Ashok Leyland completes ECB loan of $200 million

Amidst global economic turmoil, Hinduja Group flagship Ashok Leyland announced yesterday the successful conclusion of an external commercial borrowing (ECB) loan of $200 million.

This is the automotive major's largest loan in a single transaction till date.

The Chennai-based company has hedged its bets by broad basing its relationship with several banks, both domestic and international, for the loan. The company says the loan will partly fund its requirements to meet its expansion plans and overseas investments.

According to the Reserve Bank of India (RBI) guidelines, funds raised via the ECB route can only be used for meeting forex requirements for capital expenditure and other overseas investment purposes. Accordingly, RBI has given a go-ahead to the company to proceed with the utilisation of the ECB proceeds.

The chief financial officer of Ashok Leyland was understandably quite pleased with the completion of the ECB programme. "The deal is significant for the company in many ways. Meant to meet the company's funding requirements, the deal got successfully completed at a time when the global financial markets are in turmoil.

Secondly, it has been concluded at a very competitive rate", he said.