Infrastructure India's cargo volumes weakened by demonetisation

16th Feb 2017 10:23

(ShareCast News) - Shares in Infrastructure India tumbled on Thursday after saying cargo volumes have gradually improved since demonetisation by the Indian government, but recovery to prior levels depends on the rebound of the manufacturing sector.In September, the investment fund said 99.9%-owned investee company Distribution Logistics Infrastructure (DLI) seen a deceleration of cargo movements immediately after the announcement of demonetisation and the official withdrawal of certain high-value currency denomination notes from circulation.India's wider logistics sector had been affected similarly, said Infrastructure India.The company had subsequently seen some improvement, but said recovery to levels seen before the withdrawal of certain notes was subject to recovery of the underlying sectors, particularly the manufacturing sector.AIM-quoted Infrastructure India added that it would be difficult for DLI to generate an operating profit for the current year as that outfit had not been operating at full capacity. DLI had experienced slow lending from banks after restructuring its debt due to the demonetisation.India is a cash economy with an estimated 90% of daily transactions completed in cash and the company said that a lack of available legal tender impeded both households and commerce.Despite the market challenges, the company said that DLI's Nagpur terminal continued to operate as the facility started stuffing export containers in December 2016 and received an approval for a public bonded warehousing in January as well as quarantine clearance for timber in February.Infrastructure India was also exploring refinancing options in relation to the $17m working capital facility from the Guggenheim Global Infrastructure Company, which was due to mature on 10 April.At about 11:17 GMT, shares in Infrastructure India were down 15.15% to 7p each.