Market Monitor - Construction industry - India

Market performance at a glance

India  

• The Indian construction sector has been facing challenging times in recent years due to political uncertainty, weak investment cycles, subdued business confidence, and delays in land acquisition/clearance processes.
• The outlook for 2015 has improved due to a better business environment and large infrastructure projects launched by the new government.
• However, 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.