Government Schemes To Strengthen MSMEs In Pharmaceutical Sector.

 

MSMEs In Pharmaceutical Sector

The pharma industry in India is highly innovative and entrepreneurial. Along with its roots in the sector, the Geo-economic healthcare landscape has been significantly altered by new startups in the traditional space. Thus more contributions need to be made to bring forward an overall larger set of solutions through a focused research and development process. For this, MSMEs in the pharmaceutical sector require funding to grow. 

With factors such as a product pipeline, access to a specialized talent pool, and a large pool of patients to add to clinical needs, the pharma ecosystem is poised to meet multifaceted healthcare needs. Thus government policies along with various schemes should be geared towards accelerating such innovations and ground-level growth to provide problem-solving solutions at the base level of the society’s pyramid. And further reducing their dependence on obsolete processes and increasing access to affordable health care. Thus, in these circumstances, capital funding should never be a concern to gear up the MSMEs in the pharmaceutical sector.

Raise funds for MSMEs in the pharmaceutical sector with suitable financial instruments.

Government schemes for MSMEs in the pharmaceutical sector

The pharma industry is a very important sector of the economy. Its importance has raised significantly since the covid 19 pandemic. It is difficult to run the industry without sufficient funding. Thus strengthening MSMEs in the pharmaceutical sector has become the need of the hour. Keeping this in mind government of India launched 3 schemes to make the pharma industry Atma nirbhar, additional resilient and future-ready. Those are as below –

• PTUAS Scheme 
• API-CF Scheme
• PMPDS Scheme

The scheme provides for credit-linked facility capital and interest for subsidy within the pharma sector. The objectives of the schemes launched under the banner Strengthening Pharmaceuticals Industry include 

• Technology up-gradation
• Setting up common research centers 
• Operating effluent treatment plants in clusters for pharmaceutical MSMEs. 
• Support of up to Rs 20 crore each for the common facility. 

SIDBI is going to be the project advisor for implementing these schemes.

1. PTUAS - Pharmaceutical Technology Upgradation Assistance Scheme

This scheme would facilitate pharmaceutical MSMEs with a well-tried track record to upgrade their technology. The scheme has provisions for a capital grant of 10 percent on loans up to a maximum limit of Rs 10 cr. And with a minimum compensation amount of 3 years or interest subvention of up to five percent (6 percent in case of units closely held by SC/ST) on a reducing balance basis.

2. API-CF - Assistance to Pharma Industries for Common Facilities Scheme

Helping pharma Industries with the Common Facilities scheme (API-CF) would strengthen the prevailing pharmaceutical clusters’ capability for sustained growth. It provides for the help of up to seventy percent of the approved project value of Rs 20 crore, whichever is a smaller amount.

3. PMPDS - Pharmaceutical and Medical Devices Promotion and Development Scheme

The pharmaceutical and Medical Devices Promotion and Development scheme (PMPDS) would involve the preparation of study reports on topics of importance for the Indian pharma and medical device industry. The scheme is geared toward making information about the pharma and medical device sectors. So the industry can keep upgrading to cater to evolving necessities across international markets.

At a conclusion

The pharma industry is one of the most important sectors of the business economy. Due to this, a lot of emphases is being laid on the working of MSMEs in the pharmaceutical sector. It is also a growing industry as many more pharmaceutical companies are looking to expand their business. In order to expand, the industry requires raising funds for the pharma businesses. Terkar Capital caters to the required cash flow for the growth of MSMEs in the pharmaceutical sector. So, reach out to Terkar Capital for financial facility arrangements.

Cash Credit (CC) Facility - Features, Eligibility, and FAQs

 

Every business needs funds for running its operations, be it for starting a company, expanding a company, purchasing machinery, or working capital, finance is the foremost requirement. Out of all others, the major requirement of funds is for working capital. Traditionally, most of the working capital financial instruments were secured, where one must have some kind of mortgage on the property. But, now there are unsecured working capital instruments that avail loans without collateral.

