CRISIL sees slow recovery even as credit quality stabilises
15 Oct 2009
A study by CRISIL finds that credit quality of Indian companies is beginning to stabilise, after being in a virtual free fall in the financial year, 1 April to 31 March).
CRISIL's Modified Credit Ratio (MCR) has increased to 0.88 for the first half of 2009-10, after dropping to a nine-year low of 0.86 in 2008-09.
As a result of the government's fiscal and monetary easing and positive stock market conditions companies have easier access to funds; in addition, lower commodity prices have led to lower working capital requirements.
In CRISIL's opinion, however, a recovery in credit quality will at best be gradual, and may not necessarily be smooth.
According to Raman Uberoi, senior director, CRISIL, ''There are signs that both the monetary and fiscal easing and the lower commodity prices are temporary.
Additionally, unlike in the late 1990s, we see no prospect of a sudden and sustained upturn ineconomic conditions to lift corporate performance. We can therefore rule out a sudden jump inMCR of the kind we saw in 1999-2000, when MCR rose to 0.92 from 0.61.''
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