Page 14 - Plastics News April 2020

6. GST a. GST to be paid quarterly and not monthly.

b. GST should become due only when the payment has been received.
7. Export under essential Export should be considered under essential services.
services

8. Plastics Pipes Agriculture implements and other items of agriculture are considered as
Essential goods. Plastic piping systems, Micro irrigation systems and
Submersible cables are for agriculture use and potable water supply.
Government is requested to treat the PVC/ HDPE (Plastic piping systems), Micro
irrigation systems and Submersible Cables manufacturing activity for
agriculture purpose and Water supply purpose along with its Supply Chain
activities, as Essential Commodities.
9. Banking a. Additional Working Capital: RBI announced additional funds to the extent
of 10% of fund based working capital limits. However, this is inadequate.
RBI should direct banks to reduce margins on existing Working Capital Limit
and provide additional liquidity. If they do this it will free up valuable cash
for the companies. This can be done for 1 year and then again reset to
original levels as per sanction letters.
b. The industry will face massive cash flow and working capital issue once
the lock down is over. Therefore, to ease out the finance related pain,
RBI should ask Banks to automatically enhance the credit limit (Working
Capital loan, CC, BC, LC etc.) of MSMEs by 25% without any additional
collaterals.
c. RBI announced a lower Repo Rate but interest rates on CC limits are MCLR
linked and reduction is not being passed on immediately as all working
capital limits sanctioned have a “reset clause “. The rate is reset only
when the limits are renewed or after one year of the original sanction. So
this reduction offered by RBI will not be available immediately in normal
course to existing loans. Banks should be asked to pass it on immediately to
borrowers in view of this pandemic.
d. Inland & foreign LC's are getting due and banks are debiting the CC
accounts. As no collections are being received, accounts are getting
overdrawn. Factories will not have finances to start when lockdown will
be lifted. Banks should finance the LC which become due between 20th
March & April month and not debit the CC accounts. They should be
repaid in instalments over a 12- month period. This will ensure some
liquidity with business.
e. Bank Guarantees: Wherever the banks have taken Fixed Deposits as
margin for issuing BG, they should free at least 50% from that fixed
deposit or they can give loan up to 50% of the fixed deposit to enhance
liquidity.

f. “Buyer's Credit”: Several banks are not extending the buyer credit
facility from last year. RBI should direct them to do so which will help
industry import raw materials at competitive prices.
g. One of the ways that Govt. can help is to ask banks to defer collection
of term loans by one year without NPA provisions. That means a
moratorium on repayments for one year. Will greatly improve cash flow
at least to leveraged companies.

h. Delink interest rates to credit ratings for the time being.

APRIL 2020 11 Plastics News