'Nearly half of 500 listed borrowers vulnerable to weak Re'

The vulnerability of around half of the top 500 listed corporate borrowers to rupee depreciation remained high during 2013-14 despite a marginal improvement in sensitivity over previous years, says a report.
According to India Ratings and Research (Ind-Ra), 234 of the 500 largest, listed corporate borrowers have a negative sensitivity to rupee depreciation.
"If rupee depreciates by 1 per cent (against the US dollar), it would shave off their absolute EBITDA by 0.19 per cent," it said.
It added that the oil and gas sector, despite being a heavy net importer, is lesser affected by rupee depreciation.
"Since the prices of end-products of upstream and midstream players are import price parity linked, corporates in this sector where regulatory intervention is limited would be in a much better position to pass on higher rupee costs," it said.

The challenge to lenders remain that these 234 net importers account for 45 per cent of 2013-14 consolidated debt (equivalent to Rs 12.9 lakh crore).

"These corporates also account for 37 per cent of the total consolidated FY14 foreign currency debt (equivalent to Rs 1.5 lakh crore; often unhedged), making their balance sheet borrowings vulnerable to currency headwinds apart from causing deterioration in their operating profits in the event of sustained rupee depreciation," it said.
The agency estimates that the situation may not have meaningfully improved in FY15.
"The debt servicing ability of these corporates is already stretched and sustained currency depreciation could push them into the stressed category," it said.

It said corporates whose foreign exchange positions are unhedged may find themselves in a strange dilemma. Fertiliser and consumer durables are the sectors with prominent negative sensitivity.