1,000 companies borrowed ~1 lakh cr less in FY17

The record low bank credit growth of 5.1 per cent in FY17 was led by the top 1,000 listed corporates which saw their net loan outstanding decline by a whopping ~1 lakh crore in the reporting year, said a report.

One-third of this massive contraction was led by just 10 companies, which cumulatively availed of ~33,571 crore less in the year over the previous year, according to a report by SBI Research.

According to SBI Chief Economic Advisor Soumya Kanti Ghosh, who penned the report, this could either be perceived as lower debt utilisation levels or prepayment through internal accruals or through asset sale. Other reasons could be qualified institutional placement (QIP) or private equity participation.

Reserve Bank of India (RBI) data showed that bank credit inched up by a tad 5.1 per cent in the year to March 2017, which was the lowest since 1951 when it had grown by a paltry 1.8 per cent which could be attributed rise in bond issuance and cheaper nonbank fund sources coupled with overall credit aversion in the economy, as well as noninvestment by the private sector, in capacity expansion.

However, taken as a whole, as per cent annual results of about 3,000 listed entities for FY17, there was an 8 per cent increase on a CAGR basis in loan funds outstanding over FY15. The outstanding loan funds as of FY15 stood at ~22.8 lakh crore, which increased to ~26.5 lakh crore in FY17. This was ~24.2 lakh crore in FY16.

However, many top notch corporates reported contraction in loan funds outstanding in FY17 over FY16. “About 1,000 entities in aggregate reported decline in loan funds to the extent of ~1 lakh crore,” said Ghosh. Debt contraction can either be through repayments, equity conversion or restructuring he says adding “top ten entities saw a decline of about ~33,000 crore.” Some of the best known firms that have lowered loan funds include Gail India (-48 per cent), Piramal Enterprises (-37 per cent), National Fertilizers (-37 per cent), L&T (24 per cent) Hindalco (-20 per cent) and Jet Airways (-22 per cent). Cumulatively, these companies alone borrowed ~20,000 crore less, the report said.

From a sectoral point of view, this came in amid a double digit annual growth in Ebitda by most of the top 10 sectors depicting all round growth in top line, mid line and bottom line.

RBI data showed that bank credit inched up by a tad 5.1 % in the year to March 2017, which was the lowest since 1951