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Top Five Companies With Negative Net Worth

The net worth is a company’s total assets minus its total liabilities, thus measuring how much the entity is worth. It is calculated using the balance-sheet with the formula ‘Total Assets – Total Liabilities’. Alternatively, net worth also equals ‘Shareholders Equity – Reserves & Surplus’. It runs into negative if the accumulated losses of a company exceed the shareholders’ equity or if it’s debt-ridden to the extent that its liabilities exceed its assets or when the value of its assets deplete massively. It implies a weak financial position that needs to be turned around with the help of consistent profits over the coming years. Following is a list of companies with the highest negative net worth as of March 31, 2012. 

Company

Industry

Net Worth (Rs Crore)

Kingfisher Airlines Ltd

Transport - Air

-5.082.4

Tata Teleservices (Maharashtra) Ltd

Telecommunications - Service

-1.133.98

Southern Petrochemicals Industries Corporation Ltd

Fertilisers

-1.032.4

Mackinnon Mackenzie & Company Ltd

Miscellaneous

-831.1

Uniworth Ltd

Textiles – Woolen, Worsted

-745.79

Kingfisher Airlines Ltd

It is not at all a surprise to see the troubled Kingfisher Airlines (KFA) top our list of negative net worth. This is because the company has consistently been reporting losses. KFA has reported losses over the past eight years, together accumulating a loss amount of around Rs 7,700 crore. As of March 31, 2012, the company had negative reserves of Rs 6,213 crore and a negative net worth of Rs 5,082 crore. The company has a huge debt pile-up of around Rs 8,000 crore in its books, which is a matter of serious concern. Further, the latest media reports suggest that it is in talks with foreign carriers for a possible stake sale. On an YTD basis the scrip has tumbled by almost 20 per cent and is currently trading at Rs 17 per share. The scrip had touched a low of Rs 7 per share in the month of August.

Tata Teleservices (Maharashtra) Ltd

Tata Teleservices (Maharashtra) Limited (TTML) is a leading telecom player with a presence in the circles of Maharashtra (including Mumbai) and Goa. The company has the largest wire line base in the above circles among the private players. It also has a strong presence in the wireless segment through its joint venture with NTT DOCOMO of Japan. TTML is a debt-free company but has seen huge losses in the last 10 years, ranging from 7.07 per cent to 62.56 per cent of revenues. The scrip has yielded a return of 0.34 per cent YTD.

Southern Petrochemicals Industries Corporation Ltd

Southern Petrochemicals Industries Corporation Ltd (SPIC) is one of the oldest business houses in South India. The debt-ridden company, involved in the manufacture and sale of fertilisers, has been servicing its debt by selling its assets and stake. The company’s profitability has been affected by huge amounts of debt which reached a level of 12.67 to equity in the year ending September 2006. The company is now working on reducing the debt by 10 per cent if its creditors exercise the settlement scheme proposed by the management. Though the stock has YTD returns of 23.46 per cent, it had recently reached its 52-week low of Rs.12.75 per share.

Mackinnon Mackenzie & Company Ltd

Mackinnon Mackenzie & Company Ltd (MMCL) was a prime shipping company started in 1847 but is now a debt-ridden entity because of the huge loans taken to buy ships. The company has sold its ships and mortgaged its assets but is in no position to repay the balance outstanding of over Rs 800 crore. The company’s finances are deeply disappointing and the company hasn’t shown profit in the last 10 years. The interest charges for MMCL have been 60 to 99 times the company’s revenues. The company’s debt equity ratio comes to a humongous 3,302.44 for FY12.

Uniworth Ltd

Uniworth Ltd is the Indian wing of the multinational Lohia Group, an integrated wool and worsted textile company. Its major products ranges from wool, silk, linen and polyester blends to worsted yarn, blended yarn, dyed yarn, etc. On the financial front the company has consistently made losses since the last many years which have got accumulated as negative reserves in the books of the company as on March 31, 2012. The reserve of losses stands at Rs 785 crore. At present the scrip is trading at Re 1 and the same is down by 50 per cent on an YTD basis.

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