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Mumbai: Reserve Bank on Tuesday said there has been an improvement in India Inc’s leverage in 2015-16 and the overall risks in the corporate sector have also moderated over the fiscal.

“The proportion of ‘leveraged’ companies declined sharply from 19 per cent in March 2015 to 14 per cent in March 2016,”

Reserve Bank said in its Financial Stability Report (FSR), brought out on behalf of the Financial Stability and Development Council.

Going by the share in total debt as well, their share came down to 20.6 per cent from 33.8 per cent, it said.

A leveraged company is one which has negative net-worth or a debt to equity ratio exceeding 2 and the RBI took the listed non-government and non-financial companies in its analysis.

The proportion of debt of highly leveraged companies (those from the leveraged lot having a debt to equity ratio of over 3) came down to 19 per cent from 23 per cent, it said.

Further, an analysis of the current trends in debt servicing capacity and leverage of ‘weak’ companies indicated some improvement in 2015-16, it said.

The report said 15 per cent of the companies were ‘weak’ (defined as those having interest coverage ratio of less than one) at the end of March 2016, which is down from the 17.8 per cent level in March 2015.

The banks undertook a massive exercise in which they were asked to identify the debts of 130 high exposure clients as bad assets by the RBI in the December and March quarters of the fiscal as part of an asset quality review.

The FSR said the iron and steel industry had high leverage as well as interest burden, followed by other sectors like construction, power, telecommunication and transport industries.

The FSR also came up with a corporate sector stability indicator and map which is indicating that the overall risks to the corporate sector are moderating, but risks on account of low demand and liquidity pressures continue.

However, an analysis of the companies by the Ministry of Corporate Affairs data (which covers the entire universe beyond the listed ones), indicated that there has been an increase in leverage trends in 2014-15 over the earlier 12 months.

Unlike listed companies, which have to report their earnings on regular intervals, data from the Registrar of Companies is generally dated.

London/Brussels: A government overhaul of the British Steel Pension Scheme – crucial to convincing anyone to buy Tata’s British assets – is in jeopardy after Britons’ vote to leave the European Union deepened the fund’s debts and depleted its assets, analysts and industry sources said.

Pension trustees said they were in talks to assess the impact of last week’s decision, which sources said already raised the risk Tata Steel’s giant Port Talbot plant would be closed, destroying thousands of jobs.

Britain’s government has been trying to overhaul the British Steel Pension Scheme (BSPS), one of the nation’s largest defined benefit plans, with 130,000 members.

Even before last week’s referendum, its 14 billion pounds ($18.79 billion) of liabilities exceeded its assets by roughly 700 million pounds.

Tata Steel inherited the pension scheme when it bought Corus, formerly British Steel, for $12 billion in 2007.

“The trustee and its advisers are working with stakeholders to understand what, if any, impact the outcome of last week’s referendum might have on the discussions regarding the future of the scheme,” the trustees said in a statement.

Hymans Robertson, which advises firms that sponsor schemes such as BSPS, estimated British pension liabilities had gone up by about 5 percent — or several hundred million pounds in the case of the steel pension fund – since close of business on Thursday, because of the falls on stock markets and predicted fall in interest rates triggered by the British referendum.

A spokesman for Tata said he couldn’t comment on the latest funding for the BSPS, but like all pension funds, asset values moved up and down. The FTSE rose around 2 per cent on Wednesday, partly recovering from heavy losses.

At least three of the seven bidders are still interested in buying Tata’s British operations, industrial sources said, but they have also said Tata might decide to shut its loss-making Port Talbot plant in Wales and focus resources on its more successful Dutch plant at IJmuiden.

On Tuesday, Dutch union leaders said Tata was investing between 200 million euros ($221.7 million) and 300 million euros in IJmuiden. Tata Steel has not disclosed financial details.

In an emailed statement, it said the Dutch spending was part of its long-term strategy drawn up several years ago to invest in equipment to supply, especially to car manufacturers, higher-strength steels with improved surface quality.

“This significant investment will further improve IJmuiden’s competitive position as a manufacturer of world-class products for our most demanding customers,” it said.

Tata Steel says it has invested 1.5 million pounds in Britain and a similar amount in the Netherlands since 2007.

But the climate for investment in Britain is now stormy, analysts say, and steel pension liabilities are the least of the government’s worries.

“The Port Talbot operation has never been further from viability. Due to current uncertainty, private investment in Port Talbot is unlikely,” said Ben Orhan, senior economist at IHS Global Insight Pricing and Purchasing.

“The future of the steelworks is critical to those around Port Talbot and the wider UK steel industry. But the ‘Out’ result means it is at the bottom of the priorities of those, who were working hard to save it.”

New Delhi: The government has initiated a probe into dumping of certain steel items used in automotive and construction industry from China, in order to protect the domestic industry.

SAIL, Rashtriya Ispat Nigam, Usha Martin and JSW Steel have filed a petition before the DGAD for initiation of anti-dumping investigation and imposition of the taxes on the alleged dumped imports of “Wire Rod of Alloy or Non-Alloy Steel” originating in or exported from China.

The Directorate General of Anti-Dumping and Allied Duties (DGAD) “prima facie finds sufficient evidence of dumping” of the products from that country.

“The authority hereby initiates an investigation into the alleged dumping causing consequent injury to the domestic industry… to determine the existence, degree and effect of dumping and recommend the amount of anti-dumping duty, which if levied, would be adequate to remove the injury to the domestic industry,” the DGAD has said in a notification.

The period of investigation covers July-December 2015. The injury investigation period will also cover 2012-2013, 2013-2014, 2014-2015, April 2015-December 2015.

Besides, it said the applicants have requested for retrospective imposition of the anti-dumping duty.
The products under consideration in this investigation are bars and rods, hot-rolled, irregularly wound coils, iron or non-alloy steel or alloy steel, which are commonly known as wire rods.

It is used in many applications and sectors such as automotive components, welding electrodes, fasteners including nuts and bolts, nails, railway sleepers, general engineering, binding wires for construction industry, armoured cables.

Countries start anti-dumping probe to determine whether their domestic industries have been hurt due to surge in below-cost imports. As a counter measure, they impose duties under the multilateral regime of WTO.

The duty is aimed at ensuring fair trading practices and creating a level-playing field for domestic producers vis-a-vis foreign producers and exporters.

India has already imposed anti-dumping duty on several products to tackle cheap imports from some countries including China.

According to a WTO report, India, the US and Brazil were the leading initiators of anti-dumping investigations in 2015.

The WTO members initiated 107 new anti-dumping investigations from January-June 2015, slightly up from 106 in the same period in 2014, the report added.