Borrowings go up

Written by Pradip Kumar Dey | Updated: Nov 7 2011, 11:55am hrs
PSUs showed a 5.5% rise in borrowings last year, with their consolidated debt showing a growth of 15.7% in 10-11, from 10.2% during 09-10. An FE study of 40 major PSUs shows their total debt increased from R2.21 lakh crore in 08-09 to R2.43 lakh crore during 09-10 and further to R2.81 lakh crore in 10-11.

The net worth of these PSUs steadily increased from R3.80 lakh crore during 08-09 to R4.77 lakh crore during 10-11. The debt-equity ratio (D/E)decreased from 0.58 during 08-09 to 0.57 during 09-10, but increased to 0.59 during 10-11.

The debt-to-equity ratio tells the extent to which a PSU is using debt. It is obtained by dividing the total debt (total loan funds) of a PSU by its shareholders equity (net worth).

Twenty six out of the 40 PSUsexcluding banks and NBFCsresorted to higher borrowings during 10-11.Additionally, PSUs in shipping, refineries, fertilisers and gas distribution sectors raised more debt during 2010-11 compared to the previous year.

Among the PSUs, 17 saw an increase in the D/E ratio while 18 saw a decrease. The ratio was unchanged for five companies. PSUs that had a very low D/E ratio during '10-11 were BHEL, GMDC and Oil India.

PSUs that saw a sharp increase in the D/E ratio from 09-10 to 10-11 were FACT, MMTC, Indraprastha Gas, SCI, GNFC, HPCL and National Fertilisers. The D/E ratio of MMTC steadily increased from 3.83 during 08-09 to 4.41 during 10-11.

The top five borrowers during 10-11 were IOCL, NTPC, Power Grid Corpn.,HPCL and SAIL. The D/E ratios for these PSUs ranged between 0.54 and 1.99 during 10-11.

Eleven PSUs including MOIL, NMDC, Engineers India, Container Corporation, Hind Copper and PTC India, had nil debt in the past financial year. Further, 13 companies cut their borrowings last year.

A significant decrease in the D/E ratio was observed for STC, RCF, BPCL, Power Grid Corpn., GMDC and BEML.