This is where most bankruptcy cases come from in India; 40% cases from this sector

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Published: April 30, 2019 4:51:29 PM

As many as 772 cases under IBC at the end of FY19 were from the manufacturing sector, amounting to 41% of the total 1,858 such cases.

A bulk of India’s insolvency and bankruptcy cases come from the manufacturing sector, with it making up for two out of five cases filed under the IBC, a research report said. As many as 772 cases under IBC at the end of FY19 were from the manufacturing sector, amounting to 41% of the total 1,858 such cases, Kotak Institutional Equities said in the report.

From within the manufacturing sector, basic metals category seems to be in most distress, with 140 insolvency and bankruptcy cases in it. This is followed by Textiles, Leather and Apparel products with 127 cases, making up for another 6.8%.

Closed cases

Similar results were recorded for closed cases as well with over 45% of them belonging to the manufacturing industry. Of 715 total closed cases, 324 cases from the manufacturing industry were resolved. Of these, one in every ten cases belonged to basic metal production, the report said.

Ongoing cases

The trends in the ongoing cases are not dissimilar to the trends shown by closed and total cases. Out of total 1,143 ongoing cases, 448 (39%) of those are from the manufacturing sector. However, compared to the total cases in the manufacturing sector where Basic Metals lead, most of the ongoing cases are filed from Textiles, Leather and Apparel products with a total share of 6.6%.

These were in line with the 3QFY19 as well with 612 cases of total 14,484 cases belonging to the manufacturing sector. Other major sectors which filed for insolvency proceedings are from Real Estate, Renting & Business Activities and Wholesale & Retail Trade with each contributing 19.3% and 9.7%, respectively in the total number.

IBC (Insolvency and Bankruptcy Code) is about to complete three years this May. Among the other findings, the Kotak report said that the number of cases filed under IBC are increasing every quarter. Also, more than half of the resolved cases went with liquidation. “The number of cases of voluntary liquidation have seen a rise in the last two quarters,” the report added.

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