Banks account for 46% of corporate borrowings

Written by Pradip Kumar Dey | Mumbai | Updated: Jan 28 2011, 05:14am hrs
With the revival of investment sentiments after the global economic downturn, Corporate India was on a fund-raising spree and banks were the largest source of borrowings in 2009-10, followed by debt and debentures.

A FE study on the funding pattern of 365 corporates in 2009-10 shows that about 46% of the total corporate borrowing came from banks and around 24% from the domestic debt market through debentures and bonds. Of the total borrowings of Rs 9.31 lakh crore, banks accounted for Rs 4.25 lakh crore followed by debentures/bonds to the tune of Rs 2.23 lakh crore. The share of foreign currency loans in the total borrowings amounted to 12.67%. The share borrowings from financial institutions amounted to about 4%. The study also shows that borrowings as percentage of capital employed by major companies increased to 42.65% during the financial year 2008-09 from 39% during the financial year 2007-08. However, in the financial year 2009-10 the percentage of borrowings as percentage of capital employed was lower at 40.16%.

Overall, 36% companies from the sample showed an increase in the ratio of borrowings as a percentage of capital employed in the financial year 2009-10.

The top five borrowers in 2009-10 from the sample studied were Reliance Industries Limited (RIL) amounting to Rs 62,495 crore, Rural Electrification Corporation (REC) at Rs 55,948 crore, Indian Oil Corporation Limited (IOCL) at Rs 44,566 crore, National Thermal Power Corporation (NTPC) at Rs 37,797 crore and Power Grid Corporation amounting to Rs 34,417 crore. Notably, the highest increase in borrowings during the financial was for Power Grid Corporation at 20.9%.

However, a downward trend in the ratio of borrowings as a percentage of capital employed was seen for companies like SpiceJet, DishTV, Jubilant Food, Unitech, DB Corporation and Radico Khaitan. For example, the ratio for DishTV decreased from 223% during 2008-09 to 69.63% during 2009-10.