Anil Ambani Group biggest overseas borrower through ECBs

Anil Ambani Group biggest overseas borrower through ECBs

New Delhi: Anil Ambani controlled Reliance (ADA) Group has emerged as the biggest overseas borrower through external commercial borrowing’s (ECB), claiming the maximum pie of 20.7% in FY 2007, followed by the Tata Group and Reliance Industries Ltd. according to the latest Eco Pulse (AEP) Study conducted by industry chamber, Assocham.

The total ECB raised by companies in India increased substantially from $24.7 billion (Rs9,880 crore) in FY 2006 to $29 billion (Rs1,160 crore) in FY 2007, recording a growth rate of 16.4%.

From the total ECBs raised in FY 2006-07, share of Tata group carved out to be 3.2%, amounting to $0.93 billion, while Reliance Industries raised US$0.55 billion with a share of 2%.

However, Jindal Group was the fourth largest borrower, raising total ECB amounting to $0.54 billion with a share of 1.8%.

Aditya Birla group and Videocon Ltd. raised share of 1.7% and 0.7% respectively in the total ECB raised for the mentioned fiscal. The amounts borrowed by each group were $0.5 billion and $0.2 billion respectively.

According to Venugopal N Dhoot, president of the chamber, due to the large expansion activities and technological upgradation by the companies in India, of the total ECBs maximum amount raised was used for the purpose of projects which increased from 13.3% in 2005-06 to 28.5% in 2006-07.

The other major use- end of the funds was towards the modernization purpose showing an increase in the share from 18% to 19.5% respectively.

Key Findings

* Foreign fund raising by Reliance-ADA Group showed remarkable growth rate of 249% in FY 2007. Sectoral bifurcation of total ECB raised by the group was 52.4% in projects, 14.4% in rupee expenditure, 16.8% in import of capital and 8.4% in modernization activities.

*Aditya Birla Group recorded growth rate of 84.6% in FY-07. Of total ECBs raised by the Group, 28.7% was billed for modernization, followed by 13.5% and 8.1% in projects and import of capital respectively. The group also raised substantial amounts for overseas acquisition, capital expenditure and rupee expenditure making a share of 5%, 6.9% and 4.7% respectively.

*Jindal Group registered double-digit growth rate of 60.4% with maximum ECB of 82.1% raised for purpose of modernization of the group. It was followed by share of 14.2% in refinancing old loans and mere chunk of 3.2% for project purpose.

*Tata Group and Reliance Industries witnessed slowdown in their growth rates declining by 27.14% and 63.10% respectively.

* ECBs raised by Reliance Industries were flowing 100% for modernization and inspite of fervent overseas acquisition added by Tata Group, only 16.6% of ECBs was partially flowing for this purpose whereas maximum chunk of 83.4% was used for modernization purposes.

* For first two months of FY 2007-08, total ECB raised amounted to $5.69 billion in which the share of project was 39% and that of modernization 4.5% amounting $2.21 billion and $2.54 billion respectively.