Cash Credit (CC) Facility

Cash Credit is an instrument of working capital finance that enables customers to use the amount specified by the lender and pay interest only on the used amount. The amount cannot exceed the sanctioned amount. This is known as the “Credit Limit” by the bank. The cash credit facility is generally given for a period of 12 months and renewed at the end of the year. To overcome the cash crunch faced due to a credit period of debtors, the CC facility is majorly used. Drawing Power (DP) is an important concept for Cash Credit (CC) facilities. It is the limit up to which a firm or company can withdraw from the working capital limit sanctioned.

Features of Cash Credit Facility

1.      Majorly, the CC facility is given by the borrower’s principal banker. The interest is charged only on the used amount by the borrower, which reduces the financing cost.

2.      There are no restrictions on the number of withdrawals of the borrower, the only restriction is on the withdrawing amount. The borrowing limit is determined according to the creditworthiness of the borrower, whereby the borrower can only withdraw up to the limit set by the banker i.e, as stated in DP.

3.      The credit period is generally given for 12 months. After that, the borrower has to renew the period.

4.      CC is available in both secured and unsecured funding, which depends upon the availability of collateral. In the case of secured funds, collateral is assets such as stocks, fixed assets, or property.

5.      The most important benefit of cash credit is its flexibility in deposits and withdrawals. Due to this, a borrower can save a lot of interest costs by depositing as and when the cash is available to him.

An example of a Cash Credit facility

“ABC Private Ltd” is a company engaged in the manufacturing of goods. Being a manufacturing company, the goods are majorly sold in bulk and on a credit basis, where the credit period of the debtor is 30/60/90 days. Also, there was unsold stock. In such a case, the company’s capital is stuck in the form of inventory and accounts receivable. Hence, the company takes a short-term loan in order to meet its working capital issues through a cash credit facility.

 

Eligibility

1.      Age criteria: Generally, the age of an applicant should be between 21 to 65.

2.      The business should have an existence of at least 3 years or as required by the lender.

3.      CIBIL ratings: If CC is obtained through an unsecured funding option, the borrower will need a creditworthy CIBIL score.

4.      Financial record: Most borrowers have to submit a specific financial record which varies according to the lending institution and also upon the borrower’s business.

5.      There is also a specific requirement of monthly income/ turnover criteria for businesses.

Note: Eligibility criteria vary from lender to lender. The above-mentioned is majorly used.

FAQs

What is the difference between CC and Loan?

The term loan is offered by a lender at a specific rate of interest which has to be repaid within a specified tenure. Whereas, CC facility is short-term finance which helps to overcome working capital issues. The banker specifies a certain limit up to which the borrower can withdraw money and pay interest only on the used money.

Who can avail of the Cash Credit facility?

All the manufacturing and service industries, traders, distributors, companies, partnership firms, and LLPs can apply for a CC facility.

What is the amount offered by the Cash Credit Facility?

The amount of CC depends upon the drawing power of the borrower. DP is calculated by considering the amount of stock, accounts payable, and accounts receivables.

Do banks/lending institutions require collateral for the Cash Credit facility?

The collateral depends upon the availability of the borrower, whether he possesses collateral or not. If the borrower does not have collateral, the ROI in such a situation will be higher than in the secured one.

Why choose Terkar Capital for CC Facility?

If you are looking for a reliable institution for raising finances, Terkar Capital can be the most appropriate for you. We arrange a variety of both debt and equity funding solutions for our clients and try harder to provide these facilities hassle-free. Our confidentiality and transparency in services make us different from others. So, whenever it is corporate funding, Terkar Capital is ready to serve you!

Overdraft Facility - Meaning, Advantage, and Significance

 

What is an Overdraft Facility?

An overdraft facility is a financial arrangement between a bank and a customer, that allows the customer to withdraw more money than is currently available in their account. Almost every bank or financial institution in India provides an overdraft facility to its customers. The bank decides the loan amount and interest rate criteria. Let’s learn what an overdraft facility entails and how Terkar Capital simplifies the application process.

