(17 November 2007 7:30 pm)

MUMBAI: Subhash Chandra may have agreed to invest Rs 10 billion to grow Wire & Wireless (India) Ltd, but the fund-raising plans of the cable company has been severely affected this fiscal.

Though the promoters have increased their stake by around five per cent, no capital has flown into WWIL as the purchases were made in the open market.

Earlier WWIL had announced plans to offer a preferential issue of convertible warrants to Jayneer Capital (a promoter group company) translating to five per cent of the company's existing equity. With the conversion price at Rs 122 per share, this meant WWIL would have received Rs 1.31 billion from the promoter group. But the Sebi (Securities and Exchange Board of India) regulations did not clear this as it was too close to the listing of the company.

"WWIL couldn't receive funding from the promoters as the preferential issue did not meet the regulatory requirement at that time. Meanwhile the promoters have increased their stake by around five per cent by purchasing in the market," a source in the company says.

The promoters can't further increase their stake this fiscal. Sebi does not allow promoters to hike their stake beyond five per cent in a fiscal year, the source adds. The promoter holding in WWIL stood at 48.64 per cent (30 September 2007), up from 44.02 per cent (31 March 2007).

Jayneer Capital bought in several tranches and its holding increased from 23.51 per cent to 28.23 per cent during the March-September 2007 period.

WWIL's plans to raise Rs 4 billion through a qualified institutional placement (QIP) also could not sail through the Sebi regulatory hurdle for the very same reason: too close to the listing.

WWIL, though, has raised debt of Rs 2.5 billion, says the source.

WWIL is considering various financing options. "We are in talks with strategic and financial investors," says the source.

WWIL's shares dipped from a high of Rs 139.9 (11 january 2007) to a low of Rs 32 (17 October) on the BSE. But since November the scrip has rallied and gained 14.73 per cent on Thursday to close at Rs 52.95. On 16 November, it further rose 6.33 per cent to end at Rs 56.30.

WWIL intends to invest Rs 10 billion over the next four years. This will be mainly for acquisitions, capex and cost of acquiring digital customers.