Honouring arbitration awards and clearing all outstanding payments to contractors and businesses, resolving long-standing disputes, and one time restructuring of loans based on cash flow are among the measures suggested by HEMANT KANORIA, chairman, Srei Infrastructure Finance Limited, to support the industry. Edited excerpts: How has the COVID-19 pandemic and the subsequent lockdown affected the operations of your company and its personnel? The infrastructure industry and the construction sector have been experiencing a slowdown for the last two to three years. Following the outbreak of COVID-19 and the subsequent lockdown, the problem has compounded further because of severe cash flow crunch. Infrastructure projects have virtually come to a standstill with the migrant workers on their way back home. This impasse is likely to continue for next few months. Our customers are primarily in the infrastructure, infrastructure-related and healthcare sectors. For them, the challenge has been monumental and we have been working closely with them to figure out ways to resolve their problem. Fortunately at Srei, we have been able to manage our liquidity well. We hope that going forward, the situation will gradually improve in view of the support being given by the government and the Reserve Bank of India to businesses. What would be the three basic aspects on which government can support your company and industry in these times? The measures announced by the Hon’ble Finance Minister and the Reserve Bank of India in the last few weeks are going to have medium to long-term benefits and will alleviate the liquidity conundrum to a certain extent. However, in my opinion, certain steps are needed simultaneously to provide support to all businesses including the NBFCs. The Reserve Bank of India should consider allowing one-time restructuring of loans based on the cash flow. Furthermore, the loan accounts should be classified as ‘standard’ so that no provisioning is needed for the same. This will help stem the tide of NPLs and prevent businesses from tipping over into default. If the one time restructuring is not allowed to the banks, there will be large NPLs. The government, both central and state, should advise all their agencies to expeditiously clear all outstanding payments to contractors and businesses. Also, all outstanding tax refunds and tax-related disputes must be resolved at the earliest to release payments. Huge sums of money are stuck in arbitration awards against government agencies which have been dragged into the higher courts, leading to inordinate delays. Government should honour the arbitration awards and, instead of further litigation, release the payments against the awards. These simple yet effective measures will ensure liquidity for businesses and help many of them survive the current crisis. What are your expectations on the performance of your company and the industry in the current financial year? I think that if the above-mentioned practical steps are taken, then the businesses and the financial sector can bounce back within one to two years but if not then the recovery will take time. Hence, it is critical to address the practical issues at the ground level. From the point of view of businesses, everyone’s focus at this juncture is now on survival, both in life and in business. No one is expecting substantial growth in revenues and profits in the current financial year.
