A slowdown in sales of cars and real estate has hurt demand for steel and steelmakers’ profits.

India’s biggest steelmakers may be suffering from buyer’s remorse as assets they bought from bankrupt rivals stretch their bottom lines while market conditions have worsened.

Less than 18 months after scooping up these distressed assets in the hopes of extracting value and boosting market share, the steelmakers are struggling to meet sales and production targets because of a slowdown in the key construction and auto sectors.

Tata Steel Ltd, JSW Steel Ltd and others are also wrestling with falling revenues amid high debt loads.

“The operating environment has changed from when they bid for these plants,” said Amit Dixit, senior steel analyst with brokerage firm Edelweiss Financial Services. “So their payback period obviously gets elongated now.”

Steel prices were high and demand was booming then. Now, confronted with falling prices and slower consumption, steelmakers are facing the risk of credit downgrades, job losses and cuts in capital expenditure.

Arnab Kumar Hazra, assistant secretary general at the Indian Steel Association, an industry group that also represents major steel producers, noted companies would take longer to turn their assets around in the current environment.

A deepening credit crunch in India’s shadow banking industry following the collapse of a major infrastructure lender in 2018 has sharply dented spending on cars and real estate in India.

Domestic steel consumption in September was at its lowest since the start of the 2019/20 fiscal year, according to official data.

A synchronised global economic slowdown amid the US-China trade war has compounded the problem, denting global steel consumption and intensifying competition among exporters.

JSW Steel Ltd, which bought Monnet Ispat & Energy Ltd in September last year, had promised to turn it around within a year but now says it will take another year.

The company will also miss its sales and production targets for 2019/20 by 3 percent and has had to cut its capital expenditure by a third, said Seshagiri Rao, JSW’s joint managing director and group chief financial officer.

“There is a credit squeeze, there is prolonged monsoon, a weaker government expenditure and fall in consumer demand,” Rao said.

Tata Steel, which bought specialty steel firm Usha Martin Ltd in April, told the Reuters news agency the turnaround of the target company would be delayed.

Tata Steel and JSW are not alone.

The world’s biggest steelmaker ArcelorMittal and partners Nippon Steel and Sumitomo Metal Corp, which committed $6bn to buy a 10 million-tonne steel plant in India, will face similar issues, analysts have said.

Pressure building

The problems afflicting the steel majors, which together control more than half the country’s total steel production, have already surfaced among mid-sized firms.

“Inventory is high, debtor days have extended, and most mid-level steel companies are now contemplating job cuts,” said R.K. Goyal, managing director of Kalyani Steels Ltd which relies heavily on the automotive sector for steel orders.

The credit crunch and slowdown in autos and real estate pushed India’s economic growth to a six-year low of 5 percent in the April-June quarter, in a troubling sign for the steel sector whose fortunes are closely tied to the broader economy.

The extent of the slowdown is prompting companies to revise capital expenditure plans and others to question the ability of companies to achieve debt reduction goals.

Despite Tata Steel’s move to partially defer expenditure on expansions, IIFL analyst Anupam Gupta said its plans to cut debt by $1bn this fiscal year look ambitious, given weakening profitability across India and Europe.

And the downward pressure on steelmakers does not look set to reverse soon.

“We are just sitting idle and waiting for the tide to turn,” Kalyani Steels’ Goyal said.