https://www.bloomberg.com/view/articles ... e-in-india
The trouble is that companies that weren’t in the best position to handle the debt have been among the most aggressive. Late last year, of the 55 billion rupees of incomplete projects, about four-fifths were backed by financially weak companies. This year, of 104 projects awarded under the annuity model, 56 are facing financial closure issues from banks, according to analysts at Nomura Holdings Inc. They noted that companies with weak balance sheets were struggling.
The situation doesn’t look like it will improve soon. The cost of capital in India has risen sharply, and bank financing is increasingly restricted. Nervous lenders are looking for guarantees from road builders. Mumbai-listed Dilip Buildcon Ltd., a small company that’s won several HAM contracts, used up its entire working capital last fiscal year. Its debt-to-Ebitda ratio has ticked up alongside, but it boasts margins of 18 percent, the highest in the industry. The company is on the hook for at least six highway projects on the HAM model — that means a significant amount of equity and debt that still needs to be put to work.