India Ratings: Rs 1.27 lakh cr debt of 22 firms under stress
Mumbai: India Ratings on Tuesday said as many as 22 corporates, led by infra players, in the BSE 500 index are likely to default on their debt obligations worth Rs 1.3 trillion in the next 12-24 months, up from 15 firms last year.
The rating firm, however, maintained that the gross non-performing assets (NPAs) ratio for the banking system will be at the same level as the last fiscal.
"Our research says there will be 22 corporates from the infra, chemicals, media and consumer spending with an outstanding debt of Rs 1,26,700 crore, who may potentially show stress in the next 12 to 24 months," India Ratings Director (Corporates) Deep N Mukherjee told reporters here.
The Indian arm of global rating agency Fitch does not rate any of the 22 companies and the research is based on publicly available data till March 2013 or December 2012 in case the company concerned has not yet reported its numbers for the fourth quarter, he said.
Mukherjee declined to name these corporate entities.
He said the ratio of NPAs will largely remain unchanged from the 3.7 percent in December 2012. But he was quick to add that the estimate is based on assumptions of a normal monsoon this year and the rupee holding at 53 to 56 levels to the dollar.
The total quantum of restructured assets and NPAs, which together stood at around 10 percent as of December 2012, will also remain unchanged, he said.
Last year, India Ratings had said that 15 BSE 500 companies would default and they indeed did so, with a debt outstanding of around Rs 1.3 trillion.
The exposure of banking system to sectors classified as negative or as having stable-to-negative outlooks has gone up to 30 per cent in 2013, a three-year high, Mukherjee said.
India Ratings Senior Director Rakesh Valecha said the number is a notch lower than the same in 2008-09. However, the difference is debt default then was caused largely because of liquidity issues in post-Lehman crisis, while the current slowdown is much sustained.
These 22 companies are from a variety of sectors but most of them are infrastructure players.
For the infra sector, which contributes 42 percent of the banking sector's total exposure, the help has to come from the policy front as a lot of the stress is coming for want of nod for projects and other decisions, he said.