The possible over Rs 40,000-crore liquidity through the ELCGS 2.0 will be sufficient to help companies, including those hit by a sharp decline in cash flows because of the pandemic, to overcome liquidity pressures, says a Crisil report.
Under the scheme, companies with outstanding loans of Rs 50 crore to Rs 500 crore are eligible for additional credit of up to 20 per cent of their outstanding debt as of February 29, 2020.
Of Crisil-rated portfolio, as much as 1,414 companies from 27 sectors, including healthcare, are eligible for the scheme. These companies collectively have an outstanding debt of Rs 2 lakh crore as of February 29.
These companies are facing an average cash flow contraction of 17 per cent or by Rs 11,000 crore, compared to the pre-pandemic assessment.
Borrowing under the new extended scheme can provide additional liquidity equal to 3.5 times the cash-flow contraction for the sample set. This will help them overcome temporary liquidity challenges. Also, the one-year moratorium available under the scheme will provide further room for companies to stabilise their cash flows, says the report.
The scheme will particularly benefit companies in low-resilience sectors like hotels, gems & jewellery, travel and real estate as their accruals are expected to fall sharper at 23 per cent this fiscal.
Companies in high-resilience sectors like dairy, IT, FMCG, chemicals and pharma are seen less impacted, with only around 10 per cent decline in their cash flow. These companies can also benefit from the scheme with additional liquidity being created of about 5 times their cash flow contraction, says the report.