Small firms bank on Tata and M&M's finance arms for working capital needs

An increase in sales across all categories in the automobile industry, has made need for higher working capital inevitable

Large automobile corporates like Mahindra & Mahindra and Tata are throwing their weight behind small component firms through their finance arms, to meet the latter’s working capital requirement as banks are tightening their lending norms, amid rising non-performing assets (NPAs).

A fast expanding automobile market and an impending transition from BS-IV to BS-VI emission norms necessitate massive investment by the suppliers. A steep increase in prices of raw material is also prompting such suppliers to seek loans from firms such as Tata Capital and Mahindra Finance. This is despite the cost of borrowing from them being marginally higher than commercial banks.

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