Tuesday, March 24, 2020

COVID-19 Slowdown Construction Industry

COVID-19 To Slowdown Construction Industry

Why Construction Industry COVID-19 slow down in 2019-2020?

The closure imposed by state governments of some of the large Indian cities to contain the COVID-19 outbreak is likely to obstruct the execution of infrastructure construction in them and affect the growth of income of construction companies in the short term. the term said India Ratings.

Generally, the March quarter represents 30% -35% of the annual income of construction companies; of which the one-month blockage can erode 8% -10%.
The rating agency believes that construction activities in core construction cities, such as the Mumbai Metropolitan Region, Delhi, Chennai, Pune, and Bangalore, are likely to stagnate or progress at a significantly slower rate than anticipated during much of March. 2020 that can continue in April as well.
Companies with significant construction work underway in those cities are the hardest hit, as they are proving to be the epicenter of the outbreak. Around 75 major cities and districts in India are blocked, at least until March 31, 2020.

Furthermore, a large portion of construction workers who consequently head to their home cities in the interior of the country is likely to return only after the situation returns to normal, which may be as long as a month.
India Ratings and Research believe that projects that have connectivity to the cities and areas where the blockades are implemented would be affected due to the trickle effect. Furthermore, any widespread spread of COVID-19 in the country for a longer period can have a significant influence on the credit profiles of companies operating in the sector.

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