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IL&FS saga hits construction equipment sector

Garg expects improvement by March


Garg expects improvement by March


Arvind Garg.

The growth of construction equipment sector has been hit by the liquidity crisis created by Non-Banking Finance Companies (NBFCs) with growth halved to 10%, Indian Construction Equipment Manufacturers’ Association president Arvind Garg said on 3 Feb 2019 in Kolkatta.

NBFCs had provided 70-75% financing for the sector, which borrows up to 90-95%.

But the debt default saga by Infrastructure Leasing & Financial Services (IL&FS), its subsidiaries and other NBFCs has hit the sector hard.

Lenders, facing liquidity challenges, have become cautious about lending while the cost of getting finance, if any, has risen by at least 200 basis points.

However, the sector’s stakeholders are working closely to overcome this crisis, according to Garg who expects the funding to ease by March if there is no additional stress or other defaulting NBFCs.

Garg assured that the construction equipment makers are working closely with the NBFCs till confidence builds up.

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