The Hindu Business Line : Bankers give Reliance credit -- plenty of it!

YOU could say it's a case of Reliance coming to the bankers' rescue! Every banker has been complaining of declining borrowings from the corporate sector during the past two years. A quick search on the CMIE database of bank borrowings for a select bunch of 15 top companies for whom the March 2003 figures are available, seems to broadly confirm their fears.

Except for the inclusion of Reliance Industries in that select bunch. Remove Reliance; bank credit to this sample of companies may have well dropped by about 18 per cent over the past two years. Include it and the position reverses and shows an increase of about 60 per cent.

Reliance more than trebled its reliance on bank borrowings over the space of two years - from Rs 1,950 crore at the end of March 2001 to Rs 7,194 crore at the end of March 2003. Analysts attribute this sharp increase in bank borrowings to its foray and ongoing expansion in the telecom arena.

About eight companies, in this list of 15, saw a reduction in bank borrowings over the past three years - some of them drastic. Leading companies from the Tata stable - Tata Motors and Tata Steel - cut their bank borrowings significantly. Tata Motors reduced it to Rs 432 crore at the end of March 2003 from Rs 1,190 crore at the end of March 2001.

Similarly, Tata Steel cut bank borrowings by half to Rs 220 crore at the end of March 2003.

Both these companies effected sharp reductions in their debt portfolio by prepaying debt to reduce cost of borrowing. Tata Motors mentions in its annual report that it prepaid Rs 505 crore of debt (a part of which was bank borrowings).

Similarly, Tata Steel said in its annual report for 2003, that it had reduced its debt by Rs 479 crore during the past year (a part of which was bank borrowings).

There were some companies such as Mahindra & Mahindra and Ashok Leyland, which cut down on their borrowings in 2002-03 after increasing it in 2001-02.

Apart from Reliance, there were a few companies such as Britannia Industries, Raymond and Hindalco, which drew heavily on banks during the past year.

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