This is estimated to have slashed the order book of EPC players by 70-90 per cent in H1, FY21. For allied industries such as cement and building material, the pace of decline is likely to have been slower, as these also serve other infrastructure projects.
EPC players’ working capital requirements are expected to remain high, as they typically have to offer extended credit periods to developers. They also need to maintain deposits with developers as a guarantee for timely project execution.
The credit crunch among developers will only lead to higher receivable days, and hence, higher working-capital days for EPC players. Working-capital days have remained stretched for them over the past couple of years as well.
Though some cities are seeing an uptick in demand in recent months, the segment is expected to remain under pressure in FY21. Its performance in the second half of this fiscal will therefore be a key monitorable.
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