Going gets tough for debt-heavy companies as some of them face severe stress

Debt servicing ratios of some of India’s most indebted companies have deteriorated further & some of these groups are facing severe stress, finds a Credit Suisse report. Most of these groups have been already downgraded to default by rating agencies.

Even though some groups have cut back on capex and are looking to sell assets, their debt/EBITDA have worsened. Auditors, who belong to 12 of these groups, have highlighted that these companies have defaulted to the tune of Rs 5,300 crore for a period of up to 360 days.

According to the report, JP Group has had multiple instances of default in 2015, while JP Power has defaulted on $200 million in FCCB payments. Essar Steel, GVK and Lanco have been classified as NPAs by banks. "A large number of projects from power and road sectors have seen delays in completion which has led to cost overruns," said the report.