You are comparing two mid-sized manufacturers in the same industry. Both carry ₹2,400 crore of gross borrowings. Both earned ₹600 crore of operating profit before depreciation. Both therefore carry gross borrowings of four times that figure, both have interest cover in the same range, and on every leverage screen you can build they come out level. The screener you use shows a column headed long-term borrowings: the first company shows ₹2,150 crore there and the second ₹900 crore, so if anything the second looks the more conservatively financed of the two. Within eighteen months the second company is in a room with its bankers and the first is not. Nothing in either ratio was calculated wrongly, and nothing in either set of accounts was misstated. The number that separated them was never on the ratio sheet.
Two families each owe ₹18 lakh. One owes it on a home loan with fourteen years to run and a fixed instalment that has not changed since the day it was sanctioned. The other owes some of it to an uncle on the understanding that he will be repaid whenever he asks, and the rest across three credit cards that are being rotated. The total is the same, the incomes are the same, and only one of those families can plan next Diwali.
Total borrowings is a stock. What is due within the next twelve months is a schedule. Every leverage ratio in ordinary use measures the stock, and every corporate failure that surprises equity investors happens on the schedule.
Where the twelve-month figure actually lives
The balance sheet splits borrowings into non-current and current, and the split is not the split most readers assume. The portion of a long-term loan that falls due within twelve months of the reporting date is stripped out of the non-current figure and presented among current liabilities. That single convention produces the inversion in the opening paragraph: as a large repayment comes closer, the line labelled long-term borrowings gets smaller. The thing that makes next year dangerous is the same thing that makes that line look better.
Where the stripped-out portion is presented has itself moved over the years — it was long shown under other current financial liabilities, and a later amendment to the presentation schedule brought it onto the face as a separate item within current borrowings. Find it rather than assume the caption, because a comparison across a year in which the presentation changed will otherwise show a jump in current borrowings that never happened.
- Non-current borrowings, on the face of the balance sheet. Broadly, everything falling due more than twelve months out — with one exception, set out immediately after this list, that lets a contractually short obligation sit here legitimately.
- Current borrowings, also on the face. Two very different things live here together: genuinely short-term facilities — cash credit, overdraft, working capital demand loans, commercial paper — and the current maturities of long-term loans. Read them as one number and you will misread both.
- The borrowings note. The terms: tenor, security, interest basis, and the repayment schedule loan by loan. This is where a bullet repayment announces itself.
- The financial-instruments note. The disclosures on liquidity risk under Ind AS 107 require a maturity analysis of financial liabilities on undiscounted contractual cash flows, bucketed by period. Because it is undiscounted and includes the future interest, it will not agree with the carrying amounts on the balance sheet. That is the design of the disclosure, not an inconsistency in it — and it is the one place where the company itself adds the whole thing up and states what the next twelve months demand in cash.
Why the calendar is lumpy, and which instruments make it so
| How the money was borrowed | How it is repaid | What it does to the calendar |
|---|---|---|
| Bank term loan | Amortised in instalments across the tenor, often after a moratorium while a project is being built | Smooth and predictable. The current-maturities line is roughly one year of instalments and moves slowly |
| Non-convertible debentures | Frequently a bullet — interest through the tenor and the entire principal on one date, though staggered redemption structures also exist | A single date carrying a large amount, sitting quietly in non-current borrowings for years and then arriving all at once |
| Cash credit or overdraft | No maturity in the ordinary sense. Sanctioned limits are reviewed periodically and are typically repayable on demand | Looks permanent and is not. It never appears as a maturity, so a calendar built only from repayment dates misses it entirely |
| Commercial paper | Short-dated money-market paper, repaid at maturity and reissued — the outer tenor permitted is up to one year | Every rupee of it falls inside the twelve months, always, and has to be reissued to somebody willing to buy it that week |
| External commercial borrowing | Its own agreed schedule. Most are denominated in a foreign currency, though rupee-denominated borrowing from abroad is also permitted | Where it is in foreign currency the date is fixed and the rupee amount is not, so the repayment is partly a currency question — hedged or unhedged is disclosed. Check which kind this is before assuming either |
Company A shows non-current borrowings of ₹2,150 crore and current borrowings of ₹250 crore. Company B shows non-current borrowings of ₹900 crore and current borrowings of ₹1,500 crore. Both have gross borrowings of ₹2,400 crore and operating profit before depreciation of ₹600 crore. Which faces the harder twelve months?
