Companies' aggregate borrowings well within norms, says SBI

| Monday, May 9, 2016 - 21:23
First Published |

SBI says, about 60 companies reported a decline in debt levels in the last fiscal over 2014-15

New Delhi: Downplaying concerns over the high debt levels of large corporates, the state-run State Bank of India (SBI) said on Monday that the firms' aggregate borrowings were "well within the norms".

"Our estimates show that on an aggregate basis such top ten companies ratio stands at 1.93x and 1.88x respectively which is well within respected level of 2x," said an SBI Economic Research Department report.

Describing a recent Credit Suisse report - House of Debt - on over-leveraged Indian companies as "misleading", the SBI report said: "What is more important at the end of day is the net worth, cash in hand, yearly accretion to net worth, investments, market value of assets and unbundling of value of some of its subsidiaries thus overall defining its repayment capacity."

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Based on about 200 corporate results announced for 2015-16, about 60 companies reported a decline in debt levels in the last fiscal over 2014-15, SBI said. The aggregate amount of reduction in debt levels is more than Rs 6,862 crore.

"Clearly, things are now actually looking better contrary to popular perception. Cement, fertiliser, trading, finance and transport are some of the sectors that are showing deleveraging," said India's largest lender.

Industry body Assocham said last month that the slowdown in steel, textiles, aluminium and others coupled by the ongoing AQR is likely to push banks' stressed assets to Rs 10 lakh crore-mark in the fourth quarter of 2015-16.

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