Debt flood washes over corporate sales stream – Financial Express

Debt flood washes over corporate sales stream
Baiju Kalesh, MG Arun
Posted online: 2011-11-21 01:45:42+05:30

Mumbai | Heavy loans taken by Indian companies in the past to build mobile networks, power plants, airlines and airports have come back to haunt them. Deepening economic slowdown, rising interest rates and a falling stock market, which has closed the tap to raise equity, have put question marks over profits, loan repayment capacity and growth.

In many companies, the quantum of debt has even overtaken their sales.

Bharti Airtel, India’s largest mobile telephony company by subscribers and revenues, owes its lenders R60,091 crore against sales of R59,467 crore as on March 31, while rival Reliance Communications (RCom) must repay R33,744 crore with R22,430 crore revenues, Bloomberg data show.

The companies borrowed heavily to purchase third-generation wireless spectrum and later invested in rolling out networks. Mobile telephony companies paid roughly R1.06 lakh crore to purchase 3G and BWA spectrum in 2010. Bharti Airtel did not respond to emails and telephone calls.