At least 328 companies, including large corporates like JSW Steel, Tata Power, and Piramal Enterprises, have sought moratorium on loan repayment from banks. Most of the companies that seek moratorium have a credit rating of relatively safe AA rating and lower, according to data compiled by rating agency ICRA.
Few companies are conserving cash to toughen up for further challenges and others are facing severe liquidity issues due to absence of adequate working capital or emergency funds in that case.The list includes names of companies which have sought relief from banks or investors and where approval was received after the due date or is pending to be received. The list has been published by ICRA in line with the new guidelines laid down by the Securities and Exchange Board of India (SEBI) on relaxation in compliance for default recognition amid the loan moratorium granted by the Reserve Bank of India.
ICRA’s list of companies span sectors like hospitality, airport, non-banking finance companies including microfinance companies, hospitals and real estate. Some of the big names in the hospitality and aviation sector include Taj GVK Hotels, Lemon Tree Hotels Ltd and GMR Hyderabad Aviation SEZ Ltd. In the steel sector, Jindal Steel and Power Ltd, besides JSW Steel Ltd, sought postponement on loan payments. Bengaluru-based real estate major Prestige Group is also part of the list.
On March 27, the RBI had given borrowers a three-month moratorium on debt repayments for the March-May period due to the COVID-19 pandemic. This is a voluntary measure and interest keeps accruing on the loan during the period of moratorium, and experts have analysed that such a move would generally elongate the loan repayment period and add to their interest cost which would mean the same as paying the loan on time.
In a nut shell, to predict in this time period is as uncertain as the arrival of summers this year. The volatility and risk analysed is much higher just like the expenses and losses, contracting revenues and nulling out profits for the comping quarter results.