26 C
Delhi
Monday, September 28, 2020

75% companies availing moratorium are sub-investment grade: CRISIL

- Advertisement -

Prolonged COVID-19 outbreak to impact Indian industry: CRISILNew Delhi, Aug 31 (IANS) The moratorium on loan repayments provided by banks at the behest of the Reserve Bank of India (RBI) has provided much-needed liquidity support to mid-sized sub-investment grade (rated CRISIL BB+ or lower) companies, an analysis by the rating agency indicated on Monday adding that the scheme also prevented a sharp weakening of their credit profiles.

While the moratorium ended on Monday, debt restructuring announced by the RBI recently can play a crucial role in supporting the credit profiles of the mid-sized companies.

CRISIL analysed over 2,300 non-financial companies (from its rated portfolio) that availed of the moratorium to tide over Covid-19 pandemic-induced cash-flow challenges, after categorising them by rating, sector and size. It revealed divergent trends.

Three out of four entities that availed of the moratorium are rated in the sub-investment grade. Most of them were grappling with a slowing economy before the pandemic began. The severely curtailed business activity that followed in the first quarter of this fiscal had cramped cash flows, so the moratorium came as a big relief. Only one out of four companies that availed of the moratorium is rated in the investment grade (rated CRISIL BBB- or higher). They took recourse to the moratorium to build a liquidity cushion for exigencies in the near term.

According to Subodh Rai, Senior Director, CRISIL Ratings Companies in sectors impacted the most by the pandemic have been the keenest to avail of the moratorium. “While every sector has been affected by the dislocations stemming from the pandemic, the majority of those with lower resilience have availed of the moratorium. Few among the more resilient ones have done so.”

Every fifth company in highly impacted sectors such as gems and jewellery, hotel, auto components, automobile dealers, power (power utilities, independent power producers and energy traders), packaging and capital goods and components availed of the moratorium.

On the other hand, only one in ten did from less-impacted sectors such as pharmaceuticals, chemicals, FMCG, secondary steel and agriculture. Size has also been a differentiator with few relatively bigger businesses going for it.

In the mid-sized corporate segment (Rs 300-1,500 crore turnover), the number of companies availing of the moratorium was more than thrice those in the Rs 1,500 crore and above turnover range.

“The moratorium has been crucial in averting sharp downward rating actions in the face of shrinking turnover and declining profitability. It helped companies manage the sudden stretch in working capital cycles and cash flows amid the bleak business environment,” said Rahul Guha, Director, CRISIL Ratings.

While the moratorium ended on Monday, demand outlook in most sectors remains muted. In particular, companies falling in the low resilience sector will continue to remain under stress over the next two to three quarters.

To support corporates impacted by the Covid-19 induced slowdown, the RBI has introduced a one-time debt restructuring plan. Taking timely recourse to this facility can help companies manage their cash flows that, in turn, will provide support to their credit profiles.

Source: IANS

India Updates
India Updates is an independent news & Information website. Follow us for regular updates on News and Information.

Follow Us On

Related News

Former Defence Minister Jaswant Singh passes away

New Delhi, Sep 27 (IANS) Former Defence Minister Jaswant Singh passed away early Sunday, said an official statement from the R&R Hospital here. He...

BJP’s oldest ally Akali Dal quits NDA over ‘black laws’

Chandigarh, Sep 26 (IANS) The highest decision making body of the Shiromani Akali Dal (SAD) core committee at its emergency meeting held here on...

Gill stars as clinical KKR thrash SRH by 7 wkts

Abu Dhabi, Sep 27 (IANS/GloFans) Opener Shubhman Gill's unbeaten 70-run knock along with Eoin Morgan's 42 not out guided Kolkata Knight Riders (KKR) to...

RBI to retain lending rates, accommodative stance, say experts

By Rohit Vaid (IANS) Persistently high inflation fanned in part due to supply side disruptions along with seasonal factors will deter the Reserve Bank...

Amazon Echo devices to automatically delete your recordings

New Delhi, Sep 27 (IANS) After launching new Alexa and Echo devices, Amazon has introduced additional privacy controls and easier ways for the customers....

Uma Bharti, Ram Madhav among key leaders dropped from BJP’s office-bearers list

New Delhi, Sep 26 (PTI) With several BJP leaders making way for fresh faces in the new list of the party''s national office-bearers announced...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Trending Topics In India

Covid 19 India Updates

Will Govt have 80,000 crores available over the next one year?, saks Adar Poonawalla

New Delhi, Sep 26 (IANS) Rs 80,000 crore will be the cost of vaccinating everyone in India with the Covid-19 vaccine whenever it is...

Will Govt have 80,000 crores available over the next one year?, saks Adar Poonawalla

New Delhi, Sep 26 (IANS) Rs 80,000 crore will be the cost of vaccinating everyone in India with the Covid-19 vaccine whenever it is...

Centre puts price caps on medical oxygen after shortage reports

New Delhi, Sep 26 (IANS) In order to deal with shortage of medical oxygen and the resultant increase in prices in the country, the...

Huge infrastructure build-up helped India recovery rate: Dr Harsh Vardhan

New Delhi, September 26 (ANI): Union Health Minister Dr Harsh Vardhan on Friday said that huge infrastructure build-up to counter the COVID -19 situation...

Aarogya Setu loses sheen as downloads drop

New Delhi/Noida, Sep 25 (IANS) Prashant Kumar who lives in Noida sector 143 often goes to a nearby mall-cum-office complex with his family for...

PM Modi asks states to focus on micro-containment zones

New Delhi, Sep 23 (PTI) Prime Minister Narendra Modi on Wednesday asked states to reassess if lockdowns of one or two days are effective...

