A Ten Point Plan
MSME Surveys done by various organizations revealed that the
packages released by the FM under Atma Nirbhar Abhiyan are not going to benefit
them much. Now is the time to think afresh and move fast to be back on rails
without expecting much from the Government over and above the guarantees
announced. There is full realization among the MSMEs that they should live in
debt, survive and if God helps, grow.
If there were perverse incentives earlier that only made them
perpetuate small in size and not grow, now they will have to contend with no
incentives but to grow with their own ingenuity. In a debt syndrome, this can
happen only when there is a strong environment of mutual trust between the
lender and borrower. Some State Governments are trying to create a better
ecosystem and help the MSMEs.
What you should do as a MSME in this emerging scenario?
Covid-19 in a way opens a chapter in their enterprises. You
are an important link in the supply chain and it is time that you make the
government come to you and not you stand before them with a begging bowl. You
should be able to dictate your supply terms instead of bemoaning that you are
after all a cog in the wheel.
There have been surfeit of ideas and strategies but the
question that stands in front of you, is: how to respond to their work force
who were forced on holiday under lockdown and incentivize them to work for the
Company?
All that the Bank wisemen would do is to give a moratorium
for principal and interest if their credit record held you good – a standard
asset in bank language – by January 2019, a la March 2020, the beginning of
lockdown.
1.
Make a reasonable assessment of receivables by
discussing with the debtors. This will measure up the duration risk of
receivables.
2.
Take full count of the stock available and see
if there is any redundancy. Clear up all the useless stock.
3.
Assess the demand for the product in the context
of sluggishness around in Consumption and the steep fall in Consumption index.
It is very likely that the product required either a makeover or change in
complexion.
4.
Set up a digitization environment – have a
desktop or laptop and buy a ERP solution if you are beyond Rs.1.5cr turnover.
Up to 1.5cr turnover, you have Zoho ERP solution offered by the MSME Ministry
free of cost. Avail it. Incorporate every aspect of your data – from buyers to
sellers, buy to sale, cash to credit, stocks to receivables and enable GST
compliance. This will save you the bother of compliance. Any regulatory
requirement either from the Bank or the Government, you can pull out.
5.
Take work force into confidence: Discuss with
them how they would like to be paid their arrears given the firm’s predicament.
Place before them your increased obligation to the Bank and tell them what
would it mean to pay wages and salaries from the Credit window of the Bank and
how much dip would be there for the firm. Disclose your own financial position.
6.
Present the future market scenario before them
and the prospects it holds both within and outside the country. You may also
discuss with them whether they would like to partner with you in the future of
the enterprise taking into account the new dynamics of the market. Give them an
undertaking that their wages and salaries will be packaged as mutually agreed
after paying at least one month’s arrears.
7.
Strategize for attaining a brand value for your
product within a set timeframe.
8.
Discuss with all the other units engaged in
producing similar products to gain advantage of (a) a co-working space; (b)
co-branding; (c) rational pricing of the product; (d) clusterizing for purchase
of raw material in bulk on a shared e-commerce platform; (e) rediscovering the
price of the final product taking the logistics into consideration.
9.
Rework your Business Continuity Plan and arrive
at viability of your enterprise in the emerging post-Covid environment.
10. Place
your cash flow position for the next 3, 6, 9, and 12 weeks and seek your Bank’s
support.
In States like Telangana you have
Industrial Health Clinic to help you out. In other States you have some responsible
outfits of Associations like FISME in New Delhi, TANSTIA-FNF centre, KASSIA in
Karnataka, etc., that would be happy to suggest right strategies. There would
be little purpose in wasting your time any longer waiting for things to happen
since the economy is opening up.
*The writer is Adviser,
Government of Telangana, Telangana Industrial Health Clinic ltd and author of
the Story of Indian MSMEs.
https://knnindia.co.in/news/newsdetails/msme/msmes-think-anew-and-act-afresh-a-ten-point-plan
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