Pangs of High Leverage
Vital statistics often hide more than they reveal. India’s 20 most-leveraged private sector companies, excluding those that have filed for bankruptcy, have a combined debt of ₹15.4 lakh crore — almost half of the government’s budget expenditure planned for FY21. The first five companies in the pecking order — Reliance Industries Ltd (RIL), Vodafone Idea, BhartiAirtel, Larsen& Toubro(L&T) and Tata Steel—account for ₹7.7 lakh crore, according to the latest available numbers for FY19.
Even though they do not represent FY20 numbers since most firms are yet to finalise their annual reports, the debt burden of most companies is unlikely to see an erosion, except Reliance Industries, which recently got ₹1.16 lakh crore from foreign investors by selling 24.7 per cent stake in subsidiary Jio Platforms Ltd (JPL). All the other companies in the pecking order are yet to come up with their debt-handling plans at a time when uncertainty surrounds the Indian economy. In the past, many of the high debtors in the list — Reliance Communications, Bhushan Steel, Essar Steel, Videocon, Lanco Infra and Jaiprakash Associates — had defaulted on loans and filed for bankruptcy. A
