India Inc Has Sold Assets Worth Rs 1.5 Lakh Crore To Get Out Of Debt

After former Reserve Bank of India governor Raghuram Rajan issued a diktat to the banks to clean up their balance sheets by March 2017, banks have, in turn, asked the corporates to reduce the debt they have piled up over the last five to 10 years.

India Inc, under pressure from weighty debts, has been forced to sell most of their assets in order to clean up their balance sheets by March. Assets worth Rs 1.50 lakh crore have been sold or are in the process of being sold since January.

Giants like Essar and Reliance Group are at the forefront with newly announced plans to monetise assets worth Rs 85,000 crore and Rs 11,000 crore respectively. Other big names like GMR and Jaypee Group are being forced to sell lucrative business assets to trim the incurred debt.

The companies that are offering non-core assets to reduce their debt will now be able to pitch in with more equity, persuading the banks to lend further to their core businesses or to ventures into new sectors. Of course, all this will be possible only after the deals announced are completed. And even though some of the declared asset sale deals are in the pipeline, there is no guarantee that the money undertaken will flow into the banks.

Market analyst Motilal Oswal said:

But it seems like not all are happy with this arrangement; an executive of a Mumbai-based conglomerate told BusinessLine on condition of anonymity that a principal restructuring of loans - instead of having to sell assets - would have been preferred.