This section of the publication, which is based on primary data collected through a survey, seeks to reveal the financing mode and requirements of auto components, electronic goods and IT & ITeS-BPO enterprises operating across the industrial belt of Pune.

The survey revealed that broadly banks are the main financiers for SME credit requirements. Even when these sectors faced a cash crunch in recent times, banks have supported them and helped them restructure their existing term-loans. Besides banks, SMEs also source finance from NBFCs and through personal loans; a majority of them do not have access to sources like bond markets or commercial paper.

Credit usage analysis of the last three years has revealed that majority of the companies took loans for meeting working capital requirements, business expansion and purchase of machinery & equipment. The survey also enabled us to arrive at the following points that the banking sector and the financial institutions in Pune could implement to improve the credit flow for the fund-starved cluster:

- Banks need to constantly review and simplify the lending procedure and attempt to offer cheaper loans to help SMEs tide over any crisis

- Time taken for loan approval continues to be a hindrance for companies operating in the cluster

- During the next three years, besides working capital, purchase of machinery & equipment and business expansion will emerge as a major concern for the surveyed companies, and they will avail loans for buying the same.

Banks and financial institutions should actively provide financial assistance to SMEs and encourage them to opt for diversification and modernisation. The guidelines and policies laid down by the government will prove to be beneficial if banks/financial institutions adopt a prudent approach and increase their willingness to aid these fund-starved companies.Restructuring of loans can further help companies tide over the current turbulence.

Section A: Auto Component Industry

Availability of funds
According to the survey results, a majority of auto component SMEs operating in Pune depend on bank finance; also, public sector banks have an edge over private players with respect to SME lending. The popularity of nationalised banks is evident from the fact that 53% of the surveyed companies find PSUs and nationalised banks to be a convenient source to meet their credit needs. Further, 87% companies seem to be satisfied with the services offered by their respective banks.

Credit requirement

Credit obstacles

On the basis of the survey, companies rated ongoing interest rates and access to long-term loans as major hurdles. Most respondents considered paper work and access to short-term loan as a minor obstacle for procuring finance.

Section B: Electronic Goods Industry

Availability of funds
Among the electronic goods companies surveyed in this cluster approximately 80% admitted to have faced moderate difficulty in obtaining finance from different sources for their business activities. Also, these companies preferred to obtain finance from PSU banks or nationalised banks, as 80% companies obtain finance from this source and 93% of the surveyed companies are fully-satisfied by the services and products provided by their existing banks.

The survey also revealed that electronic goods SMEs by and large abstain from obtaining funds from venture capital fund, private money lenders, and private equity funds for their business purposes.

Credit requirement
From the companies that were surveyed, 22% agreed to have taken loans for meeting both their working capital requirements as well as to purchase machinery for their business purposes in the last three years. During the last three years, 14% of the companies surveyed in the electronic goods sector in the cluster, agreed to have taken loans for diversification into other activities; purchase of raw materials, and for undertaking business expansion activities.

Many of the surveyed companies also revealed that they plan to take loans or will be looking for viable loan options in the coming three years for purchasing machinery for their plants, maintenance of machinery and for business expansion activities.

Credit obstacles

According to the survey results, the surveyed electronic companies considered interest rates as a major obstacle. Most respondents considered access to short-term loan and paperwork as a minor obstacles for procuring finance.

Section C: IT & ITeS-BPO Industry

Availability of funds
According to the study, public sector banks and co-operative banks are the most preferred choices for availing finance in Pune among the IT & ITeS-BPO industry. It was observed in the survey that among the companies that availed finance, 77% preferred public sector banks for their credit needs. It was further observed that all respondents were satisfied with the services provided by their existing banks. While 62% the companies found availability of funds as moderate, 23% said that it was difficult to avail funds.

Credit requirement

The study found that in the last three years, only 27% of the surveyed IT & ITes-BPO companies availed loans, while 73% companies did not avail any kind of loans. Out of the companies that availed loans, 44% availed loans for business expansion. Further, 22% of the companies surveyed availed loans for purchasing equipment and an equal number of companies availed loan for diversification in the last three years.

The survey further revealed that only 13% of the surveyed companies are planning to take loan in the next three years. Among the companies planning to avail loans, an equal number of companies are planning to avail loans for meeting working capital requirements, for purchasing equipment and hardware, for diversification and for business expansion.

Credit obstacles
According to the survey, access to long-term loan was found to be a major credit obstacle for the companies present in IT & ITeS-BPO industry. Most respondents considered paperwork and interest rates as a minor obstacle in procuring finance.