Demonetisation, GST have Impacted Capex: Report

A report by India Ratings and Research says that Demonetisation and GST (Goods and Services Tax) have slowed down the process of capex or capital expenditure by companies.

Global overcapacity and working capital disruptions are among other factors taken into account while reaching this conclusion,indications are that growth Capex would be relatively low over FY18-FY20, a period in which only the 125 corporates of the top 200 corporates with heavy assets are likely to incur maintenance expenditure. These are corporates which add up to 80 per cent of the total capex spending over the last five years and have a capacity utilisation of 75-80 percent, according to the report.

The rolling out of the Insolvency and Bankruptcy Code, 2016, is could positively impact the process of debt resolution, especially for stressed corporates the report further. Liquidation under this Code would open up opportunities to others to expand capacity and increase mergers and acquisitions activity.