Producer Companies
105
have reported to have taken loan from some
source, with aminimum loan outstanding of
`
0.35 million and maximum of
`
1.52 mil-
lion and average being
`
0.41 million. POPIs
mention that the major lenders are (a)
FWWB, (b) Ananya Finance, (c) Caspian,
(d) NABKISAN, (e) Manaveeya, (f) BASIX
(LMP fund) and (g) NABFINS. IDBI bank
and Punjab National Bank are reportedly
showing some interest. Canara Bank and
SBI, have framed a policy and scheme for
financing producer companies.
Friends of Women’s World Banking
(FWWB) has played the role of a first lender
to the PCs. FWWB loans are collateral free
and at reasonable rates of interest (6 per cent
to 13 per cent depending on the source of the
funding and terms agreed with the FWWB’s
lender/donor). PCs and POPIs are highly
appreciative of the role played by FWWB in
building the confidence of the PCs in under-
taking business since the loans were often
accompanied by capacity building as well.
FWWB carries out in-depth assessment and
lends to PCs on the basis of business plan,
member strength andpatronage andmanage-
ment capacity rather thanbalance sheet alone.
LAMP fund, set up by BASIX group for
lending to PCs, has also come in for appre-
ciation. With the initial loan from FWWB
and LAMP, PCs are able to demonstrate
a credit track record which should enable
them to access loans from banks. FWWB
has, in the last five years, cumulatively
disbursed
`
223 million to 35 PCs. As of 30
June 2015,
`
41.76 million is outstanding to
21 companies. Seventy per cent of compa-
nies take repeat finance either from FWWB
or from Ananya Finance Inclusive Growth
(a sister company). FWWB mentions that
the repayment rate in general is very good;
except in one case there have not been any
write off in the last four years. Ananya
Finance, a recent entrant in the market has
commenced lending from January 2015.
FWWB is of the view that unless POPIs
support PCs for five years, the institutional
and business strength of PCs will not be
adequate to carry out business profitably.
Since margins are thin in most of the busi-
nesses, building the business volumes are
key to achieve cost coverage. Systematically
building such volumes of business require
capacity to plan and execute in the PCs for
which POPIs continued support is critical.
While FWWB largely lends for work-
ing capital and small machinery, Ananya
Finance is developing longer term loan
products for warehouse financing, pro-
cessing machinery and equipment aimed
at post-harvest financing. While funding
working capital requirements, Ananya
evaluates marketing tie-ups. Ananya is also
forging partnership with IDBI bank for act-
ing as business correspondent for financing
to PCs wherein Ananya carries out the due
diligence and also monitors PCs.
While NABARD has been keen on
promotion of PCs, their lending norms to
PCs is stringent and loan portfolio to PCs
is limited. NABARD sanctioned financial
assistance of
`
1,577 million (
`
1,536 million
as loan and
`
42 million as grant) to 65 new
producers’ organisations during 2014–15.
The disbursements amounted to
`
1,019.8
million (
`
1,004.4 million as loan and
`
15.4
million as grant). The assistance has been
largely for setting up marketing and pro-
cessing infrastructure in a wide variety of
crops and commodities. PCs mention that
compliance with the norms of NABARD (a)
two to three years audited balance sheets and
(b) Collateral requirements, are very tough
to meet unless POPI is willing to borrow on
its balance sheet and on lend to PCs. Two
large POPIs mention that NABARD has
shown more keenness to lend through the
promoters than to the PCs directly.
Though some of the commercial banks
have issued instructions and guidelines for
lending to PCs, branch managers are yet to
appreciate the concept and get enthused.
Bankers find that based on the balance sheet
strength and asset position, 90 per cent of PCs
are not bankable. Not having adequate capital
is the major impediment as per bankers.
To address this problem, SFAC is imple-
menting the Equity Grant and Credit
