For the first time since September 2008, Indian companies borrowed over $2 billion (around Rs 9,800 crore based on current exchange) in a month through the external commercial borrowing (ECB) route.
According to the latest data released by the Reserve Bank of India this evening, during July 2009, Indian companies borrowed $2.02 billion through ECBs, as against $2.47 bn during the corresponding period last year. Between April and July this financial year, ECB borrowings have been of the order of $ 4.73 bn (Rs 23,177 crore) as against $6.52 bn (Rs 31,256 crore at the exchange rate in July 2008) in the corresponding period last year.
Of the $2 bn raised during July this year, a quarter was accounted for by Vedanta Aluminium, which borrowed $500 million (over Rs 2,400 crore) overseas to meet its rupee expenditure. The other major user of the ECB window was Sasan Power, being developed by the Anil Dhirubhai Ambani Group, which raised $486 mn for import of capital goods. While the tenure of Vedanta’s ECB was five and a half years, Sasan has raised funds for 14 years and three months to develop the ultra-mega power plant.
Bankers say it would take a while for companies to step up overseas borrowings, as cost is still a factor and Indian companies were also being cautious in expanding their facilities. “We are seeing small-ticket size, which will pick up in a few months,” said one from a European bank.
“A pick up in both ECB and the FCCB market is around the corner,” added Kaustubh Kulkarni, director, capital markets, at Standard Chartered.
