Iron & Steel tops the list of restructured debt

The steel industry has been under pressure for some time now. This is due to weak global demand, mainly due to the euro crisis, scarcity of iron ore due to mining clampdown in Karnataka and Orissa and high coking coal prices. All these factors are forcing steel makers, especially smaller ones, into debt restructuring. Corporate debt restructuring (CDR) aims at preserving viable corporates that are affected by certain internal and external factors and minimise the losses to the creditors and other stakeholders through an orderly and coordinated restructuring programme. As today's chart of the day shows, the share of iron and steel in the aggregate debt restructured by this process as on September 30 was the highest at 30.9% with 28 cases. To add to the woes of steel companies, many banks have started to restrict sanctions of fresh loans to the sector because of fe ar of increase in non-performing assets (NPA). Thus unless there is some clarity on mining issues and global pickup in demand for steel, the sector may see more cases of companies undergoing debt restructuring. After iron and steel, the sectors with the highest proportion of restructured debt include textiles, sugar, cement and petrochemicals.