The Untapped Potential

maturity at the longer end. These are mainly fixed rate instruments, though in recent years a few variations in the form of floating interest rate bonds, zero coupon bonds and partly paid stocks have entered the market.

The size of the market is staggering. According to an estimate, the total outstanding central government dated debt, as at the end of 1996, was Rs 1,82,180 crore; in addition, outstanding amount of treasury bills was Rs 6500 crore in the case of 91 day bills, and Rs 6789 crore in case of 364 day bills. And market sources firmly believe that this market will expand even further in size in the years to come.

 

There are very few corporates who have shown interest in the market. Among the few who have are Hindustan Lever, Great Eastern Shipping, Telco, Mahindra and Mahindra, Bajaj Auto, Glaxo, Pepsi, General Motors, Procter and Gamble and a few other multinational companies ( MNCs). These are companies flush with funds, and they invest at least a part of their short term surplus money in gilt securities. While some of them have large internal accruals of cash, others have raised money through equity or GDR issues, or have received large inflows of cash from their joint venture partners from abroad.

A notable trend witnessed in the recent period is that some companies, who had collected money from these routes but were not ready to invest in projects had diverted a part of their surplus cash to the gilt securities market. But as soon as their projects took off, they moved out. Market sources mention names like Reliance and Gujarat Ambuja Cement in this context.

Most of the companies active in the gilt market have invested in 91 day treasury billsthe short end of the spectrum. And the total corporate investment in this market has been minusculenot exceeding Rs 200-300 crore, according to market estimates.