RAPAPORT... Mehul Choksi, the chairman of Gitanjali, met with a consortium of banks in Mumbai this past week in pursuit of $152.2 million (INR 10 billion) in additional funding. The integrated diamond and jewelry firm has been struggling for financing after a sharp depreciation of the rupee and recent gold import curbs that were implemented by the Reserve Bank of India (RBI).
Gitanjali shares have lost 89 percent in value, declining from about INR 562 a share at the beginning of June to a low point of INR 59 a share on August 8. The share price has since recovered slightly to close Friday at INR 72.15 a share.
The company requested the funding to bridge the rupee to dollar gap, according to a banker present at the meeting. Prior to RBI gold import curbs, banks that financed Gitanjali’s gold imports extended a letter of credit, which the company now wants to convert into working capital, the Economic Times explained.
Lenders initially agreed to loan Gitanjali funds when the rupee exchange rate was between INR 52 and INR 53 to the dollar. Last week, the rupee reached a record low of INR 69.22 against the dollar.
The banks have loaned $684.8 million (INR 45 billion) to the Gitanjali Group and around $456.6 million (INR 30 billion) to Gitanjali Gems, the flagship company that owns the Nakashatra, Gili, Sangini and Asmi brands among others.
Following the financing meeting, the bankers agreed in principal to support the company provided that Gitanjali was able to provide additional collateral.
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