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Tuesday,15-June-2021

Business

‘RBI liquidity window can augment healthcare infra’

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Reserve-Bank-Of-India

The Rs 50,000 crore liquidity window offered by the Reserve Bank of India (RBI) to banks under priority-sector lending to augment Covid-19 healthcare infrastructure will help raise treatment capacity, and availability of medicines and medical equipment, in India, Crisil said on Friday.

Hospitals could be among the biggest beneficiaries as the incremental funding can potentially increase bed capacity in the country by 15-20 per cent, the ratings agency said.

Loans under the scheme, for tenures up to 3 years, are available to banks at the repo rate till March 31, 2022. Such loans would also be classified under priority sector. Consequently, banks are expected to extend these loans below current interest rates for companies engaged in health care activities. These include makers and suppliers of vaccines and drugs; hospitals; pathology labs; suppliers of oxygen; makers of emergency medical equipment; logistics firms; and Covid-19 patients.

As many as 354 CRISIL-rated companies with aggregate bank exposure of Rs 40,000 crore will be eligible for such loans. Though pharmaceutical firms account for 68 per cent of rated bank exposure, hospitals (24 per cent of rated exposure) are likely to avail majority of the funding available.

The borrowing cost of hospitals rated by CRISIL are 10.5-11 per cent, and the new loans taken for expansion under this RBI scheme could be 300-350 basis points cheaper, leading to substantial interest savings.

Says Subodh Rai, Chief Ratings Officer, CRISIL Ratings, “Increased availability of funds at low cost will incentivise hospitals to augment beds, oxygen storage, ICUs and critical medical equipment. Even if half of the funding available is used to add hospital beds through brownfield expansion, it will mean 5 lakh incremental beds, or 15-20 per cent of India’s current capacity.”

In comparison, for entities in other health care related sectors such as pharmaceuticals, the capital requirements for enhancing production capacity of critical Covid-19 related drugs is not very high. Further pharmaceutical companies, owing to their strong credit profiles and availability of export credit facilities, have a relatively lower average cost of borrowing (8.0-8.5 per cent). Thus, majority of pharmaceutical companies may not be keen to take on substantial debt under the RBI window to fund expansion.

Also, only a few companies are manufacturing Covid-19 vaccines and these have availed of government advances/grants for funding their requirement of Rs 5,000 crore.

While incentives under the liquidity window are attractive, hospital firms would carefully evaluate decisions considering sustainability of demand and availability of critical resources such as manpower and equipment.

Says Anuj Sethi, Senior Director, CRISIL Ratings: “Augmenting healthcare infrastructure has challenges beyond capital requirements. Higher lead times for equipment and availability of qualified manpower are critical factors that can create bottlenecks. This is especially true in the case of enhancing production of critical drugs such as Remdesivir, where the outlay to increase the production capacity of 7 crore doses is only Rs 200-250 crore, but lead times for ordering and installation of machines exceed a year.”

All said, it is still early for healthcare players to evaluate their expansion plans. There will be more clarity once banks and lending institutions announce their policies for loans, and eligible firms decide on capital spends.

Business

TASMAC sold Rs 164 cr worth of liquor in just one day

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wine-shop

The Tamil Nadu State Marketing Corporation (TASMAC) has sold liquor worth Rs 164 crore in the state in just one day.

All liquor outlets and bars opened in the state on Monday.

According to reports from the TASMAC, Madurai zone accounted for the maximum sales of Rs 49.54 crore followed by Chennai region with sales worth Rs 42.96 crore, Salem Rs 38.72 crore, and Trichy region accounting for the sale of Rs 33.65 crore worth of liquor.

However there was no sale in the Coimbatore region as the shops are closed in the area following the higher number of Covid-19 cases. Shops in Nilgiris, Erode, Salem, Tiruppur, Karur, Namakkal, Thanjavur, Tiruvavur, Nagapattinam, and Myladuthurai remain closed as the number of cases are high.

Of the 5,338 shops in Tamil Nadu, 2,900 reopened on Monday.

The founder president of Pattali Makkal Katchi(PMK), Dr S. Ramadoss has called upon the state government to rework its policy on liquor and to enforce a total prohibition in the state for the health of the people of the state. He has also said that the claims of Chief Minister Stalin that TASMAC shops were allowed to function following the brewing of illicit liquor in the state as well as to prevent smuggling of liquor from neighbouring states.

Ramadoss has in a statement said, “Stalin should work his way to enforce total prohibition in the state of Tamil Nadu for the sake of the health of the people of the state, both mental and physical.”

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Business

Sensex, Nifty climb new record highs

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Bombay-Stock-Exchange

The key Indian equity indices continued their record run on Tuesday.

The BSE Sensex touched a fresh high of 52,836.31 and the Nifty50 on the National Stock Exchange hit an all-time high of 15,889.60 points.

Healthy buying was witnessed in banking and realty stocks.

Around 9.40 a.m., Sensex was trading at 52,813.83, higher by 262.3 points or 0.50 per cent from its previous close of 52,551.53 points.

It opened at 52,751.83 and has touched an intra-day low of 52,671.29 points.

The Nifty50 on the National Stock Exchange was at 15,875.05, higher by 63.20 points or 0.4 per cent from its previous close.

The top gainers on the Sensex were Asian Paints, IndusInd Bank and Tata Steel, while the losers were Dr Reddy’s Laboratories, SBI, Titan Company and L&T.

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Business

Fuel price hike paused: Petrol, diesel prices unchanged

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Petrol

The Oil marketing companies paused the hike in fuel prices on Tuesday providing respite to people already burdened with all time high petrol and diesel retail rates.

Accordingly, the price of petrol continues to remain at Rs 96.41 per litre and diesel at Rs 87.28 per litre in Delhi.

OMCs had raised the price of the two petroleum products on Monday to take retail levels at new highs across the country.

In the city of Mumbai, where petrol prices crossed Rs 100 mark for the first time ever on May 29, the fuel price reached new high of Rs 102.58 per litre on Monday. Diesel price also increased to reach Rs 94.70 a litre, the highest among metros. The price levels remain unchanged on Tuesday.

Across the country as well petrol and diesel price rise was paused on Tuesday but its retail prices varied depending on the level of local taxes in different states.

Petrol prices in three other metros apart from Mumbai has also already reached closer to Rs 100 per litre mark and OMC officials said that if international oil prices continue to firm up, this mark could also be breached in other places by month end.

With Tuesday’s price pause, fuel prices have now increased on 24 days and remained unchanged on 22 days since May 1. The 22 increases hasve taken the petrol prices up by Rs 6.01 per litre in Delhi. Similarly, diesel has increased by Rs 6.55 per litre in the national capital.

With global crude prices also rising on a pick up demand and depleting inventories of world’s largest fuel guzzler – the US, retail prices of fuel in India are expected to firm up further in coming days. The benchmark Brent crude is currently close to $74 on ICE or Intercontinental Exchange.

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