India Inc's ECBs up 27% to $4.2 bn

Cheaper funds abroad have led more Indian companies to tap the external commercial borrowing route. They raised $4.2 billion (Rs 18,900 crore) in July this way, 27 per cent higher than the $3.3 bn in the previous month.

According to Reserve Bank of India data, the ECB dues of Indian companies as on March 31 this year were $88.27 bn. Of the July raising, $3.7 bn was under the automatic route, by 92 companies. The remaining $500 million was raised via the approval route, which requires a case-by-case okay by the central bank.

Under the automatic route, Reliance Industries raised $1.1 bn for re-financing of old loans and NTPC raised $500 mn for expenditure on capital goods, through ECBs. Vodafone Essar and Vodafone Essar Mobile Services raised $110 mn and $200 mn, respectively, through ECBs via the approval route. The central bank has asked for clarification on the end-use of the funds raised by companies under the latter route.

Advanta India, a multinational seed company that raised $50 mn, was the only one to take the Foreign Currency Convertible Bonds route. Borrowings abroad by Indian companies have been on a steady rise due to the high interest rates in the domestic market. “Indian companies are finding it cheaper to raise funds overseas,” said Samiran Chakraborty, regional head of research at Standard Chartered Bank.