New Delhi, Sep 14: Corporate India's external commercial borrowings declined by 44.95 per cent in the first four months of current fiscal to 6.52 billion dollars from 11.85 billion dollars in the corresponding (April-July) period of previous fiscal, clearly indicating an economic slowdown, a study says.
While Indian companies raised 63 per cent of the ECBs for projects and modernisation in the previous year, there was almost no fund raised this year for the same, according to an ASSOCHAM Eco Pulse (AEP) study on ''Channelising the Foreign Borrowings''. The study also reveals that the number of companies raising capital through ECBs route has also witnessed a plunge by 54.29 per cent, from 280 companies during the first four months of FY08 to 128 companies in the same period of FY09.
"Dip in the GDP growth rate of India and global slowdown have kept business heads away from raising capital through ECBs for expansionary, project and modernisation activities in the current fiscal", ASSOCHAM President Sajjan Jindal said.
In the first four months of FY09, maximum finances raised through ECBs were for import of capital goods, which accounted for 79.88 per cent of the total amount. However, in the same period of the previous year, this was as low as 20.19 per cent of the total capital raised.
The appreciating rupee and rising prices of industrial metal has attributed to the rise, the study said.
Funds raised for overseas acquisition, however, witnessed a slight increase from 4.37 per cent in April-July 2007-08 to 5.85 per cent in the same period of 2008-09. But, the number of companies in both the fiscal years for the four month period totalled 10 each.
Finances raised by companies in India for refinancing of old loans witnessed a sharp spike from 0.20 per cent in April-July 2007-08 to 5.16 per cent in same period of the current fiscal. High cost of money and rising metal and energy prices have contributed to the jump in the foreign capital for the same purpose, the study says. Projects contributed a share of 40.34 per cent of the total amount raised during Apr-July FY08. Out of the 80 companies that raised funds for project purpose, Reliance Industries and Tata Motors topped the pile by raising 2,000 million dollars and 490 million dollars respectively.
Among the 90 companies that drew on ECBs for modernisation in April-July 2007-08, Reliance Industries and JSW Steel headed with 500 million dollars and 320 million dollars respecitvely.
During April-July, 99 companies raised funds for import of capital, with Reliance Communication and Coastal Gujarat Power topping the list by raising 750 million dollars and 500 million dollars respectively, the study adds.