Page 26 - 30NOV2019EA

rowings exceed market capitalization in commerce over the past few years. Will
case of more than 100 corporate houses. the group, be able to come out the debt
It may be a cause of concern and trigger trap as claimed by Ambani would be
stress amongst lenders is that the majori- watched with interest?
ty of advances or loans had been given to
these stressed companies. Together these Power Grid Corporation
100 companies owe close to 10 trillion, State-owned Power Grid has got share-
the highest during the last decade (see holders’ approval to raise up to 10,000
chart). crore through issuance of bonds on
Top companies with very high debt private placement basis. As per a manda-
include Reliance Industries Limited The total debts of tory filing before the Stock Exchange, a
(total debt 1,61,720 crores), Power Grid Vodafone Idea and special resolution was approved to raise
Corporation of India ( 1,46,086 crores), the fund from domestic market. The
National Thermal Power Corporation Tata Motors as on resolution was moved in the annual
( 1, 42,933 crores), Vodafone Idea 31 March 2019 were general meeting on August 27. Its to-
( 1,25,940 crores), Indian Oil Corporation tal borrowing till March 2019 totaled
(86,359 crores) and Bharati Airtel ( 83790 1,08,524 crore about 1,35,339 crores as per the balance
crores) etc. and 91,124 crore sheet.

ompanies with very low market respectively. This Vodafone Idea
capitalization to debt ratio in- implies that their total Gross debt on Vodafone Idea as of
C clude Vodafone Idea (15.1 per cent), September 30, 2019 was 1,17,300 crores
Tata Motors (32.7 per cent), Tata Power debt is higher than their including deferred spectrum payment
(30.4 per cent), Tata Steel (38.5 per cent), market capitalisation obligations of 89,170 crores to the
GMR Infrastructure (37.7 per cent), IRB government. It had debt of 1.08 lakh
Infrastructure (17.5 per cent), Sadbhav crores at the end of 2018-19 and net
Engineering (18.1 per cent), Adani Power loss of 14,600 crores. Technology in the
(48.1 per cent), Jindal Steel (30 per cent), industry is changing so fast that even
and Rattan India Power (2.7 per cent), before existing investments are recov-
among others. This is based on compa- ered, the company will need to invest in
nies’ m-cap at the end of August 23, 2019, newer technologies for survival.
and total debt at the end of financial year Vodafone Group CEO Nick Read
2018-19. admitted that “The future of Vodafone’s
In all, 54.5 per cent of all corporate India operations is critical as India
loans are now with companies with had been a very challenging situation
inadequate m-cap, up from 46.5 per these companies have debt to EBITDA for a long time on the back of higher
cent at the end of financial year 2018- (earnings before interest, tax, deprecia- taxes and unsupportive regulatory
19. These companies will now have to tion and amortization) of more than 6 environment”.
depend on internal accruals to man- times.
age debt servicing and fund operations, Bharati Airtel
raising risk of a debt default or corpo- Reliance Industries According to a report by India Ratings
rate failure if the economic downturn Reliance Industries Limited ended last the total debt of the top three telecom
gets longer than anticipated. Access to financial year (2018-19) with a net debt of players — Reliance Jio, Bharti Airtel and
fresh capital is essential for the survival 1,54,478 crore. Group Chairman Mukesh Vodafone Idea — is a massive 3.9 lakh
of many of these financially stressed Ambani tried to assuage investor con- crores. Bharti Airtel the country’s third
firms, given their poor financials cerns over the group’s rising debt levels, largest telecom operator slipped into
including losses in recent years. Analysts saying the group has a clear roadmap red, incurring net losses of 2,866 crore
expect defaults in return of borrowed to become zero net-debt company in 18 for the first quarter of 2019-20, impacted
funds in corporate India if slowdown months. by a continuing tariff war with Mukesh
persists. Mukesh Ambani’s observation came Ambani’s Reliance Jio and huge debt of
For readers benefit, we analyze finan- at the 42nd Annual General Meeting. close to 83, 790 crores.
cials of some of the top corporate houses The company accumulated gross debt The list of 100 most valued compa-
including those of Reliance Industries of more than 2.87 lakh crore, as it nies shown here point out how debt is
Limited, Vodafone Idea, Coffee Day diversified into consumer-focused eating into the business giants' viability
Enterprises, Future Consumer, Deepak businesses in retail, telecom, refining and making them more vulnerable amid
Fertilizer, Lemon Tree Hotels . Some of and petrochemical business and e- the ongoing slowdown in the country.

26