Mumbai: While the RBI has initiated process for the speedy resolution of stressed assets in the banking system, a study conducted by the economic research department of SBI showed that India Inc has embarked on a major deleveraging exercise with top ten entities lowering their debt by Rs 33,000 crore over the past one year.
According to it, about 1,000 firms in aggregate excluding banks and finance reported a decline in loan funds by as much as Rs 1,00,710 crore.
“The debt contraction could either be through repayment from internal accruals, Qualified Institutional Placement (QIP) or private equity participation, asset sales, equity conversion or restructuring of debt. Some of the best-known firms that have lowered loan funds include GAIL, Piramal Enterprises, National Fertilizers, L&T, Hindalco, Jet Airways, Reliance Infrastructure, Tata Steel, Jaiprakash Power Ventures and Jindal Stainless Steel. They accounted for almost one-third of reduction in loan funds in FY17,” said Soumya Kanti Ghosh, group chief economic advisor at SBI, in its latest report.
In terms of absolute numbers, Hindalco remained on top of the chart with maximum reduction in its outstanding loan amount during the last one year followed by Reliance Infra and Piramal Enterprises. While Hindalco lowered its loan funds by Rs 5,823 crore from Rs 28,445 crore as on March 2016 to Rs 22,622 crore by the end of March 2017, Reliance Infra managed to reduce its outstanding loan funds by Rs 5,090 crore to Rs 12,601 crore during the same period.
Piramal Enterprises saw its loan funds drop by Rs 4,594 crore to Rs 7,760 crore. However, in terms of percentage, Gail India topped the chart by trimming down its debt by 48 per cent to Rs 3,005 crore followed by Jindal Stainless Steel, which reduced its loan exposure by 45 per cent to Rs 5,120 crore.
“The Tata Group’s new chairman has identified non-core businesses and is in the process of divesting some of them. The group is in process to sell drug discovery services firm Advinus Therapeutics while the fertilizer business may also be up for sale,” he added.
The recent corporate results for about 3,000 listed entities according to Mr Ghosh also suggests that the outstanding loans have increased at a CAGR of 8 per cent during the past two financial years. From Rs 22.8 lakh crore as at the end of FY15, the outstanding loans have increased to Rs 26.5 lakh crore in FY17.
