Banks total 49% of corporate borrowings in 2006-07

Written by Pradip Kumar Dey | FE Research Bureau | Updated: Sep 19 2007, 06:01am hrs
India Inc sought banks, among other external sources, for majority of their finances in 2006-07. The borrowings from banks for 121 major corporates surveyed by FE amounted Rs 1,06,908 crore or 48.81% of the total borrowings. Debentures/bonds were the second largest of loans, accounting for another 18.01% or Rs 39,445 crore. The share of financial institutions (FIs) in the total borrowing amounted to 2.88%, while total deposits, contributed only 1%. The data has been collated from a study of sources of borrowings during 2006-07 and 2005-06 of 121 major companies.

Banks, debentures/bonds, FIs, and deposits provided the bulk of external resources providing 70.7% of the total borrowings. On the other hand, borrowings as percentage of capital employed of major companies increased from 33.60% during the year 2005-06 to 34.66% during 2006-07.

The highest borrowers from banks, debentures/bonds, financial institutions and fixed deposits during 2006-07 were Indian Oil (Rs 17,131 crore), NTPC (Rs 8,143 crore), Tata Steel (Rs 1,750 crore) and CESC (Rs 785 crore) respectively.

The top five borrowers during 2006-07 are Indian Oil (Rs 27,083 crore), NTPC ( Rs 24,484 crore), BPCL (Rs 10,829 crore), HPCL (10,517 crore) and Tata Steel (Rs 9,645 crore). Among these highest increase in borrowings during 2006-07 was seen in the case of Tata Steel ( 283.3%).

Fifty six companies showed an increase in the ratio of borrowings as percentage of capital employed in the year 2006-07 against the previous years figures.

Mention may be made of Ranbaxy Lab (30.23% in 2005-06 to 57.50% in 2006-07), Tata Steel (20.50% to 40.88%), Orchid Chemicals (56.71% to 76.50%) and Tata Tea (17.48% to 34.37%). A downward trend in the ratio can be seen in the case of GMR Infrastructure (43.41% to 10.73%), Sun Pharma (54.38% to 30.37%), Ambuja Cement (34.10% to 19.87%) and ACC ( 35.51% to 22.57% ).

The total borrowings ofthe 121 major companies under study amounted to Rs 2,19,018 crore at the end of 2006-07 or 34.66% of the total capital employed at Rs 6,31,813 crore.

Money collected from banks increased by Rs 28,340 crore from Rs 78,568 crore in 2005-06 to Rs 1,06,908 crore in 2006-07, increasing their share in the total borrowings from 46.41% to 48.81%.