Untitled Document
  
 

In this chapter we highlight the issues that SMEs in the Chennai cluster face for financing their plans.

Section A: Auto Component Industry

Among the surveyed auto component companies, more than 60% face moderate level of hurdles for procurement of funds. According to the survey companies in lower turnover bracket found it relatively easier to acquire funds; 57% companies in the lowest turnover bracket of below Rs 10 mn found it easy to procure funds as compared with 26% companies in the higher turnover bracket of Rs 10.01 - 100 mn that found it easy to procure funds.

Internal accruals/own sources and bank term loans emerged as the two popular sources of procuring funds. Around 72% companies preferred acquiring loans from internal accruals/own sources. The companies obtained loans mostly for meeting working capital requirements, for purchasing machinery and for diversification.

Around 76% companies agreed that SME-focussed stock exchanges could mitigate the financing problems of MSMEs, whereas 66% were in favour of factoring services and 48% were in favour of restructuring of debt to pay interest payments.

Section B: Leather industry

Among the surveyed leather companies, around 58% faced moderate levels of difficulty in acquiring funds. The survey revealed that companies in lower turnover bracket found it relatively easier to acquire funds; 50% companies in the lowest turnover bracket of below Rs 10 mn found it easy to procure funds as compared with only 29% companies in the higher turnover bracket of Rs 100.01 - 250 mn that found it easy to procure funds.

Bank term loans and internal accruals/own sources emerged as the two popular sources of procuring funds. Around 68% companies preferred acquiring loans from banks. The companies obtained loans mostly for meeting working capital requirements, purchasing machinery and for diversification.

Around 97% companies agreed that SME-focussed stock exchanges could mitigate the financing problems of MSMEs, whereas 70% were in favour of factoring services and restructuring of debt to pay interest payments.