International satellite major Alcatel Spacecom and the European rocket launch agency Arianespace have cleared the decks to buy into the Subhash Chandra-promoted Agrani Satellite Services Ltd (ASSL).

It is understood from FIPB (Foreign Investment Promotional Board) sources that Alcatel Spacecom and Arianespace have made individual submissions to the board for their investments in ASSL to the tune of $15 million (9.75 per cent) and $ 5 million (3.25 per cent) respectively for a combined 13 per cent stake in the Rs 1,1500-million satellite project.

The submissions were made yesterday. These individual submissions are under the overall umbrella of up to 74 per cent FDI (foreign direct investment) approved by FIPB on 3rd October. This follows the clearance given on 21 September by the cabinet committee for economic affairs, Ministry of Commerce and Industry, for the proposed investment.

Meanwhile, ASSL is reportedly in talks with a global satellite major for an alliance involving technical, commercial and operational cooperation and a minimum investment of 26 per cent in the company.

ASSL is raising funds for the project at a 1.5:1 (Rs 6900 million: Rs 4600 million) debt equity ratio. Chandra has committed to underwriting the Rs 4600 million if the amount cannot be raised through other sources, as well as expenditures already incurred.

As of now the lead financier for the project from India is the Industrial Development Bank of India (IDBI), which has sanctioned Rs 3,000 million. The Life Insurance Corporation (LIC) has cleared another Rs 750 million for the project.

With this latest infusion, ASSL expects to close debt financing of the project by end-October or early-November.

Alcatel is supplying the satellite which will be delivered 19 months after financial closure. The satellite, with a life-span of 14 years, has 24 ‘C’ band and 14 ‘ku’ band transponders. The promoters expect the project to be cash positive at the start of the second year of operations.