Builders here appeared to be facing an uphill battle to stay afloat amid worsening industry and economy conditions.

According to the Financial Supervisory Service’s public disclosure system on Thursday, 16 percent of the country’s 50 top construction companies were found to be suffering from capital erosion due to snowballing deficits as of June this year.

Skyrocketing debt was another problem, as the builders had a combined outstanding debt of 157.9 trillion won ($141.6 billion), which compares to the 4.6 trillion won tallied in 2010.

Out of the group, 30 of the top-ranking companies had a debt ratio of over 200 percent.

This situation is unlikely to get better soon given the gloomy industry outlook by experts and related organizations.

The construction business survey index ― a measure of business conditions for the construction industry ― rose by 11.6 points on-month in September, according to Construction Economy Research Institute of Korea data. But the 70.6 point figure was not much higher than the August figure, which was the lowest in two years.

A BSI reading above 100 means businesses believe their conditions will improve while a reading below the 100 mark means pessimists outnumber optimists.

“It was mostly seasonal reasons that pushed the index up,” said Lee Hong-il of the institute. “It’s gotten cooler, and that usually means an automatic increase in demand.”

He added that October will not be witnessing a significantly improved index due to a lack of factors that could be expected to help raise the index any higher.

Among the troubled builders, Byucksan, Poonglim and Namkwang were suffering from full capital erosion as their deficit completely eclipsed their paid-in capital. Kumho Industrial showed an erosion rate of 87.2 percent, followed by Hanil with 78.2 percent and Chinhung with 42.2 percent.

In terms of debt, Kumho had a debt ratio of nearly 3,000 percent, while Hanil had 1,423 percent and Sambu, 1,045 percent.

Due to overwhelming relucance among investors toward buying corporate bonds issued by the builders, companies are facing greater frustration in securing capital.

Mirroring the industry-wide difficulty, well-known builders like Byucksan, Poonglim, Namkwang and Dongyang have all applied for court receivership after deciding they cannot be responsible for their own fate.

Adding to investors’ concerns is the recent application from Woongjin Holdings for a court to manage its construction arm, Kukdong.

The Construction Economy Research Institute ruled out the incident as having an impact on the September business survey index, but experts said the sudden fall of one of the nation’s best-known construction companies will no doubt cast a further shadow over the industry in general.

By Kim Ji-hyun  (jemmie@heraldcorp.com)