Cash Flows, Labour and Raw Material are biggest MSME concerns

The findings from the most comprehensive survey conducted by All India Manufacturers Organisation, ( AIMO ) across India with MSMEs indicate that there are Multiple Factors which will impact the MSME industry post the lockdown.

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AIMO conducts The Most Comprehensive survey among MSME’s

Monday, May 04, 2020: The findings from the most comprehensive survey conducted by All India Manufacturers Organisation, ( AIMO ) across India with MSMEs indicate that there are Multiple Factors which will impact the MSME industry post the lockdown. The key concerns would be availability of
Finance, availability of labour, payment of wages and more importantly availability of raw material.

Explaining the key findings of the survey , Mr.K.E.Raghunathan , Past President of AIMO “ 66% of the entrepreneurs cited Cash Flow issues as their inability to make wage payments for April, which normally happens between 1st and 5th of the month , as the receipts from the customers have dropped to zero and there has been no advance received during March and April for fresh orders. Our interaction with Entrepreneurs point, as of today over 91% of entrepreneurs have not fully paid the wages and salaries for the month of April”.

According to Mr.Sudharsan Sareen , National President of AIMO – “ AIMO has taken the role of the coordinated voice of the MSME Industry in highlighting the issues faced by over 58 Million MSMEs employing over 120 Million people. While numerous Trade Bodies across the country have requested the Government of India and State Governments for financial packages and support , the AIMO survey indicates that entrepreneurs feel there are equally worrisome issues. 92% felt the Raw material unavailability will be a key concern when the lockdown ends and they reopen with possible higher price, lower credit from vendors, settlement of previous dues and higher minimum quantity being the key concerns which are likely to crop up.“ Raghunathan points.

“ 72% felt that Labour issues would need to be addressed and was a concern area for MSME’s. The key areas of worries were that 82% felt that getting Migrant workers back will be difficult and that they may not be traceable if they get their March and April salaries paid in full and allowed to return back to their native places during this period “ added Raghunathan

“ Over 68% felt that existing workers will demand higher salary after reopen during partial relaxation of lock down phase ,as they will feel that others are getting paid without working. Most MSMEs are finding it very difficult to assess and determine how much to pay as some of them may have worked from home like their sales staff whereas the production staff have been idle at home. It would bring about a salary parity issue for the organization if people who do not work get paid as much as people who work. This will also impact morale and create other issues within the labor unions and those who will get paid for working and with those who will get paid for not working.” Mr.Kenny Ramanand , the General Secretary of AIMO, elaborated on the labour issues

“82% of the respondents , felt their Banks did not pass on any reduction in the interest rates on existing loans taken even though the RBI Governor had announced it during the course of the lockdown. The time delay of 8 weeks for any approval or processing by banks for extension of credit is another area of concern for over 80% of entrepreneurs. Procedural delays and fine print were worrisome challenges faced by the MSMEs today.” Added Raghunathan

“ UNCERTAINITY AND UNPREDICTABILITY WAS THE BIGGEST CHALLENGE and was taking a huge toll mentally and financially on the entrepreneurs , their employees and their families. According to over 94% of the entrepreneurs Survival was the biggest challenge and Profitability was the least of their worry. Most Entrepreneurs do not know how the Lockdown period will be managed and when they be able to resume business and if COVID 19 cases increase , will there be another lockdown. Respondents felt they are unable to plan or budget due to the Uncertainty of the impact of this Pandemic” concluded Raghunathan on the key aspects of the survey About the magnitude of the survey

, Mr.K.E.Raghunathan, Past President of AIMO said . “ Over the week between 25th to 30th April 2020 we have conducted 6 surveys with entrepreneurs, Self Employed individuals , SME owners ,Corporate CEOs and Trade and industry experts in multiple sectors across India especially from the traditional manufacturing hubs in the country like Raipur , Surat, Raigarh, Vijaywada , Firozabad , Panipat, Tirupur , Kharagpur , Sivakasi , Salem, Channapatna, Hosur, Dibrugarh including some of the industrial hubs in the bigger cities like Pune , Chennai , Bengaluru , Ahmedabad and New Delhi among others . For each day of the survey we received approximately 16000 responses. The survey was done using Social and digital Platforms like Email, Facebook , Whatsapp, Twitter , LinkedIn among others.”

Explaining the scope of the study , Raghunathan said , ” Our First day survey was to understand which concern is the priority for Entrepreneurs, the 2nd day Survey was to understand the opinion of the Entrepreneurs from Economic stand point with respect to LOCK DOWN period extension after 3rd May 20. The 3rd Day Survey was to understand the real experience of the Entrepreneurs on the performance
of Financial Institutions as we wanted to know if the RBI Governors announcements had really transformed into end benefit and what exactly those who have availed such loans feel. The 4th day survey was on Employee concerns on the current migrant workers situation for their respective firms. The 5th day survey was to understand the key issues in sourcing of Raw materials. Finally , the 6th and last day survey was to understand on how entrepreneurs view Profitability concerns of MSME’s. We had also collected various suggestions through telecons and mails to understand more field pain points and needs of the various sectors and people, which can be implemented.” Elaborated Mr Raghunathan . The recommendations to the Government based on the feed back will follow next.

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Cash Flows, Labour and Raw Material are biggest MSME concerns
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The findings from the most comprehensive survey conducted by All India Manufacturers Organisation, ( AIMO ) across India with MSMEs indicate that there are Multiple Factors which will impact the MSME industry post the lockdown.
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THE POLICY TIMES
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