Nearly a Third of India's Top Companies Under Debt-Stress

The depressing economic conditions have jolted a number of top performing companies in India. As a rough estimate, nearly a third of India's top companies are seeing their profits dipping, and debts rising like never before. In good times, these Indian top companies had launched aggressive growth plans, mainly funded through debts, hoping the demand growth would remain robust in the coming years. It didn't.

Unfortunately, things didn't go their way. And that pushed these companies deep down into debts; many of these companies are now either financially insolvent or on the verge of it. And they can't even use equity market to raise capital to ease their sufferings. These companies are finding themselves in a spiral of plummeting profits, increasing liabilities and shrinking markets. The economic slowdown has clearly taken a heavy toll on the financial performance of these companies.

However, many industry insiders say there is nothing much to worry about. The situation like this is pretty normal in an economic downturn. They are quite optimistic about these companies getting back to the normal track. And the projects - that were started when the economy was doing good – are likely to pay back sufficient to cover debt servicing. But all this remains to be seen. Till then we can only keep our fingers crossed and wait.