Nilesh Desai, Chief Consultant, Growth idea lab, and Vice President, Telangana State Confederation of Indian Micro, Small and Medium Enterprises has years of experience in nurturing MSMEs. In a chat with CMR on the situation that MSMEs faced which includes the problems like salaries and wages, unavailability of resources as many workers left for their hometowns, lack of transportation facilities and more.
And Suppliers changed their conditions of credit this creating a cashflow problem, demand has not picked up as non-essential purchases are postponed till clarity comes.
When asked about Government sanctioned loans for MSMEs, he commented “Under Atmanirbhar Bharat, INR 3 lac cr emergency line of a credit guarantee scheme was announced. According to the government’s own estimate, 45 lac borrowers are eligible but as on today 1.63 lac cr has been sanctioned and about 60% of it is disbursed. This indicates, either MSME is very cautious to use or banks are creating problems.” He also said that under the scheme, interest has to be serviced by the unit, and a one-year moratorium from the principal amount is there.
The prediction he gave for MSMEs are “50% of units having informal finance will disappear in the next six months. Existing MSME units, having a stream of the balance sheet will survive but others will turn NPA, both because of risk aversion of banks and their own vision.”
He said there are opportunities for creating more jobs in MSMEs, only if they increase their operational efficiency. “Indian MSME assets as on today will be in the range of 100 to 200 lac cr and most of the entrepreneurs go to their CA at the end of the year for filing income for return with a request to reduce tax liability and they go to the bank for increasing limits. Any extra debt without proportional equity is poison. Their own balance sheet, Profit & Loss can give 52 ratios and once they know this, they can optimize resource allocations. I expect that in the first year itself the unit can improve net profit by 1 to 5%. I expect that if every MSME does this, it will increase 5% better utilization of assets without any capital expenditure and create 2/3 cr jobs.”, he said.
SMEs balance sheets & profit and loss analysis are done by SME analytics in which Mr. Desai is a part of, they are providing this service free of cost to all MSME/Small traders. And also he asked both central & State governments to make this mandatory as it is not costing them anything.
Finally, his advice to MSMEs “Please understand the meaning of equity, margin & debt, if you are looking for any type of loan also prepare CMA data by yourselves & get it from your CA. You know your business better than your CA.”
