It is not at all an overstatement when they say that debt is dangerous. The problem is that interest expenses are a fixed cost. You have to pay them irrespective of how the sales and profits are performing. This is the reason why too much debt in an adverse economic scenario can wreck havoc with a company's finances.

The woes of debt-laden Indian companies are getting worse. The quantum of debt for restructuring in India Inc has been growing at an alarming rate. Here are some worrying figures reported by Business Line. During April-September 2013, debt aggregating about Rs 645 bn was referred to the Corporate Debt Restructuring (CDR) Cell. This is a 63.5% jump from Rs 394.35 bn referred in the corresponding period of the previous fiscal. It must be noted that the quantum has increased despite tightening of the CDR norms.

What are the reasons for the financial problems of the highly indebted companies? Poor economic environment and regulatory hurdles rank as the key reasons. The outlook for the Indian economy continues to remain bleak at least over the medium term.