Indian Inc continued with its debt retiring tilt for the second consecutive year. Data sourced from annual reports show that 162 firms in the private sector reduced secured and unsecured borrowings by Rs 6,000 crore during the 2001-02 financial year.
They brought down secured debt by Rs 4,316 crore to Rs 18,616 crore and unsecured debt by Rs 1,684 crore to Rs 4,711 during the year.
Corporates seemed eager to retire bank loans as early as possible. The 162 firms repaid Rs 2,541 crore bank loans in the year, accounting for 42.35 per cent of the total repayment of loans.
Rs 1,000 crore worth of loans from financial institutions (16.6 per cent of total) was also repaid.
The rest of the repayments were in the form of debentures, fixed deposits and foreign currency loans.
The principal cause of repayment of loans has been the recession in almost all sectors. With little to no profitable avenues for investment available, the corporate sector preferred to reduce its debt burden, in the process saving on interest costs.
The performance of 2,568 companies for the year to March 31, 2002, showed that there was an aggregate 3.15 per cent reduction in the interest burden.
The study also shows that repayment has been across the spectrum -- from small corporates to big conglomerates, from loss-making firms to profit-making ones.
Larsen & Toubro topped the debt reducers' list with its total borrowings in 2001-02 declining by Rs 720 crore to Rs 3,544 crore.
Tata Engineering, which suffered a setback on account of heavy borrowings, reduced its debt burden by Rs 691 crore.
ITC came next, with a debt reduction of Rs 574 crore, followed by Century Textiles by Rs 270 crore, Recron Synthetics by Rs 177 crore and Sterlite Industries by Rs 166 crore.
