India Inc's owes Rs 27 lakh crore in loan payments

Key Highlights: 

• Outstanding loan funds of India at Rs 26.5 lakh crore in FY17
• 1000 entities managed to bring down debt by over Rs 1 lakh crore in FY17
• Top 10 companies constitute one third of reduction in loan funds during FY17

Total outstanding debt, or loans remaining to be paid, for India Inc stood at Rs 26.5 lakh crore at the end of fiscal year 2017 as against 24.2 lakh crore in the year previous to last. 

State Bank of India's (SBI) Ecowrap report dated June 22, 2017 said, " The recent corporate results for about 3000 listed entities suggest increase in loan funds outstanding at a CAGR of about  8% or so."

SBI said that some 'top notch' corporates  reported contraction in loan funds outstanding in FY17 over  FY16. "About 1000 entities in aggregate (excluding banks &  finance) reported decline in loan funds to the extent of Rs 1,00,000 crore," it said, adding, "The top  ten entities, saw decline of about Rs 33,000 crore."

Companies like GAIL,  Piramal Enterprises,  National Fertilisers, L&T, Hindalco and Jet Airways cumulatively brought their debts down by about Rs 20,000 crore.

Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI said, “This could either be perceived as lower debt utilisation levels or prepayment through internal accruals or through asset sale. The reasons could be many, including QIP or private equity participation.”

A Credit Suisse report said that overall stress still remains unchanged in India Inc with debt interest coverage ratio still at 40%. What this means is that a large number of companies do not have adequate resources to repay their debt.