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Which banks lent more to debt ridden groups?
Jul 15, 2015


Continuing our discussion of poor quality loans, we came across an interesting short article in the Economic Times today, which discussed a report released by UBS on Indian banks exposure to certain debt heavy groups. Some of the groups discussed in the report included GMR, GVK, Jaypee and Lanco. The leading banks' exposure to these companies (in FY12 and FY15) has been showcased in today's chart of the day.

It may be noted that the management of Yes Bank has seemingly rubbished this report stating that some of the facts and figures are wrong; and that UBS has wrongly termed some of the bank's assets as 'stressed'.

We compiled the latest D/E ratio for the major companies of these groups. Please note that we only took the total of the long term and short term borrowings (and have not included the current maturity of debt) to calculate the D/E ratios of these firms. For GMR Infrastructure, the latest D/E ratio stood at stand at 5.3x, for GVK Power & Infrastructure at 11.6x, Jaiprakash Associates at 5.6x and Lanco Infratech, at negative 84 x. With the D/E ratio at such high levels, it does make us scratch our heads as to what these banks would have been thinking when they lent additional amounts to these firms; Especially considering that the total debt taken by these four companies totals to a whopping figure of about Rs 1.6 trillion!

Data source: Economic Times, UBS; *ICICI's exposure stood at Rs 169 bn, SBI's exposure stood at Rs 93 bn.

This Chart Of The Day was published in The 5 Minute WrapUp - These 'tips' will surely make you a successful investor

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1 Responses to "Which banks lent more to debt ridden groups?"

Pradeep

Jul 16, 2015

Very nice insight for future results
Can we get data on other NBFC like IDFC,L&THolding Finance, Can fin Home LIC Housing Finance , Repco home finance etc.

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