The Hindu Business Line : Overseas borrowing gets easier for India Inc

The credit squeeze in the overseas markets, especially for India Inc, appears to be easing. Not just the bluechip corporates, even mid-size and small Indian companies are now able to mop up foreign currency resources in view of the positive perception about India among foreign lenders.

A host of Indian companies, ranging from such well-known names as National Aviation Company of India Ltd and United Phosphorous Ltd, to lesser known Saraswati Industrial Syndicate and Sainik Mining & Allied Services, has collectively raised $1.919 billion in June 2009, against $494 million in May 2009 and $1.615 billion in June 2008.

Four times higher

The quantum of funds raised in June 2009 is nearly four times that raised in the preceding month.

According to the RBI’s data on external commercial borrowings/foreign currency convertible bonds for June, the number of companies tapping foreign currency resources is higher at 50 against 36 in May 2009.

Going by the quantum of funds raised, troubled national carrier NACIL tops the list. It raised $830 million via ECB for import of capital goods. DLF mopped up $300 million for project financing and Pepsico India Holdings raised $130 million for import of capital goods.

Among others that tapped the ECB route are Suzuki Powertrain India Ltd ($128.75 million), United Phosphorous and Gestamp Automotive India Pvt Ltd ($50 million each), RAK Ceramics ($9.5 million), Madhucon Projects and Saraswati Industrial Syndicate ($5 million each), JK Paper Ltd and Sainik Mining & Allied Services ($3 million each), etc.

Rolta India and Simbhaoli Sugars raised $50 million and $5 million respectively for foreign currency convertible bonds buy-back.

Positive view

According to Mr Joel Akilan, Chief Representative (India) of Spanish bank BBVA: “The ECB data clearly indicate that international lenders have a positive view of the Indian economy.

“This is underscored by the fact that Indian corporates are now able to access ECB cheaper at 75-100 basis points over LIBOR against 450-500 basis points about a year ago.”

In the first quarter of FY2009, India Inc raised $2.711 billion via ECBs against $4.052 billion in the corresponding previous period.