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Why should manufacturers opt for smart financing solutions?

By Nisha Shukla,

Added 27 April 2023

Sunil Kapoor, CEO of Siemens Financial Services, talks about why manufacturers should opt for smart financing solutions and how their schemes are helping businesses to achieve their goals.


Sunil Kapoor

How smart financing solutions accelerate growth in companies?

With manufacturing and construction sectors contributing significantly to global CO2 emissions, the need to adapt to changing market demands and CAPEX constraints while reducing environmental footprint is having a transformative effect on traditional manufacturing processes. With smart financing solutions by Siemens Financial Services, we understand technology, markets, applications, and operating pressures which enables our customers to achieve clearly identified and desired business outcomes. Our financing solutions help manufacturers upgrade, digitize, and stay competitive while streamlining operating costs in the ‘new normal’.

Smart Financing solutions from Specialist financiers who understand the sector and its challenges, enable manufacturing companies to:

1. Acquire new generation technologies with quick turnarounds (with quick processing times and a digitalised documentation)

2. Improve working capital/cash flow management

3. Increase production capacity and/ or flexibility and increase operational efficiency by making it possible to acquire technologies even without ownership (via Leasing solutions) All of these (individually or together) make it possible for manufacturing companies to become more competitive in the market and provides them with an edge to accelerate their growth with the assistance of digitalisation.

What are the key advantages of smart financing? How does it enable companies to garner ROI and maintain business continuity?

The key advantages of smart financing:

Easy and flexible – Allowing manufacturers to raise the finance they need, when they need it, on suitable terms as per their circumstances and supported by customer-focused processes.

Expert, appropriate and transparent – from financiers who understand the sector and its challenges, as well as the role equipment and technology play in addressing those challenges and can therefore offer customised finance solutions linked to desired outcomes that assist financial planning.

Reliable and sustainable – from financing partners that have a track record of association with the manufacturing sector and are looking to build long-term customer relationships.

Smart financing enables companies to maintain or improve their ROI since it is always a customised solution, provided based on a deeper understanding of the business, the sector, the technologies being acquired, business phase and overall business potential. Since it also considers factors such as current and potential cash flow, seasonality of business, and usage of technology, it ensures business continuity by providing the right type of financing solution, as per the specific requirement of the business, without adding undue financial pressure on it and taking away from other key financial commitments (e.g., Working capital commitments towards raw materials and salaries).

Why should manufacturing industries opt for smart financing solutions for their business?

Finance is a key driver to ensure growth, profitability, and sustainability for any business. For manufacturing industries, it is even more crucial to use this driver efficiently since they need to make large investments in production assets and materials, along with managing all other resources.

Smart financing solutions enable manufacturers to avail financing at a short notice, as per their specific business needs and on terms which are most favourable for their business. Thereby providing them with the most flexible, most customised solution they can avail in the shortest possible time (as early as 48 hours for loans up to Rs. 75 lakhs once the documentation is completed). Add to this all the time and hassle saved with digital documentation signing and quick disbursal times, it is a win-win solution for any manufacturing business.

Tell us in detail about your Financing @ Zero% Interest scheme. How will it benefit manufacturers?

We have close relations with majority of the leading manufacturers across industries. We tie – up with them to provide financing programs for their customers. We provide their customers with a range of customised financing solutions that meet their business needs, both short-term and long-term.

For the manufacturers, these schemes enable them to close the sale on the spot (even at an exhibition or machine showcase) since financing is readily available for customers to avail, based on easy documentation and quick processing times.

How customised finance solutions can enable companies adapt to Industry 4.0?

The Fourth Industrial Revolution or the Internet of Things, is the Digitalisation of processes, the installation of widespread sensors in the physical environment, and the ability to rapidly enhance production economics through real-time performance data analysis.

Customized financing solutions enable companies to:

a. Acquire new technologies without making large upfront investments

b. Efficiently use/restructure their current and potential cash flows

c. Allow for business seasonality and/or uncertainties

d. Use new technologies without taking on the burden of ownership – by considering leasing the equipment/technology

This allows companies to evaluate the best technologies for their business and make the most prudent financial investments for digitalization and upgrades to Industry 4.0.

SFS provides a diverse set of financing solutions to businesses in the energy sector. Kindly shed some details on this. How has it impacted to their growth?

Siemens Financial Services Private Limited (SFSPL) focuses on asset financing solutions while a separate business unit under the global Siemens Financial Services organization is also involved in equity investments and project financing solutions. Within the portfolio that SFSPL manages, we have witnessed a very high interest among customers who are seeking to modernize their power generation equipment such as gas and steam turbines, aiming for energy efficiency and sustainability. Over the past two years, many customers, including in the private captive power space across industries, have opted to move from a capex to an opex model. We see this trend continuing going forward.

Your company has been financing greenfield renewable projects and significantly contributing to decarbonization? Which companies have opted for it and how significantly has it helped them to cut down on carbon emissions?

We can provide equipment/asset financing for renewable projects and players in the renewable project space. Companies who have opted for equipment finance span across various industries such as power, infrastructure, manufacturing, pharmaceuticals.

A solution that is popular across industries is called ‘Pay as you Save’ where we structure the financial payments for the new technology being acquired based on the amount of savings it generates monthly. This allows customers to upgrade their technologies for more sustainability-oriented ones while allowing them to pay for it from the savings they may generate from electricity or other forms of savings.

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