The Hindu Business Line : India Inc raises Rs 45,000 cr less this year compared to 2007

India Inc finds raising money a lot tougher proposition in 2008 compared to the previous year if data compiled by Bloomberg news agency is anything to go by. It could mobilise only Rs 3,05,377 crore as of December 23, the latest date up to which such data have been compiled as compared to Rs 3,51,316 crore – a shortfall of roughly 13 per cent.

Both equity and debt mobilisations have been lower, with funds raised from international institutions registering a sharp decline in absolute terms (Table).

With the global credit crisis deepening, raising money through debt has been tough, but not as bad as equity, Corporate India managed to raise Rs 2.5 lakh crore , a fall of just 7.3 per cent over last year.

The rate of decline, however, has been far steeper on the equity front with companies managing to raise only Rs 52,200 crore this year under this route, a 33.3 per cent decline from the Rs 70,000 crore in 2007.

Rights offers, which contributed Rs 29,500 crore, actually saved the day with funds raised under this route registering a near three-fold increase. Shareholders evidently seemed willing to put in fresh money in the businesses they already had exposure in rather than support initial public offerings. This is just as well, as IPOs shrank both in terms of number as well as in the sums raised.

Within equity instruments, IPOs and Qualified Institutional Placements (QIPs) have borne the brunt of the market meltdown. Clearly, if retail appetite for investments in new ventures was low, the situation on institutional investor front was not much different with the latter too preferring to be lukewarm in their support.

On the debt front, the liquidity crunch in overseas markets seems to have come in the way of companies trying to raise funds overseas. Borrowers instead turned to the home markets for funds. Consider this: Sums raised through international bonds and FCCB issues, key sources of debt funds last year, fell steeply by 83.8 and 94.3 percent respectively compared to 2007.

Syndicated loans accounted for a bulk of all debt raised by companies, but this too fell by 3.7 per cent. With falling share prices in domestic markets, the conversion of FCCBs may not have been attractive proposition.

Overall, credit crisis notwithstanding, the domestic bond market saw a 28.6 percent increase in issuances to Rs 91,700 crore.