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Section A: Chemical Industry

Sources of funds

According to the survey, the three most preferred sources of financing for the chemical SME’s were: bank term loans, overdraft/cash credit or internal accruals. Most companies are planning to avail loans from the same source which they had availed in the past. Bank term loans emerged as the most preferred source of financing for companies in the past and are likely to remain so in future; overdraft/cash credit is the other most preferred source of financing.

Deployment of funds

The survey revealed working capital requirement as the key area where the respondents deploy their funds. Almost 78% of the respondents indicate working capital requirements along with other areas where funds were deployed in the last three years. Whereas 88% respondents indicate the deployment of funds for meeting working capital requirements along with other areas in the coming three years.

Credit obstacles

Higher interest rates are the biggest obstacle that chemical companies in the cluster face while applying for loans. Apart from these, collateral requirement and long legal procedures are the other tedious obstacles that companies face while applying for loans.