Little effect on retail, media, food services: Experts

Around 50% firms don’t meet criteria

The recommendations of the K V Kamath-led expert committee for loan restructuring, approved by the Reserve Bank of India on Monday, are seen to have limited impact on the retail, media and food services industries, experts tracking these markets said.

These sectors are part of the list of 26 categories identified by the committee for loan restructuring.

According to analysts, large firms in these three segments don't need loan restructuring as they have efficiently managed their operations. Also, the discretion to restructure loans ultimately rests with banks, the experts said. “Though small and medium enterprises have debt on their books, the question is whether banks would agree to restructure loans or not. At the same time, most of the large companies are not highly leveraged,” said Anand

Agarwal, CFO, V-mart Retail.

Future group, which was the most leveraged among large retail firms in India, announced a sale of its retail assets to Reliance last week, transferring its liabilities as part of the deal.

Others such as Trent, Titan, Westlife Development, and Jubilant Foodworks are net-debt free, implying they do not require this window at all, said sector experts.

The only exception is Aditya Birla Fashion and Retail, whose net debt at the end of the June quarter stood at ~3,250 crore. In a post-results analysts call last month, the company said it proposed to bring down net debt to ~2,000 crore by the end of FY21 by improving working capital efficiency and utilising some proceeds from its rights issue of ~1,000 crore.

“Again, large companies have enough avenues available to them to raise money. So, who really needs the loan restructuring?” asked a retail analyst, who declined to be named.