Indian firms' overseas borrowing increases by 65 percent in May

By siliconindia   |   Wednesday, 24 June 2009, 01:25 IST   |    1 Comments
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Indian firms' overseas borrowing increases by 65 percent in May
Bangalore: The external commercial borrowings (ECB) market for Indian business has increased by 65 percent. The total overseas loans raised by Indian firms have moved up from $299 million in April to $494 million in May this year. According to the data released by the Reserve Bank of India, about three dozen companies raised capital from overseas market through ECBs and foreign currency convertible bonds (FCCBs). "This is helping Indian companies improve their debt to equity ratio," said Amit Chatterjee, Head-convertibles, ICICI Securities. But, he also pointed out that ECBs were still being raised at historically high rates of two percent over the London Inter Bank Offered Rate. Most of the companies raised overseas funds for import of capital goods, modernization and overseas acquisition. The companies that raised money include Bharat Petroleum ($25 million for expenditures), Bajaj Hindusthan ($20 million for FCCB buyback), Cadila Healthcare ($10 million for overseas acquisition), Skol Breweries ($45 million for importing capital goods) and BOC India ($79 million for importing capital goods). Also, the Suzlon Energy raised over $61 million under the approved route for buy back of its FCCB. However, the Indian companies that raised funds about $25 billion via ECB/FCCB in 2007-08, saw a huge dip after September 2008, with the lowest ever amount raised in April 2009. Providing flexibility to the Indian companies in raising money from overseas, the Government has eased the overseas borrowing norms. RBI has allowed companies to prematurely buy back FCCBs at a discount till December 2009.