PremiumSpiceJet has been sanctioned loans worth Rs127.52 crore, while Bird Worldwide Flight Services, a unit of Bird Group that operates ground handling services at Mumbai airport, has been guaranteed an amount of Rs8.5 crore under ECLGS 3.0
New Delhi: Companies in the aviation sector, including airlines like SpiceJet and GoAir, have been provided with guaranteed support to the extent of about ₹349 crore under the government's Emergency Credit Line Guarantee Scheme (ECLGS), minister of state for civil aviation, VK Singh, said in the Rajya Sabha on Wednesday.
Responding to a query from member of Parliament K R Suresh Reddy, Singh said that while no funds have been separately allocated to the civil aviation sector, borrowers from the sector have been provided with guaranteed support of up to ₹349 crore, as of 16 July, as per information from National Credit Guarantee Trustee Company Limited (NCGTC).
According to data submitted by Singh, SpiceJet Limited has availed loans worth ₹127.52 crore, while Bird Worldwide Flight Services Mumbai Private Limited, a unit of Bird Group that operates ground handling services at Mumbai airport, has been guaranteed an amount of ₹8.5 crore under ECLGS 3.0. A total of ₹136 crore has been guaranteed under ECLGS 3.0.
Meanwhile, a net amount of ₹213 crore has been guaranteed to as many as eight companies ECLGS 2.0. These include CAE Simulation Training Private Limited ( ₹18.40 crore), Aerostructures Manufacturing India Private Limited ( ₹45.19 crore), Bengal Aerotropolis Project Limited ( ₹16.36 crore), Suad Forging India Private Limited ( ₹3.5 crore), WAISL Limited ( ₹26 crore), Go Airlines (India) Limited ( ₹25.65 crore), Flight Simulation Technique Centre Private Limited ( ₹44.14 crore), Air Works India Engineering Private Limited ( ₹11.07 crore), VEM Technologies Private Limited ( ₹1.93 crore), Rossell India Limited ( ₹18.31 crore) and Alpha Design Technologies Private Limited ( ₹2.50 crore).
The Finance Ministry had in May 2020 launched the Emergency Credit Line Guarantee Scheme (ECLGS) to help the pandemic-hit economy. This scheme was initially aimed to provide Rs. 3 lakh crores of unsecured loans to MSMEs and business enterprises to mitigate the distress caused by the coronavirus-induced lockdown. However, sectors like aviation, tourism were later included under the scheme.
The expansion of the ECLGS to sectors such as civil aviation, hotels and tour operators, which have been severely impacted by the intense second wave of the covid-19 pandemic, will act as a lifeline to highly leveraged companies, Crisil Rating said in a report in June.
"More sectors have been brought under the scheme’s ambit, some eligibility criteria have been relaxed, and micro, small and medium enterprises (MSMEs) have been allowed to avail of loans for longer tenures," the report said.
"The scheme has sanctioned about ₹2.54 lakh crore ( ₹2.5 trillion) of loans under the previous three versions as of mid-May," it added.
The Union government has decided to extend the validity of the scheme from 13 May till 30 September 2021 or till guarantees for an amount of ₹3 trillion are issued. Disbursement under the scheme will be permitted up to 31 December 2021.
According to a statement issued by the ministry of finance, borrowers who are eligible for restructuring as per RBI guidelines of 5 May 2021, and had availed loans under ECLGS 1.0 of overall tenure of four years comprising repayment of interest only during the first 12 months, with repayment of principal and interest in 36 months thereafter, will now be able to avail a tenure of five years for their ECLGS loan—that is, repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter.
"All these (sectors) have been hit hard by the second wave. In the current quarter, these sectors are expected to see a demand contraction of over 30% sequentially," Crisil said in the report.
"Moreover, except for airport operators, many companies in the other stipulated sectors of the scheme have high leverage, which constrain their ability to withstand unexpected demand contraction," it added.
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