Indian truck owners struggling to make loan repayments: Crisil
Loans to truck and bus operators are showing signs of weakness not seen for three years, credit rating agency Crisil said, underlining the scale of the slowdown in India's transportation industry as economic growth stutters.
Repayments on loans by commercial vehicle owners have fallen significantly over the past year, according to a Crisil report, raising fears of a rise in non-performing assets (NPAs) as the industry battles rising fuel costs and slowing freight demand.
"A portfolio analysis of the leading non-banking financial companies (NBFCs) that lend to the CV segment reveals that delinquency in near-term buckets is rising," Pawan Agrawal, Crisil senior director said in a statement.
Sales of medium and heavy goods vehicles in India fell by about 25 percent in the first 11 months of the financial year that ended in March, according to industry data, as sluggish economic growth curbed sales for companies such as Tata Motors Ltd, Ashok Leyland Ltd and Eicher Motors Ltd.
Below-average or deferred loan repayments from the sector could continue for the next few quarters, Crisil said, likely leading to a rise in NPAs for lenders.
A protracted slowdown in India's mining industry and sluggish industrial output growth have compounded the fall in heavy goods vehicle sales, as company's delay or abandon upgrades to their fleets.