Indian capital goods makers are witnessing the highest strain in their working capital requirements over a five-year period, which is weakening their credit risk profile, ratings agency CRISIL said on Wednesday.
The pressure on equipment manufacturers and construction firms is primarily due to the deferred capital investment plans by their clients since the last fiscal, it said in a study conducted on 50 capital goods firms.
"Project deferment by customers resulted in a 15 percent decline in order inflows for capital goods entities in 2011-12 over the previous year," said Nagarajan Narasimhan, senior director, CRISIL Ratings, in a statement.
The liquidity of these companies has been affected as a large portion of the working capital needs has been funded either through high-cost short-term debt or through delayed payments to suppliers, the agency said.
Tight liquidity and weaker debt protection measures have impacted the credit quality of these firms, it added.