Rupee, Volatile Markets Worry Corporates

Corporates expressed concern that the volatile market conditions will make fund raising more difficult for large infrastructure projects. They said rupee depreciation combined with volatility in the stock markets will send out negative signals which the country can ill-afford.

Said K G Ramanathan, chairman and managing director, Indian Petroch-emicals Corporation Ltd (IPCL), "It is difficult to predict the stock market.

The international scene is bad with crash in the South East Asian market and fall in the other market.

The yen, although today stood at 144.5 from 146 it is expected to crash further," he explained.

Though blue-chip and semi blue-chip companies will not be affected so much as they can raise funds through other resources, smaller and medium-sized companies will be hit.

Says Ashwin Dani, vice-chairman, Asian Paints, "It is surely a crisis. We are no more insulated from what is happening around us. Companies with large projects wishing to raise money will be hit."

Many companies will now have to wait till market conditions improve before deciding.

Though no major public issues have been planned now, many companies are planning to hit the market sometime next year to part-finance their large projects. These now will have to wait.

"At home, the fund raising programme of all corporates will be suspended. None of the corporates will now venture in the capital market. There is overall nervousness in the market.

The Indian corporates will have to wait till the international and Asian markets settle down," added Ramanathan.

A feeling has also gained ground amongst corporates that they will have to depend more on domestic debt for their funding plans.

"The current developments will drive corporates further towards domestic debt.This has already happened earlier due to the south -east asian currency crisis. The present situation in the stockmarkets may not detriorate further but it will take along time for the Asian markets to recover," said R V Shahi chairman and managing direcot of the Mumbai based power company BSES.