Timely intervention saves a unit closing down
Banking Frontiers|November 2020
In the third case study on how the Telangana Industrial Health Clinic (TIHCL) successfully intervenes and rescues sick MSMEs, we present the case of Deccan Pulverizers:
Timely intervention saves a unit closing down

Deccan Pulverizers is a private limited company in the business of manufacturing silica/potash powder from quartz/feldspars mineral stones. The final product is used as a raw material in ceramic, glass, paint, and electrical industries. It has its registered office at Hyderabad while the factory is situated at Talakondapally village in Mahabubnagar district of Telangana.

There are 3 promoters for the company.

The project was conceived basis expected export orders. It had availed a term loan of ₹6.2 million from Andhra Pradesh State Financial Corporation (APSFC), which was used for constructing a factory shed and purchasing machinery. While the machinery was bought as proposed in the project report, the company lacked any formal working capital arrangement. It was entitled for incentives from the State Government of an amount of Rs 2.1 million, including an investment subsidy of Rs1 million, which were not disbursed. While the machinery was ordered as soon as the loan was sanctioned, there were delays in installation on the part of the vendors. The unit did not receive the expected export orders and the promoters searched for buyers in the local markets. In the initial stages, it could not find buyers who could pay for the material in 60 days and this led to a delay in receivables, which in turn impacted repayment of the term loan to APSFC. This resulted in a levy of penal interest.

PROMOTERS USING OWN FUNDS

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