Recovery of bad debt from steel companies to dip
The next round of large debt resolution in the steel sector under the Insolvency and Bankruptcy Code (IBC) is expected to see lower recovery. As of March, there were 17 stressed steel assets with a total outstanding liability of ?62,000 crore seeking resolution. Unlike the first wave of debt clean-up, the upcoming resolution cases shall largely be smaller assets concentrated in the long integrated, sponge iron and flat re-rolling space, said credit rating agency Crisil. Moreover, the global trade barriers will also curb exports of flat re-rollers and suppress demand for the small steel assets put on the block, it added. The government has managed to recover ?70,000 crore of the ?1.7-lakh crore defaulted by 94 companies, translating into a haircut of 58 per cent for financial and operational creditors. At ?90,000 crore, just 16 steel companies accounted for nearly half of the bad debt. Their resolution required a haircut of 47 per cent.
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