Auto Component SME Streamlines Procurement with CredAble’s Working Capital Solution

A Case Study on Working Capital Financing for an SME Automotive Manufacturer

Overview:

The borrower is a company listed on the NSE SME Exchange and has been specialising in aluminium pressure die-casting and precision machining of both ferrous and non-ferrous materials since 2011. With over a decade of manufacturing expertise, the company plays a critical role in the automotive supply chain, serving as a trusted component supplier. Headquartered in Tamil Nadu, it operates out of Chennai, one of India’s largest hubs for auto and ancillary manufacturing, where several Japanese and global OEMs have established production bases.

The company supplies to clients across India and China, contributing to global automotive value chains. Despite strong demand, the borrower faced cyclical cash flow mismatches due to advance raw material procurement requirements and elongated payment cycles, impacting vendor relationships and production continuity.

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Roadblocks:

As a mid-sized manufacturer in the auto sector, the company faced structural liquidity challenges:

• Working Capital Gaps: Traditional financing channels were slow, bureaucratic, and didn’t provide timely disbursement to keep pace with procurement cycles.
• Credit Period Reduction: The client’s credit period was reduced, which increased working capital pressure.
• Dependency on Supplier Credit: Prior to financing, the client heavily relied on supplier credit, leading to inconsistent procurement.

The borrower needed a fast, flexible capital solution to address cyclical working capital needs, improve procurement efficiency, and reduce raw material costs.

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Approach: Working Capital financing by NBFC CredAble

CredAble structured a Working Capital Demand Loan (WCDL) to ease cash flow constraints and enable timely procurement of raw materials.

Financing Structure and Timeline:

• Facility Type: Working Capital Demand Loan (WCDL)
• Purpose: To prepay for aluminium procurement and enable early vendor payments
• Disbursement: Fast-track disbursal in alignment with procurement cycles

Sector Relevance:

• The borrower belongs to the automotive manufacturing sector, where just-in-time operations are crucial, and any delay in raw material procurement leads to ripple effects across the value chain.

Solutioning: Liquidity Meets Cost Efficiency

CredAble’s working capital facility was custom-tailored to support the borrower’s procurement rhythm and vendor relationship goals.

1. Procurement-Linked Capital Access

• Enabled advance procurement of aluminium, which is otherwise available only through upfront payments.
• The facility helped them transition from reactive to proactive procurement, securing better pricing and ensuring uninterrupted raw material supply.

2. Vendor Payment Enablement

• With liquidity on hand, the company could make early payments to vendors, resulting in improved terms and relationships.
• Strengthened trust across the supply chain and improved delivery SLAs.

3. Cost Optimization

• The company saved 2–2.5% on raw material procurement costs by being able to negotiate better terms thanks to upfront payments.

4. Business Continuity Assurance

• Prevented potential production stoppages caused by delayed raw material procurement.
• Allowed the borrower to respond confidently to demand surges from their automotive clients.

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Cascading Effect for Borrower

Within the first few months of activation, the working capital line generated measurable outcomes:

• 2–2.5% cost reduction in aluminium procurement
• Improved vendor relationships, with early payments building goodwill and reliability
• Streamlined operations, minimising raw material-related delays
• Improved cash flow cycle, leading to better production planning and capacity utilization
• Stronger position in automotive supply chain, due to uninterrupted fulfillment capability

“Our operations depend on timely procurement of aluminium, but the advance payment terms always strained our liquidity. CredAble’s support helped us stay ahead of the curve, negotiate better, and keep production smooth.” - CFO, Leading Auto Components Manufacturer

CredAble: Powering India’s Manufacturing Backbone

CredAble’s working capital solutions are engineered for SMEs in core sectors like auto manufacturing. By integrating capital into procurement and payment cycles, CredAble enables businesses to operate with greater agility, cost-efficiency, and resilience.

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