Kamath Panel's 5 key ratios may make loan recast hard for small metal firms

Experts say a one-size-fits-all solution works against medium and small players in the ferrous and non-ferrous space

The Kamath Panel has identified 26 sectors, including ferrous and non-ferrous, impacted by Covid-19 for a loan restructuring scheme to be rolled out by banks and non-banking financial companies. The committee has identified five key ratios with different limits across sectors as a threshold for implementing a resolution plan. 

The five key ratios are: total outside liability/adjusted tangible networth (TOL/Adjusted TNW), total debt/EBITDA, current ratio, debt service coverage ratio (DSCR) and average debt service coverage ratio (ADSCR).

For the steel sector, which was under stress even before Covid-19 and has a current debt of Rs 2.66 trillion, the debt/EBITDA ratio