GDP fall to hurt MSMEs said Crisil

Mumbai: The Covid-19 induced economic contraction will significantly hurt micro, small and medium enterprises across sectors, ratings agency Crisil said on Thursday. It said that India Inc is expected to head towards a 15 per cent decline in revenue and a 25 per cent fall in earnings before interest, taxes, depreciation and amortisation (Ebitda).

For MSMEs, the rating agency said the fall in revenue will be steeper at 17-21 per cent, while Ebitda margin will shrink 200-300 basis points to 4-5 per cent as weak demand gnaws away gains from lower commodity prices. "A sharp decline at the operating level will also impact creditworthiness, aggravating the liquidity stretch these units have been grappling with, particularly on the working capital front," the ratings agency said.

"In the process, average interest service coverage ratio could slide to 1-1.5 times from 2.4 times seen between fiscals 2017 and 2020, even after factoring in the benefit of moratorium on interest payments announced by the Reserve Bank of India (RBI)."