Global ratings agency Standard & Poor’s on Wednesday said an increasing focus by India Inc on lowering debt is likely to improve their credit profiles.
“More companies are improving their high financial leverage and boosting their credit profiles by adopting measures such as sale of equity and assets or using their free operating cash flows to reduce debt,” S&P said in a report.
“Focus on lowering debt will likely improve their credit profiles,” it added.
The routes adopted by domestic companies include raising equity, selling non-core assets and in some cases divesting businesses, it noted.
S&P credit analyst Mehul Sukkawala said economic gloom and high interest rates have affected debt-servicing ability and these are the primary factors pushing companies towards this strategy. In some cases, companies are refocusing on reducing debt after years of investing for growth.