Improved outlook due to a better business environment and large infrastructure projects.
- The Indian construction sector has been facing challenging times in recent years due to slow reforms, weak investment cycles, subdued business confidence, and delays in land acquisition/clearance processes.
- The outlook for 2016 has improved due to a better business environment and large infrastructure projects launched by the new government.
- On-the-ground, recovery is expected to be a gradual process as the sector still deals with structural constraints.
- Construction companies remain highly leveraged, and obtaining financial support for projects remains a challenge. However, banks have increased loans to the sector.
- Payments in the construction sector take between 90-120 days on average.
- We continue to maintain a cautious approach in underwriting this sector.
- Besides financial information, we assess trading experience with buyers and monitor any changes in payment behaviour. We also assess the strength of the customer-buyer relationship.
- We would generally not encourage customers to lengthen their normal terms of payment.