Trending News In India

BJP’s oldest ally Akali Dal quits NDA over ‘black laws’

Chandigarh, Sep 26 (IANS) The highest decision making body of the Shiromani Akali Dal (SAD) core committee at its emergency meeting held here on...

Self-sufficient in defence linked to ‘self-respect’, ‘sovereignty’ of country: Rajnath

New Delhi, Sep 27 (PTI) Defence Minister Rajnath Singh on Saturday said a country that depends on imports for its military equipment can never...

BJP’s oldest ally Akali Dal quits NDA over ‘black laws’

Chandigarh, Sep 26 (IANS) The highest decision making body of the Shiromani Akali Dal (SAD) core committee at its emergency meeting held here on...

NCB seizes phones of Deepika, Rakul, Simone, Karishma in drugs case

Mumbai, Sep 26 (IANS) The Narcotics Control Bureau (NCB), which quizzed Bollywood actors Rakul Preet Singh, Deepika Padukone, her former manager Karishma Prakash, and...

Gill stars as clinical KKR thrash SRH by 7 wkts

Abu Dhabi, Sep 27 (IANS/GloFans) Opener Shubhman Gill's unbeaten 70-run knock along with Eoin Morgan's 42 not out guided Kolkata Knight Riders (KKR) to...

RBI to retain lending rates, accommodative stance, say experts

By Rohit Vaid (IANS) Persistently high inflation fanned in part due to supply side disruptions along with seasonal factors will deter the Reserve Bank...

Trending Showbiz

NCB seizes phones of Deepika, Rakul, Simone, Karishma in drugs case

Mumbai, Sep 26 (IANS) The Narcotics Control Bureau (NCB), which quizzed Bollywood actors Rakul Preet Singh, Deepika Padukone, her former manager Karishma Prakash, and...

NCB quizzes Deepika, Sara, Shraddha in drug case related to SSR death

Mumbai, Sep 26 (IANS) The Narcotics Control Bureau (NCB) on Saturday questioned Bollywood divas Deepika Padukone, Sara Ali Khan, Shraddha Kapoor for several hours...

‘CBI delay in converting abetment to suicide to murder frustrating’

Mumbai, Sep 25 (IANS) Vikas Singh, family lawyer of late actor Sushant Singh Rajput, on Friday stated that the delay being by Central Bureau...

NCB questions Rakul, Deepika’s ex-manager, Dharma Productions honcho

Mumbai, Sep 25 (IANS) The Narcotics Control Bureau (NCB) on Friday is questioning Bollywood actor Rakul Preet Singh, Dharma Productions executive producer Kshitij Ravi...

Famed singer S.P. Balasubrahmanyam succumbs to Covid-19

Chennai, Sep 25 (IANS) Famed playback singer and Padma awardee S.P. Balasubrahmanyam, or popularly SPB or Balu in the movie world and who has...

WhatsApp clarifies after probe agencies retrieve chats

New Delhi, Sep 25 (IANS) The Narcotics Control Bureau (NCB) cloned the mobile phones of Rhea Chakraborty and others, which gave them access to the WhatsApp chats...

Trending Sports

I am surprised Sanju Samson is not representing India in all formats, says Warne

Dubai, Sep 27 (PTI) Spin legend Shane Warne on Saturday expressed his "surprise" that wicketkeeper-batsman Sanju Samson is not playing for India across formats.Samson...

I am surprised Sanju Samson is not representing India in all formats, says Warne

Dubai, Sep 27 (PTI) Spin legend Shane Warne on Saturday expressed his "surprise" that wicketkeeper-batsman Sanju Samson is not playing for India across formats.Samson...

Shaw and Rabada propel Delhi to big win over Dhoni’s CSK

Dubai, Sep 26 (IANS/GloFans) In yet another dismal show, three-time IPL champions Chennai Super Kings (CSK) suffered a 44-run defeat against a charged-up Delhi Capitals (DC) here on...

KL Rahul’s record-breaking ton blows RCB away

Dubai, Sep 25 (IANS/GloFans) Captain K.L. Rahul on Thursday shattered a few IPL records with a blistering 69-ball 132 not out -- the highest individual...

Sat on bench for hours after losing in 1992 Oly quarters, reveals Paes

New Delhi, Sep 25 (IANS) Eighteen-time Grand Slam champion Leander Paes made history in 1996 when he became the first Indian tennis player to...

Ex-Australian cricketer Dean Jones dies of cardiac arrest in Mumbai

New Delhi, Sep 24 (IANS) Former Australian cricketer Dean Jones passed away in Mumbai on Thursday after suffering a cardiac arrest. The 59-year-old was...

Latest Trending News In India

Former Defence Minister Jaswant Singh passes away

New Delhi, Sep 27 (IANS) Former Defence Minister Jaswant Singh passed away early Sunday, said an official statement from the R&R Hospital here. He...

Self-sufficient in defence linked to ‘self-respect’, ‘sovereignty’ of country: Rajnath

New Delhi, Sep 27 (PTI) Defence Minister Rajnath Singh on Saturday said a country that depends on imports for its military equipment can never...

BJP’s oldest ally Akali Dal quits NDA over ‘black laws’

Chandigarh, Sep 26 (IANS) The highest decision making body of the Shiromani Akali Dal (SAD) core committee at its emergency meeting held here on...

NCB seizes phones of Deepika, Rakul, Simone, Karishma in drugs case

Mumbai, Sep 26 (IANS) The Narcotics Control Bureau (NCB), which quizzed Bollywood actors Rakul Preet Singh, Deepika Padukone, her former manager Karishma Prakash, and...

Gill stars as clinical KKR thrash SRH by 7 wkts

Abu Dhabi, Sep 27 (IANS/GloFans) Opener Shubhman Gill's unbeaten 70-run knock along with Eoin Morgan's 42 not out guided Kolkata Knight Riders (KKR) to...