India Inc's external borrowings fell 29% in April

With rising uncertainty in global markets and mismatch in pricing expectations, borrowings from abroad by Indian companies fell by $1 billion in April, down 29 per cent to $2.73 billion from the $3.83 billion in March.

In March 2011, the comparative figure of borrowings was $5.06 billion, which fell to $2.06 billion in April. Liquidity was tighter last year than now.

Company executives and bankers said with the long-term refinancing operation in Europe, liquidity was not an issue. However, international banks had turned very cautious in fresh lending or exposure, partly due to safety concerns.

Of the total raised, $1.62 billion was via the automatic route by 66 companies. The other $1.11 bn was raised through the approval route, requiring case-by-case approval by the Reserve Bank of India.

J Akilan, chief representative–India for BBVA, the European lender, said the uncertainty in global financial markets due to factors like the euro zone crisis weighed on fund raising. Also, the depreciating rupee has made companies adopt a wait and watch approach.

A senior executive in the corporate banking unit of another global bank said some Indian companies sought quotes (rates) lower than the cost of funds. This led to mismatch in expectations and stretching of the time for fund raising.

GO Airlines (India) Ltd contracted external borrowings worth $795 million for importing capital goods. The loan tenure is 99 months, according to RBI data. Under the automatic route, Posco Maharashtra Steel Ltd raised $443 mn for import of capital goods, while Bangalore Metro Rail Corp’s borrowings were $250 mn for railway projects. JSW Steel raised $276 mn for importing capital goods and to modernise operations.

IRB Ahmedabad-Vadodara Super Express Tollway raised $100 mn for road projects. The tenure was seven years and one month. Engineering major Larsen & Toubro Ltd raised $100 mn for capital goods expenditure. Its tenure is six years and three months.

3i Infotech, an ICICI Bank-supported company, raised $130 mn through foreign currency convertible bonds to redeem older convertible ones. Faced with debt, the company was referred to the corporate debt restructuring forum. Its lenders have cleared the package, which provides an interest payment holiday and a cut in interest rate.

Bharat Forge Ltd, the Pune-based engineering outfit, raised $40 mn to pay off FCCB investors.