These are largely small and mid-sized companies, and some large ones with leveraged balance sheets that are more vulnerable to a sharp slump in cash flows. Crisil will continue to engage with these clients over near to medium term.

On the other hand, we foresee 39 companies (see annexure) surmounting the stress because of balance sheet liquidity, unutilised bank lines, and other external financial flexibilities. These companies are not expected to face liquidity issues when it comes to operating expenses and debt repayments in the near term.

Recently, a few public sector banks have started offering loans for credits classified as ‘standard’ with a moratorium on repayment and concessional interest rates to tide over cash flow mismatches arising out of current lockdown on businesses. These can offset liquidity constraints to some extent, but revenue-related challenges will continue in the near term.

Crisil will monitor the companies for developments that could impact their businesses in the longer run. Crisil is also looking at other sectors where companies have announced shutdowns to comply with the government directive, and may announce further rating actions shortly.