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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Institutions

Sagar Pharma Ltd has paid-up equity capital of Rs 200 crore, and the aggregate FPI limit is the sectoral cap of 74%. FPIs presently hold Rs 120 crore of this equity, and a single FPI holds Rs 18 crore. Ignoring dilution, what is the maximum additional equity (in Rs crore) that FPIs in aggregate may acquire, and does the single FPI breach its own limit?

The aggregate cap is 74% of Rs 200 crore, which is Rs 148 crore. With FPIs already holding Rs 120 crore, the headroom is Rs 28 crore. The single FPI holds 9%, which is below the 10% ceiling, so it does not breach its limit.

  1. ARs 28 crore; single FPI is within its limitCorrect
  2. BRs 28 crore; single FPI breaches its limit
  3. CRs 148 crore; single FPI is within its limit
  4. DRs 80 crore; single FPI is within its limit

Explanation

Aggregate limit = 74% of 200 = Rs 148 crore. Headroom = 148 - 120 = Rs 28 crore. Single FPI holding = 18/200 = 9%, below 10%, so no breach. Rs 148 crore ignores existing holdings, and Rs 80 crore wrongly uses 200 - 120.

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