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Section B: Pharmaceutical Industry

Sources of funds

Out of the total respondent companies in the survey, approximately 70% companies in the Mumbai cluster have utilised their internal accruals along with other sources for finance in the past. This trend is expected to continue into the future as 71% respondents have indicated that they will utilise their internal accruals along with other sources to finance their future needs. Bank term loans proved to be the second choice for these companies for financing as approximately 68% respondents obtained finance through this source along with other sources in the past. However, this trend is on the verge of declining, as only 56% respondents indicate that they are planning to utilise bank term loans along with other sources in future for their financing needs.

Deployment of funds

Working capital requirements has emerged as the most important application of fund for the respondent companies in the cluster. According to the survey, 85% of the companies have deployed funds for working capital requirements along with other requirements the last three years and similar percentage of companies have indicated deployment of funds for working capital requirements along with other requirements in the coming three years.

Procurement of funds

The survey reveals that procurement of funds is not a key challenge for the respondent companies in the cluster as 37% companies found procurement of funds to be very easy. This can be attributed to the fact that approximately 70% respondents in the sector have utilised their internal accruals along with other sources for finance in the past. Only 6% companies find it very difficult to obtain finance.

Credit obstacles

According to the survey the respondents face various obstacles while obtaining credit. Among these obstacles, long legal procedures was ranked as the biggest obstacle by the respondent companies. Collateral requirements while applying for credit was ranked as the second biggest obstacle in the survey.