STUDY THE IMPACT OF CORPORATE DEBT RESTRUCTURING ON A COMPANY’S FINANCIAL PERFORMANCE

Abstract

The global financial crisis has distressed the corporate sector in a number of countries, affected both by a tightening of credit and weaker consumer demand. Corporate Debt Restructuring (CDR) is an effective financial tool for minimizing the adverse effects of default on the borrowers as well as lenders. This is especially important, as the credit portfolio of banks and financial institutions are created mainly out of the resources raised from the general public. This report starts with an introduction about corporate debt restructuring, how it functions in India and its structure, emphasizing on the need and importance of CDR. It further moves on to study recent cases of CDR in India and how they turned out. Analysis has been performed by studying the impact of CDR on six companies and their performance. This has been done by studying the impact on major ratios. Further, recommendations have been made on the basis of the study as well as the current scenario. Some of these include improved monitoring, appraisal process and alignment with the legal system. Also, institutes could be set up for funding decisions, especially in the case of infrastructure projects that are on the rise.