Working capital finance to seasonal industries

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Querist : Anonymous

Querist : Anonymous (Querist)

21 October 2017 How Bank's assess the Working Capital finance for seasonal industries like rice mill and seed processing? Which method they use?
Second since these business operates mainly for 4-5 months in a year, so how holding periods will be computed by Banks?

Amol S Joglekar

Amol S Joglekar (Expert)
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21 October 2017 01. working capital is assessed in the usual and normal manner. There is no any deviation as such.
For seasonal businesses, banks normally ask for WCTL (Working Capital Term Loan) rather than cash credit facility
02.what do you mean by "holding period"?... can you please elaborate?

Querist : Anonymous

Querist : Anonymous (Querist)

21 October 2017 Thnx Sir, But WCTL is used for business concerns facing liquidity crunch. I may be wrong.
By holding period i mean Inventory holding period, debtor holding period and creditor holding period.

Amol S Joglekar

Amol S Joglekar (Expert)
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22 October 2017 01. Crop cycle is taken into account while calculating working capital of seasonal industries.
02. Holding period as you call it is same as for other industries.