As the name suggests, the bank gives overdraft facilities to borrowers.  It is to withdraw money more than the balance available in their bank account to overcome working capital requirements. OD is a short-term loan that must be repaid as determined by the bank. It can be available even if the account balance is zero. Such a facility is available in both secured and unsecured ways. The borrower can be individuals, self-employed professionals, etc.

OD Facility Example

To effectively manage your money, it is critical to understand the concept of an overdraft. So, let’s simplify using the example below:

PQR Private Ltd, a company with a current account at XYZ Ltd Bank, has a credit balance of Rs 750 Lacs. The company needs to make a payment of Rs 820 Lacs to one of its vendors. After analyzing the expenses, the company realizes that it needs additional cash to make the payment.

Hence, the company approaches its banker and applies for an overdraft of up to Rs 850 Lacs. The banker approves the application at a reasonable ROI. Thus, the company can now use the overdraft amount as and when required and will pay interest on the amount used above the credit balance.

Overdraft (OD) Terms

The terms of a loan may vary depending on the borrower’s profile, repayment capacity, relationship with the banker, financial history etc.

Features of OD Facility

1. The overdraft facility helps in the effective working capital management of the company. It solves the immediate cash crunch. Also, It gives flexible repayment options to the current account holders.
2. The credit limit depends upon the relationship of the borrower with his banker and also his credit score.
3. Generally, the credit period is 12 months. Thus, the borrower has to renew the facility according to their requirements.
4. The interest is charged only on the extra amount used. Other than the credit balance of the bank account which varies as per the amount of the Overdraft.
5. The repayment of the OD is not done through EMIs. However, the borrower can pay as and when he is available with cash but before the end of the credit period.

Maximizing Your Overdraft Facility

The OD facilities can be a helpful way to manage your finances, but it’s important to use them wisely, as they can be expensive.

Here are some tips for maximizing your overdraft facility and avoiding unnecessary fees:

• Only use your overdraft facility for short-term expenses.
• Make sure you have a plan to repay your overdraft as soon as possible.
• Shop around for the best overdraft deal.
• Consider using a credit card instead of an overdraft facility.
• Be aware of the fees associated with overdrafts.

Learn more about the dropline overdraft facility here.

Overdraft facility at Terkar Capital

Terkar Capital is a financial institution that is known for providing overdraft facilities to its customers with ease. With Terkar Capital, borrowers can easily apply for overdraft facilities based on their needs and eligibility.

Particulars for OD Facility

# Min Amount (Rs. INR)  -  25 Lacs

# Max Amount (Rs. INR) (No capping) -  Rs. 100 cr +

# ROI  -  Repo Rate Linked

# Tenure -  Revolving

An overdraft is a helpful financial tool in times of need. However, it is important to understand its meaning and potential risks. We believe this blog provides an in-depth explanation of overdraft’s meaning, its usage, and how it works. Overall, this article provides a helpful overview of the concept of overdraft meaning in the context of Indian banking.

FAQs

1. What are the eligibility criteria for an OD facility?

There are no set criteria for eligibility. It varies from lender to lender. But factors like the borrower’s age, credit score, earning/turnover, and relationship with a banker are considered majorly.

2. What is the procedure for obtaining an overdraft facility?

A borrower applies for an OD facility. The bank checks their credit score, relationship with the bank, earnings, and eligibility. If approved, the OD is sanctioned.

3. Who can avail of the OD facility?

Current and savings account holders can get an overdraft facility from their bank, depending on their relationship with their banker. Individuals, self-employed professionals, and enterprises can be borrowers.

4. Is there any requirement for collateral?

Collateral depends on the borrower’s availability and whether they have it. ROI is higher for unsecured loans.

5. Who offers the overdraft facility?

Almost all banks provide Overdraft facilities to their saving and current account holders. Nowadays, financial institutions also provide such a facility.

6. How long can the bank account be overdrawn?

The time duration of the overdraft depends upon the agreement between the banker and the borrower. Generally, the facility is provided for 12 months and has to be renewed at maturity.