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ECLGS: SpiceJet, GoAir, other aviation firms guaranteed support of Rs349 crore

The expansion of the ECLGS to sectors such as civil aviation, hotels and tour operators, which have been severely hit by the devastating second wave of the covid-19 pandemic, will act as a lifeline to these highly leveraged companies. (Photo: Mint)Premium
The expansion of the ECLGS to sectors such as civil aviation, hotels and tour operators, which have been severely hit by the devastating second wave of the covid-19 pandemic, will act as a lifeline to these highly leveraged companies. (Photo: Mint)

  • The Centre has decided to extend the validity of the scheme from 13 May to 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

NEW DELHI: Aviation companies, including airlines such as SpiceJet and GoAir, have been provided guaranteed support to the extent of about Rs349 crore under the government's Emergency Credit Line Guarantee Scheme (ECLGS), minister of state for civil aviation VK Singh told the Rajya Sabha on Wednesday.

Responding to a query, Singh said 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 Rs349 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 been guaranteed an amount of Rs127.52 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 Rs8.5 crore under ECLGS 3.0. A total of Rs136 crore has been guaranteed under ECLGS 3.0.

Meanwhile, a net amount of Rs213 crore has been guaranteed to as many as eight companies under 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 last year launched the Emergency Credit Line Guarantee Scheme (ECLGS) to help businesses hit by the pandemic. This scheme initially aimed to provide Rs3 lakh crore of unsecured loans to MSMEs and business enterprises to mitigate the distress caused by the coronavirus-induced lockdowns. 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 hit by the devastating second wave of the covid-19 pandemic, will act as a lifeline to these highly leveraged companies, Crisil Rating had 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 to 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.

"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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