PM narrows down on small sector December 9, 2008
Posted by dhirendra1972 in Business, Capital Market, Domestic Brand, Domestic Equity Market, Equity, Equity Market, Finance, Financial Capital, financial market, Indian Business, Online Marketing, Working Capital.Tags: Indian Business, Marketing, money market, small sector, small sector in indian market
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Good Evening friends, PM of Indian Dr. Manmohan Singh is takeing care of small and medium enterprises. I read following news at yahoo site. In a move aimed at further boosting the micro, small and medium enterprises (MSME) sector, Prime Minister Manmohan Singh is understood to have asked a high-level committee headed by the cabinet secretary K M Chandrasekhar to look into the issues plaguing the sector and submit its report within a fortnight.
The move comes a day after the government announced a package to stimulate the economy. The package, however, has failed to enthuse its entrepreneurs. All India Confederation of Small & Micro Industries Association president Sudarshan Sareen said, “The RBI’s Rs 7,000-crore credit refinancing is too less. At least Rs 10,000 crore should be made available for rehabilitation of sick industries and another Rs 10,000 crore for marketing development fund.” A delegation of the association, which met the Prime Minister today, sought adequate support from the government.
MSME secretary Dinesh Rai told The Indian Express that the memorandum submitted to the PM included speedy formation of a special fund for enterprises in the unorganised sector and an enhancement of cash-credit limits/ over draft facilities by at least 15 per cent. Besides seeking extension of time period for reckoning MSE accounts as NPAs from 90 to 180 days.
India Inc needs $10bn for debt re-financing November 10, 2008
Posted by dhirendra1972 in Credit Market, Earnings, Investment, Net Profit, Re-financing, Repayment Time, Savings, Working Capital.Tags: Capital, Debt, Loan, Profit, Sector
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Good evening friends. Many needed to repay their debts. Small and medium industries. This is in reference to The Times of India which I want to share it with you.
Questions have time and again been raised about the balance sheet strength of India Inc. An analysis shows that around half of sensex companies would need re-financing in the immediate term. Re-financing would essentially replace existing debt obligation with a debt obligation bearing different and possibly, easier terms. Sensex constituents alone would account for nearly 80% of the Rs 50,000 crore ($10 billion) required by major Indian firms to re-finance debt over 18 months.
A pronounced decline in earnings of certain companies could lead to a situation where net profits may not be adequate to cover interest costs, flagging off debt re-financing requirements. Delays / deferment of projects under implementation, and working capital constraints could, as a result, kick in.
The list of companies which have higher re-finance requirement is topped by Hindalco Industries (Rs 15,400 crore), Reliance Industries (Rs 6,200 crore), Tata Steel (Rs 5,500 crore), Bharti Airtel (Rs 2,000 crore) and Reliance Communications (Rs 1,900 crore), data from J P Morgan shows. In all, there are around 13 Semsex companies with substantial re-financing needs.
“Given the turmoil in the credit markets, we believe it is also necessary to look at refinancing / rollover risks over the immediate term. At the systemic level, debt to be re-financed over the next 18 months appears manageable at 13% of total borrowings. Sectors that appear to have relatively higher risk on this variable are materials, consumer discretionary and real estate,” Bharat Iyer, analyst with J P Morgan India said.
Refinancing is usually undertaken to reduce interest costs, extend the repayment time, pay off other debts or to raise cash for investment. “Companies only consider refinancing, if the potential for a substantial cost savings exists, or if there is a need to extend the loan due to weak cash flow or other non-recurring commitments.
Therefore, calculating the up-front, ongoing, and potentially variable costs of refinancing is an important part of the decision on whether or not to refinance,” said a senior investment banker. Debt for sectors such as real estate should be more closely looked at as many of them often collateralize loans by the stock of the development company, rather than the developed property, she added.
Companies from materials, energy, industrials, telecommunication services and real estate will go for debt-refinancing by May-June 2010. The risk profile of debt in the case of the materials sector is also higher as it has largely been utilized to finance overseas acquisitions (Hindalco).
