90% of Rs 2.4 trillion of the debt is from "investment-linked" or "commodity" sectors.
Domestic ratings agency Crisil Ratings on Monday said the fall in commodity prices and a lack of pick-up in investments has resulted in debt of over Rs 2.4 trillion getting downgraded in first of the fiscal, and guided towards difficult times ahead for such leveraged companies.
90% of Rs 2.4 trillion of the debt is from "investment-linked" or "commodity" sectors, its chief analytical officer Pawan Agrawal said, adding the currency devaluation by China has also hurt companies.
The rating agency came out with its half-yearly report on credit quality, which pointed out to debt-weighted credit ratio which is total debt on the balance sheets of firms upgraded versus downgraded, declining to a three-year-low of 0.27 per cent for April-September.
The debt-weighted credit ratio had stood at 0.62% for the entire fiscal 2014-15.
The report, however, said it is a better picture if one goes by the number of firms upgraded and downgraded. In H1, it saw 981 upgrades as compared to 460 downgrades.
Crisil had earlier guided towards an improvement in the metrices, but Agrawal on Monday said the pressure because of the dip in commodity prices has resulted in improvement being delayed.
He said companies from the infrastructure, commodity and related sectors will continue to be under pressure in the future as well, and those in the consumption and export-linked sectors will see an upping in the credit quality.
Elaborating on the reasons for the companies facing difficulties, Agrawal said investments are getting delayed as there is no deleveraging by non-core asset sales.
He acknowledged that fresh investment decisions are taking longer and revival in it depends on reforms and clarity on domestic demand.
Steps taken to remove obstacles stalling projects in the power and road sectors will take a few months to show results on the ground, he added.
The risk of a default on payments is higher among the companies which are rated BB and below, he said.
If the US Fed hikes rates, companies who have got external borrowings may be impacted, Agrawal said, stressing on the importance to hedge and added that Crisil does not see it snowballing into a systemic issue.
Stating that it does not have rating on the troubled Amtek Auto, Crisil today said it has done a review of its better rated companies following the default by the auto parts maker, and stressed on the need to avoid sharp rating corrections.
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