The Emergency Credit Line Guarantee Scheme (ECLGS) would advantage the low resilience sectors, such as hotels, gems and jewellery, travel, and actual estate, the most, considering the fact that their accruals are anticipated to fall sharper at 23% this fiscal. But tthe more liquidity afforded by means of the scheme for the 26 impacted sectors would be significantly larger at practically 10 occasions of money flow contraction due to the Covid -19 induced pandemic, a Crisil study mentioned.
Companies in higher-resilience sectors such as dairy, information and facts technologies, FMCG, chemical substances, and pharmaceuticals are observed significantly less impacted, with the decline in their money flow restricted to 10%. These sectors, also, would advantage from the ECLGS with more liquidity getting made of about 5 occasions of their money flow squeeze. Other debt heavy sectors such as textiles and steel will also have comparable more liquidity against their money flow decline.
The ECLGS 2. has been extended below Atmanirbhar Bharat 3. scheme to eligible businesses in 26 stressed sectors identified by the K V Kamath Committee. ECLGS can potentially infuse Rs 40,000-crore liquidity to the Crisil-rated eligible businesses such as these in wellness care sector. This infusion would be enough to assist these hit by the sharp decline in money flows for the pandemic.
“Borrowing under the ECLGS 2.0 scheme can provide additional liquidity equal to 3.5 times the cash-flow contraction for the sample set. This will help them overcome temporary liquidity challenges. Also, the one-year moratorium available under the scheme will provide further room for companies to stabilise their cash flows,” Subodh Rai, Crisil Rating’s senior director, mentioned.
Under ECLGS 2., businesses with outstanding loans of amongst Rs 50 crore and Rs 500 crore are eligible for more credit of up to 20% of their outstanding debt as on February 29, this year. The tenure of such more credit would be 5 years, such as 1-year moratorium on principal repayment.
The typical money flow of such businesses is observed contracting 17%, or by Rs 11,000 crore, compared with the pre-pandemic assessment for the existing fiscal, the Crisil Rating study mentioned.
Of the Crisil’s rated portfolio, 1,414 businesses from 26 sectors have been identified eligible for ECLGS 2.. Their total outstanding debt stood at Rs 2 lakh crore as on February 29 this year. It is assumed that all eligible businesses will avail of the complete fund-primarily based debt facility accessible below the scheme, the study mentioned.