THIS IS INDIA
Here's a financial tip no one gives you. If you owe money to the
banks, make sure the amount is huge. Then you won't need to worry
about paying it back on time. Or, indeed, in some cases, paying it
back at all.
This is not a joke. Several top business houses in India owe banks
astronomical amounts and have defaulted in repayment. But instead of
facing pressure to pay back these loans, companies are routinely given
sweet deals: either their loans are 'restructured' in a way that
allows a moratorium on interest payments, or their repayment schedule
is extended generously.
In December 2015, the Supreme Court ruled that under RTI, and in the
interest of transparency, banks must reveal the names of companies who
default. Until now, banks have refused to share this information
easily.
In absolute terms, the gross non-performing assets - loans not repaid
by borrowers - owed just to state-owned banks was reported at Rs 3.04
lakh crore. That's four times the entire budget for education in
India. A large part of these loans will never be repaid by the
companies.
Compare this with the farm loan waiver of Rs 70,000 crore given by the
government in 2009 that faced huge criticism from free market
economists who start beating their chests at the mention of subsidy to
the poor in the country.
The Reserve Bank of India so far has not released the details of
individual borrowers who have defaulted on repayment of their loans.
In the absence of this, here is a list of the 10 most indebted
companies of India, reported by Credit Suisse in its October 2015
report. The debt shown on their balance sheets was till March 2015.
One expects that debt on these 10 companies comprise a major chunk of
the non-performing assets of the banks. Though it is unclear how much
is the exact amount of non-performing assets against each company,
however, just their outstandings make for staggering reading.
01 - THE RELIANCE GROUP
The Anil Ambani-led Reliance Group is in the business of power,
insurance, wealth management, telecommunication infrastructure and
entertainment. In March 2015, the company had a debt of Rs 1.25 lakh
crore on its balance sheet.
The amount is equivalent to the special package announced for Bihar by
Prime Minister Narendra Modi ahead of state elections in August this
year.
02 - THE VEDANTA GROUP
Anil Agarwal's company is the second-most indebted company. According
to Credit Suisse, the company, which is into metals and mining, had a
debt of Rs 1.03 lakh crore.
This is equivalent to the amount raised by the Government of India in
March 2015 through it's biggest-ever auction of telecom spectrum.
03 - ESSAR GROUP
Managed by the Ruia Brothers (Shashi Ruia and Ravi Ruia) the company,
with operations in 25 countries, owes Rs 1.01 lakh crore.
That's what the Centre plans to spend on building smart cities until 2020.
04 - ADANI GROUP
Gautam Adani, the chairman of the Adani Group of companies is known
for his proximity with Prime Minister Narendra Modi. His business
house owes Rs 96,031 crore to the banking system. The amount is a
little less than the Budget for building the bullet train network
between Mumbai and Ahmadabad proposed by the government.
Earlier this year, the State Bank of India reportedly approved a loan
of around $1 billion (Rs.6,600 Crore) for the company's coal mine in
Australia. However, after much hue and cry in the media due to the
highly stressed balance sheet of the public sector bank, the approval
was withdrawn.
05 - JAYPEE GROUP
Manoj Gaur-run Jaypee Group has a debt of Rs 75,163 crore on its
balance sheet. Jaypee Group had a golden time during the Mayawati rule
in Uttar Pradesh between 2007 and 2012.
The debt is eight times the allocation for mid-day meals in 2015 that
feeds 12 crore school going children in the country.
06 - JSW GROUP
Sajjan Jindal is the chairman of JSW group and he was recently in
headlines for reportedly organizing the meeting between Pakistan Prime
minister Nawaaz Sharif and Narendra Modi.
Big connections allow you big credit lines. As per the Credit Suisse
report, the group has a debt of Rs.58,171 crore. The amount is
equivalent to the cost of 26 Rafale fighter aircrafts that India plans
to buy from France.
07 - GMR GROUP
Named after its promoter G M Rao, the group is known for building
Delhi's T3 International Airport terminal.
The group has a debt of Rs 47,976 crore on its balance sheet. The
amount can be used to build to coal-based power plants with a
generation capacity of 4,000 MW each - enough to provide electricity
to the state of Haryana during peak summers.
08 - LANCO GROUP
Headed by L Madhusudan Rao, the company runs solar and thermal power
plants. It has a debt of Rs 47,102 crore.
09 - VIDEOCON GROUP
Venugopal Dhoot's company, the group once famous for making
televisions, owes Rs 45,405 crore to banks. This amount can be used to
93 missions to Mars by India.
10 - GVK GROUP
Founded by GVK Reddy, the group has interests in energy,
infrastructure and hospitality sectors. The company has a debt of
Rs.33,933 crore. The amount is just a little less than government's
allocation under the MNREGA scheme (National Rural Employment
Guarantee Act) of Rs.34,000 crore in 2015.
Darryl D'Monte
Chairperson, Forum of Environmental Journalists of India (FEJI)
