The recent relaxation of external commercial borrowing norms seems to be inducing India Inc to use the route to raise resources. During the month of November 2008, Indian corporates have raised a total of $1.70 bn as against $1.12 bn in October 2008, by way of external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs).

A large number of corporates opted to raise capital through the automatic route in November, whereby they raised about $1.52 bn. The remaining capital was borrowed through the approval route. Vedanta Aluminum raised about $406 m for the import of capital goods, with a maturity of 5 years and 3 months. This was followed by Reliance Industries Ltd, which raised $400 m to fund its project with a maturity period of 10 years and 10 months.

However, none of the companies borrowed capital through the FCCB route, the RBI data showed.

On Wednesday, the Reserve Bank of India (RBI) released the latest figures on ECBs and FCCBs for November 2008.

On Wednesday, the rupee ended lower at 48.79 against the dollar, compared to its previous close of 48.47.

In October 2008, Reliance Industries Ltd raised a total of $400 m, out of which $300 m was raised to fund its project, with a maturity of 10 years, while the remaining $100 m for the import of capital goods, with a maturity period of 11 years. In October too, none of the companies took the FCCB route to borrow capital.

During September 2008, Indian corporates had raised $ 2.83 bn through ECBs.

Out of the total ECBs raised, $2.46 bn was raised through the approval route and $370.23 m through the automatic route. Apparently, in September, too, they did not borrow via foreign currency convertible bonds at all.

The RBI data showed that Aryan Coal Benefications Pvt Ltd was the largest issuer of ECB borrower, through the automatic route, in September for $80 m for the import of capital goods with a maturity period of 8 years.

At the same time, the largest ECB issuer through the approval route was Reliance Industries which raised $1.65 bn for its project with a maturity period of 5 years and 6 months. This was followed by Gujarat State Petroleum Corp, which raised $325 m under the approval route. GTL Infrastructure raised $150 m, during the same period.

During August and July 2008, Indian corporates raised $1.60 bn and $2.47 bn, respectively, through the ECB and FCCB route.

As compared to last year, there has been an increased amount of domestic activity, as Indian corporates are looking at raising capital through domestic bonds and debentures.

During the months of April and May the ECBs and FCCBs raised by Indian companies were $1.16 bn and $1.28 bn respectively, the Reserve Bank of India said. In March, ECBs and FCCBs raised by Indian companies stood at $4.5 bn, as against $862.12 m in

February and $1.89 bn in January 2008. Net external commercial borrowings (ECBs) inflow slowed down to US $ 3.3 billion in April-September 2008 (US $ 11.2 billion in April-September 2007). Net ECB inflows were low at 16.8 per cent of net capital flows during April-September 2008 as against 21.9 per cent of net capital flows in April-September 2007.