Over half of 500 cos in debt trouble; need Rs 7 tn to pare it

More than half of the highly over- leveraged top 500 companies would need more than a whopping Rs 7 trillion or USD 114 billion and three years to deleverage themselves, says a report India Ratings.

"If equity infusion is used as a means to deleverage, as many as 262 of the 500 top corporates would require a minimum equity infusion of around Rs 7,04,300 crore (USD 114 billion).

"But raising this amount will be a significant challenge given that between FY08 and FY14, less than half of this amount was infused as equity across these 500 corporates," India Ratings senior director for financial services Deep N Mukherjee said in a note.

If these companies were to bring down their leverage ratio to a prudent level, they will need around three years to complete the process, provided their debts do not rise from the FY14 levels, he said. Mukherjee added, however, that the process will take five to six years if there is only a marginal uptick in the economy over the current level.

Of these, as many as 96 corporates, which are already tagged as non-performing assets or are undergoing corporate debt restructuring, will take 5-10 years to reduce their leverage to moderate levels, he said.