2.5 m in interest cost: Redington

Raj Shankar, deputy managing director, Redington India says the new refinance terms allows for the loan to be repaid at LIBOR plus 3.5 percent instead of 3.5 percent as was earlier.

After refinancing its loan, taken for share buyback purpose in 2012, Redington India is in a position save USD 2.5 million in interest cost for the balance four years. In an interview to CNBC-TV18, Raj Shankar, deputy managing director of the company says the new loan refinance terms allow the company to repay the loan at LIBOR plus 3.5 percent instead of 5.5 percent earlier.

Redington's Mauritius arm, Redington International Mauritius Limited (RIML) had taken a five year term loan in 2012 worth USD 78 million at an all-inclusive interest rate of LIBOR plus 5.5 percent per annum.

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Additionally, Shankar says he is bullish on the company's growth ahead. "For the first nine months of current financial year we grew our topline by about 11 percent and the bottomline by about 14 percent. The last quarter which is January-March quarter has been another good quarter for us,” adds Shankar in an interview to CNBC-TV18.

Below is the edited transcript of Shankar’s interview to CNBC-TV18.

Q: Focusing on your wholly owned subsidiary in Mauritius we do understand that you have refinanced a loan worth around USD 78 million. Can you take us through the refinance terms, which are the new terms vis-à-vis the old terms and what sort of interest saving cost would we see?

A: When we had to buy back the shares of Investcorp in February 2012, while we had funded part of that through an internal cash accrual, there was a certain portion which is about USD 78 million that we had taken a five-year loan from a group of banks.

Now, we had a one year moratorium and subsequent to which we had to pay in eight equal half-yearly installments. So, this is up to February 2017. What we did is we managed to have the same terms, if at all slightly better terms with another multinational bank who is giving us today at LIBOR plus 3.5 percent per annum instead of the LIBOR plus 5.5 percent that we had with the earlier banks when we signed in February 2012. This would result in about USD 2.5 million over the balance four year period for Redington.

Q: We have seen a good amount of demand come in for the iPhone 5 and about 15 percent of your India's segment revenues comes from the distribution of these handsets. How is the business doing and what kind of revenue run rate are you hoping to clock?

A: For the first nine months of current financial year we grew our top-line by about 11 percent and the bottom-line by about 14 percent. The last quarter which is January-March quarter has been another good quarter for us. Our board meeting is scheduled for tomorrow, so at this point in time I cannot share specific numbers. Overall, I am glad that our growth momentum continues.

First Published on May 21, 2013 01:50 pm