As interest rates rise, zombie companies haunt India Inc

The waters are rising for firms whose earnings are not enough to repay debt

If Indian companies were people, around 20 per cent of the listed space would be individuals whose salaries don’t cover their loan instalments.

An analysis of 1,995 listed companies shows that 19.2 per cent of them earn less what is needed to meet interest payments. The interest coverage ratio is the ratio of a company’s earnings before interest and taxes (EBIT) to its interest payout. The ratio is less than one for 384 companies. They are called zombie companies if the ratio remains below one for three years in a row.

Howard Marks, the legendary American investor, recently said vulnerable