Debt levels of top ten Indian business houses in financial year 2013 have gone up by 15 per cent as compared to the previous year, according to a report by Credit Suisse.
According to the report, gross debt of Adani Group has gone up from Rs.69,201 crore in financial year 2012 to Rs.81,122 crore in 2013. Similarly, the debt of Essar Group has gone up from Rs.85,224 crore to Rs.98,412.8 crore. GRM Group’s gross debt has gone up from Rs.36,028.9 crore to Rs.40,824.9 crore while GVK group’s debt has risen from Rs.20,957 crore to Rs.25,264 crore.
Jaypee Group has seen its debt rising from Rs.53,587.8 crore to Rs.63,654 crore, JSW Group from Rs.37,463.6 crore to Rs.41,575 crore (data for June 13), and Lanco Group from Rs.31,393 crore to Rs.39,034 crore. Reliance ADA Group’s gross debt rose from Rs.91,496.7 crore to Rs.1,13,543.9 crore, the highest in debt level, while the Vedanta Group saw its debt rising from Rs.94,724 crore to Rs.99,610.8 crore, the second highest in debt among top 10 Indian groups.
Credit Suisse could not quantify Videocon Group’s debt because data for 2013 was not available. Videocon Group in 2012 had a debt of Rs.27,283.4 crore.
In total, these Indian groups have seen their combined debt increasing from Rs.54,7,361 crore to Rs.6,31,024.7 crore in the period under reference, the report said.
“We find their (top 10 business groups) debt levels are up another 15 per cent even as profitability continues to be under pressure. For most of them, the debt increase has outpaced capex and asset sales are yet to take off. The rising stress is visible with some loans of Lanco, JPA, and Reliance ADA already being restructured,” Credit Suisse Securities Research said.
Stating that the debt servicing ratios were under pressure, the report said the debt coverage ratios had further deteriorated for groups such as Essar, GMR, GVK and Lanco. It said the debt servicing strain was likely to intensify further as capitalised interest was a further 30-250 per cent higher and 40-70 per cent of loans are forex.
“Many companies’ loans are 40-70 per cent foreign-currency dominated, therefore, the sharp depreciation of the rupee is adding to their debt burden. Adani Enterprises and Reliance Communications have the largest percentage of borrowings through forex loans,” Credit Suisse said.