A third of India Inc sees deterioration in financial health in June quarter: Report

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August 12, 2021 8:41 PM

As many as 3,177 businesses or 32 per cent of the 9,963 companies monitored, saw their GST compliance score deteriorating in the June 2021 quarter, Rubix Data Sciences said in its quarterly risk transition report on Thursday.

credit ratingsThe report is based on parameters such as GST filings, provident fund filings and credit ratings

Indicating the increasing financial stress among companies, a report has found that a third of corporate India has seen their debt servicing ability hit in the June quarter of the current fiscal, massively up from 22 per cent in the previous three months ending March.

As many as 3,177 businesses or 32 per cent of the 9,963 companies monitored, saw their GST compliance score deteriorating in the June 2021 quarter, up from 22 per cent in the March 2021 quarter, Rubix Data Sciences said in its quarterly risk transition report on Thursday.

However, an equal number of companies, to be precise 3,149 firms, also saw their score improving, while 36 per cent or 3,673 companies saw no change in the score.

A falling GST compliance score clearly indicates that the financial health of nearly one-third of businesses being monitored deteriorated in Q1 of FY22, suggesting higher risk levels in the quarter, said Kaushal Sampat, co-founder of Rubix, which is an analytics-based B2B risk management and monitoring platform.

The report is based on parameters such as GST filings, provident fund filings and credit ratings.

Though there could be several reasons for non-compliance with statutory requirements for paying GST and filing PF and tax returns, cash flow delays or liquidity problems are probably the most important drivers for non-compliance, Sampat said.

For 40 per cent of 3,677 businesses (whose PF filing was available, the PF compliance score deteriorated in Q1 of FY22 from 29 per cent in the Q4 of FY21. this is closer to the Q1 of FY21 level when 55 per cent companies saw the score dropping at the height of the first wave of the pandemic.

However their credit ratings was not affected much as only 8 per  cent of the companies probed saw their credit ratings score deteriorate in Q1, which was 7 per cent in Q4 of FY21, while 4 per cent of them saw their credit profile improving, 88 per cent had no change in the score.

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