New Delhi, March 8 (IANS) Corporate capital expenditure in the country is likely to remain subdued in the upcoming financial year (FY20), a report by the credit rating agency India Ratings and Research said.
“Ind-Ra expects corporate capex to grow at mid-single-digit level, primarily on account of a capacity overhang coupled with domestic and external uncertainties,” said the report.
Further, maintenance capex is likely to comprise around 70 per cent of the total capital expenditure in financial year 2019-2020, resulting in about Rs 1.35 lakh crore growth capital expenditure in FY20. It expects oil and gas, and construction sectors to meaningfully expand their balance sheets in in the upcoming fiscal.
It also said that tighter market liquidity conditions in FY 2018-19 coupled with the combined hardening of commodity prices, weakening rupee and delayed recovery prospects post demonetisation and Goods and Services Tax implementation resulted in higher downgrades in Ind-Ra’s portfolio.
During FY20, the agency believes, liquidity management is likely to be the key differentiator.
“As financing risks are likely to remain elevated, especially for corporates with weaker credit profiles, corporates will be required to put in place measures to tie up funding in a timely manner to avert credit events,” it said.
–IANS
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