Majority of working capital requirement of capital goods companies is met through delayed payments to suppliers or high-cost short-term debt, resulting in weaker credit ratings
Mumbai: Credit quality of the players in the capital goods sector has come under tremendous strain with working capital requirements touching a five-year high due to deferment of large capital investment plans during the past fiscal, says a report by CRISIL.
The CRISIL study, after analyzing 50 capital goods companies also points out that high inventory and delay in payments by customers are leading to tight liquidity situation.
"Project deferment by customers resulted in a 15% decline in order inflows for capital goods entities in 2011-12 over the previous year. The reasons for deferment in projects include demand slowdown, increase in project costs and interest rates and lower cash flows," CRISIL senior director Nagarajan Narasimhan said.
He also said working capital requirement of banks have reached five year high.
Referring to tight liquidity situation of capital goods firms, the report said majority of working capital requirement is met through delayed payments to suppliers or high-cost short-term debt, resulting in weaker credit ratings.
Also, high interest rate regime has increased the cost of funds for these companies, impacting the credit quality.
"We have either downgraded the ratings or revised the outlook to 'negative' of 117 capital goods entities in 2011-12, representing a fifth of the agency's total downgrades or revisions in outlook to 'negative' during the year.
"We believe the revenue growth and profitability of capital goods entities will further slacken in 2012-13, resulting in sustained pressure on their credit quality," CRISIL director Anuj Sethi said.
The panel headed by NABARD Chairman Prakash Bakshi will review existing credit structure and also explore ways to strengthen cooperative credit architecture in rural areas
Under the agreement with Monaco, there is a specific provision for providing banking and ownership information and the requesting state has to provide some minimum details
New Delhi: India has entered into an agreement with Monaco for exchange of information that will allow the two countries to check tax evasion and money laundering, reports PTI.
"Government of India and Government of Principality of Monaco have signed a Tax Information Exchange Agreement (TIEA) yesterday," an official statement said today.
This is the ninth TIEA being signed by India.
Under the agreement with Monaco, there is a specific provision for providing banking and ownership information and the requesting state has to provide some minimum details about the information requested.
"Information must be foreseeably relevant to the administration and enforcement of the domestic laws of the contracting Parties concerning taxes and tax matters covered by the agreement," the statement said.
However, information is to be treated as secret and can be disclosed to only specified person or authorities, which are tax authorities or the authorities concerned with the determination of tax appeal, it added.
The agreement was signed by the Minister of State for Finance SS Palanimanickam from Indian side and Counsellor of Government for Finances and Economy Marco Piccinini from Monaco's side.