oppn parties Companies Reduce Debt, Shrink Investments And Conserve Cash In These Uncertain Times

News Snippets

  • RSS chief Mohan Bhagwat calls for one temple, one well and one crematorium to do away with deep divisions in the hindu society
  • Staff unrest plagues craft beer manufacturer Bira as current and formaer employess allege delays in salary and other payments
  • Intel appoints India-origin Sachin Katti as CTO & AI chief
  • Sebi says there is no manufacturing activity reported from Gensol's EV plant in Pune
  • Shooting WC: Former world champion drops to last in 10m air rifle individual event as his rifle malfunctions
  • Shooting World Cup: Arjun Babuta misses gold by 0.1 pont, settles for silver in 10m air rifle while Radrankksh Patil and Arya Borse win silver in 10m air rifle mixed event
  • IPL: MI beat CSK as Rohit Sharma (76 no) and Suryakumar Yadav (68 no) make short work of PKBS bolwers. CSK, with 2 points from 8 matches, have reached a point of no return in this years' competition
  • IPL: RCB beat PKBS by 7 wickets as Virat Kohli (73 no) and D Padikkal (61) sizzle
  • After Bangladesh commented on the riots in bengal over the Waqf bill, the Indian government has asked it protect the minorities in its own country and stop commenting on India's internal affairs
  • PM Modi discussed collaboration in technical and innovation fields with Tesdla owner Elon Musk, who is visiting India before the imminent entry of his firm Starlink in the country
  • Murshidabad returning to normal after clashes over the Waqf bill, internet restored, curfew lifted
  • The murder of a 17-year-old boy sparked protests in Delhi's north-east area Seelampur
  • Allahabad HC stayed the demolition of a mosque in UP's Fatehpur after the district authorities order for razing it was challenged by the Masjid Waqf committee
  • Hyderabad Police pick up an alleged fraud accused from a hotel in Kolkata but Kolkata Police not kept in the loop. Relatives of the man file a missing complaint and FIR
  • An ICU technician was held in Gurugram's Medanta Hospital for sexually assaulting a patient
RSS chief Mohan Bhagawat calls for 'one temple, one well',as well as one crematorium, to end caste differences
oppn parties
Companies Reduce Debt, Shrink Investments And Conserve Cash In These Uncertain Times

By Ashwini Agarwal
First publised on 2021-06-09 14:15:24

When times are tough and uncertain and business is bad over a longish period, cost saving becomes a prime focus area for companies. Companies begin put investments on hold or even pull back, reduce the interest burden by repaying loans and look for cheaper finance by hitting the capital market. An SBI research report shows that the Covid crisis in the economy has made many large borrowers across several industries repay their loans and reduce the debt burden to cut costs. The report says that more than 1000 listed entities across 15 sectors have reduced their debt by a staggering Rs 1.7 lakh crore in 2020-21. As a corollary to this, these 1000 companies have shown cash and bank balance which is 35% higher in March 2021 compared to last year.

The repayment of loan by corporate entities has resulted in a massive slowdown in credit growth in 2020-21. It also means that although banks are flush with funds, there are no takers as companies are following a conservative approach in these uncertain times by putting off investment in expansion or starting new projects. SBI chairman Dinesh Khara has said that corporate have turned risk-averse.

But do companies have a choice? The economy is showing no signs of any substantial recovery. Although the second wave has receded, there is talk of the third wave hitting sooner or later. The country is still not sure how fast and how soon it will be able to fully vaccinate at least 60-65 percent of its population. People have lost jobs and are still losing them. Others are facing cuts in salary. They do not have money in their hands. Demand is unlikely to pick up anytime soon. The government has not heeded to requests of making huge investments in infrastructure projects to kick-start the economy. The scenario is pregnant with negativity. Hence, the companies reducing debts and putting investments on hold have taken a wise decision. It is better to let the bad times pass and be well prepared to take advantage of an upswing, as and when it happens.