Covid-19 impact: India Inc seeks moratorium on loans, waiver on levies

Published: March 19, 2020 2:45:23 AM

While the services sector — aviation, hospitality and retail — is the worst hit, manufacturing companies too are faced with stretched working capital cycles as their fixed costs remain even as demand has evaporated.

Moody’s has downgraded India’s growth forecast for 2020 to 5.3% on downside risks emanating from the spread of Covid-19 cases in the country.Moody’s has downgraded India’s growth forecast for 2020 to 5.3% on downside risks emanating from the spread of Covid-19 cases in the country.

By Malini Bhupta

Hit by near lockdown conditions across the country, Corporate India is expected to seek relief from the government. On a conference call on Tuesday, members of the Federation of Indian Chambers of Commerce and Industry (FICCI) decided to request the government for a moratorium on loans and waiver on GST payments. FICCI secretary-general Dilip Chenoy said: “We have inputs from members on different sectors and a lot of working capital is hit due to the lockdown, so we are looking at possibility of banks giving a moratorium or rescheduling loans. There are many levies that hospitality sector has to pay, so in the face of the lockdown we are saying if some of these can be waived for a certain duration.”

Senior bankers told FE on Wednesday that they were in touch with their corporate borrowers, who had expressed concerns over a possible liquidity crunch that they could be faced with if the lockdown continued for a few more weeks. Given that almost every industry from metals, retail, aviation, hospitality to auto are going to be hit by the lockdown, India Inc has decided it is time to ask for a relief package from the government.

While the services sector — aviation, hospitality and retail — is the worst hit, manufacturing companies too are faced with stretched working capital cycles as their fixed costs remain even as demand has evaporated.

Moody’s has downgraded India’s growth forecast for 2020 to 5.3% on downside risks emanating from the spread of Covid-19 cases in the country. Industry, however, believes the cuts to economic growth could be much deeper as demand destruction seen in the last couple of weeks is unprecedented.

Companies are also worried about raising capital, given that equity markets are in a freefall as panic stricken global investors have been selling heavily. With equity markets showing no signs of stabilising, some members of FICCI also are in favour of some steps to curb the volatility in the markets. Leading listed companies are in favour of a ban on short-selling. The recent carnage in the markets have also impacted plans of companies looking to raise capital from public markets. For instance, the initial public offering of Burger King, Rossari Biotech and Antony Waste Handling have been deferred. India’s fourth largest airline GoAir was expected to tap the markets to raise Rs 5,000 crore in 2020.

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