Dono pe ₹18 lakh ka udhaar. Ek ka home loan hai — chaudah saal, har mahine ek tay kist, koi surprise nahi. Doosre ne chacha se liya hai "jab maangoon tab wapas" aur teen credit card ghuma raha hai. Total barabar, kamai barabar, aur Diwali ki planning sirf ek kar sakta hai. Companies mein bhi wahi: dono pe ₹2,400 crore karza, dono ka 4 guna leverage. Par ek ko agle baarah mahine mein ₹250 crore chukana hai aur doosre ko ₹1,500 crore — jabki dono kamate hain lagbhag ₹300 crore. Screener ke "long-term debt" column mein doosra kam dikhta hai, kyunki jo kist paas aa jaati hai woh us column se nikal ke current mein chali jaati hai.
- Leverage ratios measure the size of the debt; only the maturity split says when it has to be dealt with.
- The portion of a long-term loan due within twelve months is moved into current liabilities, so the long-term line shrinks as the danger approaches.
- Current borrowings mix genuinely short-term facilities with current maturities of long-term loans — separate them before reading either.
- The liquidity-risk note gives a maturity table on undiscounted contractual cash flows, which will not tie to the carrying amounts by design.
- Debentures usually repay in a bullet and cash credit never matures at all, so the calendar is lumpy in ways the total never shows.
Mark it done to track your progress through the curriculum.
Common questions
Short, direct answers to what people ask about this topic.
- current maturities of long term borrowings meaning
- Current maturities of long-term borrowings is the slice of a long-term loan that falls due within twelve months of the reporting date, stripped out of non-current borrowings and presented among current liabilities. The loan itself has not changed — only the portion repayable next year is moved. That convention is why the line labelled long-term borrowings gets smaller as a large repayment gets closer.
- the part of a long-term loan repayable within twelve months of the balance sheet date is classified as
- A current liability, reported as current maturities of long-term borrowings. Where it appears has moved over the years in Indian presentation: it was long shown within other current financial liabilities, and a later amendment brought it onto the face of the balance sheet inside current borrowings. Find the caption in the company’s own balance sheet rather than assuming it, or a year-on-year comparison will show a jump in current borrowings that never happened.
- how do I find out how much debt a company must repay next year
- Add the current maturities of long-term borrowings to the short-term borrowings on the face of the balance sheet, then check both against the loan-by-loan repayment schedule in the borrowings note. The financial-instruments note goes further: the liquidity risk disclosure gives a maturity analysis of financial liabilities on undiscounted contractual cash flows, bucketed by period. Because it is undiscounted and carries future interest, it will not agree with the balance sheet carrying amounts, and that is the design of the disclosure rather than an inconsistency in it.
- a large single repayment of principal at the end of a loan’s term is called a
- A bullet repayment — the whole principal falling due on one date at the end of the tenor, with only interest paid until then. It is why a repayment calendar can look undemanding for four years and then require a single very large sum. A bullet announces itself only in the repayment schedule inside the borrowings note; no leverage ratio and no gross debt figure will show it.
- can a loan due within a year be shown as non-current
- Yes, in one specific case: where the company can insist on rolling or refinancing the obligation for at least twelve months beyond the reporting date under a facility that already exists. The word doing the work is insist — the test is what the company is entitled to, not what it expects to arrange. Where the roll depends on the lender agreeing again, as on an ordinary demand facility, the obligation is current. The wording of this test has been amended more than once, so read the accounting policy note rather than a remembered rule.