With an increase in sales across almost all vehicle segments making it necessary to pump-in more working capital, automotive OEMs are chipping in to help auto components manufacturers, claim industry sources. They mention that automotive OEMs are supporting smaller component manufacturers as they later find it hard to cope up with the working capital requirements as banks have tightened their lending norms amid rising NPAs. Working on the challenge to meet BSVI emission norms, and tackling a steep rise in raw material prices, auto components suppliers are finding it tough to acquire the necessary working capital. Many are said to approach NBFCs. Though the rate of interest of NBFCs is higher than that of the banks, sources mention, suppliers are looking at them as they don’t ask for hypothecation. The investments made by the auto components industry is said to be two and half times that of the auto makers. Smaller suppliers in the wake of two main challenges mentioned above, and with the cost of steel witnessing a sharp rise in the region of 15 to 20 per cent, are finding it difficult. Sources state that OEM clients will take time to adjust the price increase at the supply end. The time lag is something that has a lot of them worried.

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