In the last two years, 12 business groups have sold assets worth R54,900 crore to pare their debt. Also, 16 large companies have put assets worth R60,200 crore on the block, which is about 12% of their debt. Most of the assets sold were from companies in power, oil and gas sectors, as banks have been putting pressure on companies in these sectors to deleverage through asset sales. Interestingly, most of the the sales have been to other companies—both domestic and international—in the same sector, indicating good buying opportunity.
The power sector—gas, hydro and wind—accounts for about one-third of the total assets sold. Non-availability of gas and coal had stymied the sector and companies saw their debt piling up in the last two years. A report by Standard Chartered highlights that asset sales have brought about a meaningful reduction in debt of the power business of the Jaypee group. However, for most companies, leverage will still remain high after the sale of assets.
The report points out that while there is demand for operational road assets, the demand for many assets remains weak, especially in thermal power, small steel plants and telecom sectors. Thermal power, which is the most stressed sector, has few takers because of lack of availability of coal.