The government has given no direct subsidies to help us revive
In this issue, we feature Captain Prakash Nair, Director Operations, Indel Industries Ltd, Mumbai (an SME), whose company has been manufacturing electrical distribution and control equipment since 1988. In this candid chat with the Confluence HR team, he tells us what keeps him going, despite the government’s ‘insipid’ stimulus package for small players and the debilitating impact of the COVID 19 Pandemic. Here are excerpts from the interview:
Q. The government recently offered a ₹ 3 lakh crore stimulus package to revive SMEs/MSMEs/Micro industries. Do you think the credit lines offered will help revive your company?
It will hardly have any impact I believe. This is because when we consider the number of MSMEs and multiply the eligibility figures (as per the government) it shows that a lot of money is being pumped into the MSME sector and does not take into account, small players. Actually, those who really need money do not stand to gain. The two schemes, one offering 10% of the total facility is better while the second scheme offering 20% of the outstanding as on 29.02.2020, is much more difficult since the eligibility criteria is not enough to restore the confidence of MSMEs. More than these eligible loan amounts, we have paid as salaries and other statutory expenses and if the lockdown extends, then we don’t have any other source to get our fund flow back. Moreover, to get money from banks or maintain credit facility is a major headache for small entrepreneurs. The government has given no direct subsidy on interest or any benefit that will directly impact our businesses. Giving loans is not a solution to get our business back on track.
Q. Are you able to retain your workforce considering liquidity has taken a severe hit following the lockdown due to COVID 19 outbreak?
Yes, we have managed our entire workforce well and have managed to retain them. We will also start with full force once this lockdown is lifted.
Q. What immediate problems do you want the government to address so that your outfit survives?
The government must give some direct benefits to the entrepreneurs, that too, with achievable criteria like interest subsidy, working capital term loan with minimized documentation. Such influences will boost our fund availability.
Q. Are banks willing to bail you out by offering loans/ODs and extending moratorium on loans?
These are welcome steps but considering loan criteria or requirement it is not easy to get immediate benefits. They want DP eligibility, previous financial background support and so on. But for paying salary and meeting statutory expenses we cannot delay them by resorting to such indirect measures.
Q. The government says it will offer you e-commerce platforms to generate demand and provide access to new markets. Do you think this step will help you reboot and revive your company?
Demand is important, and in whatever way it comes is welcome. For the kind of industries we are were running, there is not much scope using e-commerce platforms. Consumer industry may benefit and it is a welcome step.
Q. What steps will you take to generate demand through a remote marketing team? Is this a viable option?
Consumables industry may benefit, but a capital-intensive engineering industry can only avail indirect benefits from remote marketing.
Q. Many SME/MSME/Micro industries have been forced to shut shop because of severe liquidity crunch. What steps would you like the government to take to help you get back on your feet?
The governments have all the tools, like Direct taxes, mainly GST, & IT rates. Why are they not touching this?. Now talking about the Rs 20 lakh crore benefit, most of this amount is only on paper. If thy reduced 1% GST or reduce IT rates, it will directly affect our business. Generally speaking, MSMEs getting cheaper loans only makes sense if you are 100% healthy. Most others have to pay higher interest rates which does not make the loans viable.
Q. How will the flight of labour impact your business? What steps do you suggest to take to tide over this crisis?
We don’t have any “labour” in the common sense of the term. So far there is no impact on our workforce. We slightly reduced their monthly salaries but still paid them on time. I can only hope they understand the present situation and continue to support us.
Q. The pandemic has got most SMEs staring down the barrel. Do you see a ray of light at the end of the tunnel?
Definitely! We are confident that we will tide over this crisis pretty fast. But at the moment, I see no light at the end of the tunnel.