Foreign currency woes
Companies that have borrowed in US dollars may face pressure due to rupee depreciation
By Research Desk | Jul 13, 2018
Many businesses borrow in foreign currencies, such as the US dollar, to take advantage of ultra-low interest rates in the foreign markets. Such borrowing can be by issuing bonds or by loaning money from a foreign bank.
What looks like a smart move in the short term may come to haunt if the foreign currency appreciates with respect to the native one or the interest rates in the foreign market rise.
The table below lists some Indian companies that borrowed in US dollars a couple of years ago. Because the rupee has depreciated since then, they now have larger loan amounts outstanding. The repayment is due in the next five months. Keep an eye on how these companies deal with the repayment. The companies with high debt on their books may, especially, face some pressure.
|Company||Amount borrowed ($ Mn)||Borrowed on||USD-INR rate||Amount borrowed (Rs Cr)||Maturity date||Amount to be paid |
|Increase in loan (%)||Debt to equity|
|OK Play India||7.6||29-Oct-10||44.4||33.8||31-Oct-18||51||51||2.16|
|Asahi India Glass||10||30-Sep-11||49||49||31-Oct-18||67||37||2.45|
|Steel Strips Wheels||10.7||30-Aug-12||55.6||59.4||31-Aug-18||72||20.6||1.99|
|Data as on May 8, 2018|
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