2012-06-20

Crisil: 53% SMEs prefer own funds over bank funding

Rating agency Crisil on Tuesday said a large majority of SME promoters - as many as 53 percent - continue to use their own funds to tide over inflationary pressure as getting bank funds are not without difficulties for them.

Crisil: 53% SMEs prefer own funds over bank funding

Rating agency Crisil on Tuesday said a large majority of SME promoters - as many as 53 percent - continue to use their own funds to tide over inflationary pressure as getting bank funds are not without difficulties for them.

"Easy access to bank funds has always been difficult for of small and medium enterprises (SMEs)...Support from the lending institutions would have provided additional fillip to the sector," said Sachin Nigam, Senior Director for SME ratings, Crisil in a research note.

After a survey of over 3,000 SMEs on their funding patterns, it has found that 53 percent of them met their funding needs through promoters' funds and personal loans in FY11, Nigam said quoting a survey finding.

The survey revealed that while revenue of the SMEs increased 29 percent last fiscal, raw material costs rose 31 percent while operating margins marginally declined (1 percent), showing their inability to pass on the inflation pressures to their customers, he said.

In the same fiscal, equity capital bought by SME promoters increased 29 percent, while loans from promoters' family and friends were up 24 percent, indicating that funding requirements were met through promoters' funds than through bank borrowings.

The Crisil study said companies in the engineering and capital goods, textiles and chemicals, which have high input costs, are most susceptible to inflationary pressures.

However, notably, country's largest lender State Bank of India recently announced an up to 3.50 percent reduction in interest rates for the SMEs.

Related opportunities
  • Welcome to Urbandot Couriers & Cargo, your reliable partner for..
    Locations looking for expansion Telangana
    Establishment year 2023
    Franchising Launch Date 2024
    Investment size Rs. 2lakh - 5lakh
    Space required 200
    Franchise Outlets -NA-
    Franchise Type Unit, Multiunit
    Headquater Khairatabad Telangana
  • Music Equipment & Music Stores
    About the Brand: Sabari Musicals, founded in 2006 by V. Muthulingam..
    Locations looking for expansion Tamil nadu
    Establishment year 2006
    Franchising Launch Date 2025
    Investment size Rs. 50lakh - 1 Cr.
    Space required 2000
    Franchise Outlets -NA-
    Franchise Type Unit, Multiunit
    Headquater Chennai Tamil nadu
  • Skills / Personality Development
    SpellBee International is an educational research organization focused on enhancing..
    Locations looking for expansion Tamil nadu
    Establishment year 2009
    Franchising Launch Date 2014
    Investment size Rs. 2lakh - 5lakh
    Space required 250
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater Ambattur Tamil nadu
  • Online Travel Services
    Nitsa Holidays – Your Gateway to Customized International Travel Nitsa Holidays..
    Locations looking for expansion Delhi
    Establishment year 2015
    Franchising Launch Date 2024
    Investment size Rs. 5lakh - 10lakh
    Space required 250
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater Delhi Delhi
Insta-Subscribe to
The Franchising World
Magazine
tfw-80x109
For hassle free instant subscription, just give your number and email id and our customer care agent will get in touch with you
email
mobile
OR Click here to Subscribe Online
Daily Updates
Submit your email address to receive the latest updates on news & host of opportunities

Free Advice - Ask Our Experts

pincode
;
ads ads ads ads