Uncertainty in market, makes it difficult for SMEs to get bank loans

Aurangabad, July 15:

Closure of showrooms, including markets during the second wave and ongoing restrictions have hit the automobiles, electronics and electrical industries. At present, due to partial lockdown, the annual turnover of more than 600 companies in the district has declined and banks have been reluctant to extend loans to them this year.

Due to outbreak of second wave of coronavirus, various states decided to implement a complete lockdown and shut down trade and business. Despite the cases declining, the restrictions are still in place. As a result, sales of various products in many states has come to a complete standstill. Demand for spare parts also declined as showrooms for vehicles and electronics and electrical products are closed. As a result, many automakers have reduced production.

More than 600 small and medium enterprises dependent on large automobile companies in Waluj, Chikalthana and Shendra have also reduced their production. Despite permission by the state administration to keep the production going, the annual turnover of most of the companies has decreased due to lack of orders. Turnover has declined by 60 to 65 per cent over the last year, prompting banks to stop issuing new loans to more than 600 companies this year. At present, showrooms have reopened and companies have started receiving orders.

However, it has become difficult for the companies to get loans from banks to fulfil these orders. This has put entrepreneurs in trouble. Giving more information, Massia vice president Kiran Jagtap said that the SMEs are still facing difficulties in getting orders. Many entrepreneurs who have applied for bank loans are being turned away due to uncertainty in markets. The situation will improve only if restrictions are removed and markets are opened at full capacity.

Exports saved industries

The ongoing restrictions throughout the country have affected all industries. But as the city is a auto hub and supplies spare parts to companies not only in the country but also around the world, the export of these products has helped keep the industry alive in the district. Currently the situation is under control, said CMIA president Shivprasad Jaju.