News Letter: IL & FS and MSME

News Letter
IL & FS and MSME
Date:09/10/2018
During the recent past, all media is full of stories on IL & FS. And I read that 16000cr payment they have to receive. For such a large company, not getting paid in time, has to lead to Government to suspend the board.
Think of MSMEs. They have got thin equity, and when payments get delayed, it leads to the chain reaction and the big difference, it hurts for salaries and best talents leaves.
 Please imagine the scenario. Although govt of India has come out with delayed payment policy but is it practical?
 I think Tredex may be quick fix solution and all efforts should be how soon it can percolate down in the ecosystem.

Regards,

N.P. Desai

Revival of Sick MSME:-4 Pillar Strategy

Revival of Sick MSME:-4 Pillar Strategy

                 All efforts of the revival are on 4 pillars namely Finance, Behavior, Lean & Digital.

Finance:- Our research shows that generally, MSME is poor in accounting which leads to financial problems. Our approach is to hand hold by designing std accounting system, training monitoring and develop so that MIS is developed for daily decision making. Monthly trail balance and variance report. This will lead to developing Budgeting so that fine balance is reached in capex and opex needs.

 

Behaviour:- Because of sickness, psychologically, entrepreneur and in turn whole organisation is in negative behaviour. So first we will apply change for entrepreneur’s behaviour (both core and circumstantial) and then it will be applied to whole organisation in phases. We expect to gain 2 to 5% change in bottom line.

 

Lean:- We will apply all principles of lean, do the gap analysis and corrective measures so that all existing processes are directed to stabilization and growth phase. This will be a year-long effort. We expect this to contribute 2 to 25% on operational efficiency.

 

Digital:- As of today, adoption of digital technology is very low and in phases, or step with it will be MIS and go to automating using various digital technology, wherever necessary, talent gap can be bridged by training and monitoring, we expect another 2 to 5% cost reduction or increase operational efficiency.

 

Good & Pleasant day.

Regards,

N.P. Desai

News Letter

News Letter

Every MSME Entrepreneur starts with lots of passion but two or three years down, he loses steam. Have you thought about why it happens?
  • Do You Want Your Business to grow at a faster rate?
  • Do You Want Better profits?
  • Do You Want Better use of your capital?
  • Do You Want Better trust of your Bank?
    Every Entrepreneur is always working for top line and bottom line. Is it true?
Every Entrepreneur or most of them file their annual returns for income tax purpose as a statutory requirement.
But if they analyse their profit & Loss statement and balance sheet, they can get @ 52 data points which most of  Entrepreneurs are not aware and if they are aware also, they do not correct many steps which are required for correcting their overall strategy.
  We instead have to concentrate on increasing our operational efficiency so that capital formation happens thus reducing borrowing cost (if you have borrowed from an external source)
              Every bankers/Financer/Equity investor look for the cleaner balance sheet. what is the meaning of clean balance sheet?
                 Every  Entrepreneur having a turnover above 1cr shall be able to understand/face this.
            We found a free solution and if you give us your balance sheet and profit & loss statement for one to five years, we can do it.
                 Please note that we do not want your company’s name so when sending you can send without your companies name. We are only interested in the sector in which you are working.

Happy Gandhi Jayanti.

Regards,

N.P. Desai

News Letter MSME Pulse- Sept issue

News Letter
MSME Pulse- Sept issue
From the above report, it seems NPA in MSME sector has slightly reduced. But it does not state, whether this reduction is because of recovery (one-time settlement, or DRT & Other laws) or by restructuring I feel, first may be more true.
             I am dealing with PSU banks for the revival by infusing fresh equity but all PSU banks are not open to such possibility. To name few banks, Bank of India, Vijaya Bank & SBI etc. So can this report can look into.
      I seem TAT for PSU bank has come down from 42 days to 32 days. Is it a reason to cheer?
       It indicates two factors attitude of branch managers and low use of technology where both Pvt sector bank and NBFC are far ahead.
       Actually, I should congratulate SBI for staring stress resolution division, headed by DMD. why other banks cannot follow this model?
                         As per on balance sheet commercial lending portfolio and NPA trend MSME has shown partial recovery but all three MSME Pulse, I have raised the issue of job which may get lost because of NPA.
    Our estimate indicates that 1cr jobs are at stake. Why MSME pulse cannot work on that too?

Regards,

N.P. Desai

News Letter: Article By Sri Abir Roy, Seetharaman & Associations in Financial Express on 6/9/2018

News Letter

Article By Sri Abir Roy, Seetharaman & Associations in Financial Express on 6/9/2018
Let me Congratulate Sri Abir for deep insights for IBC & other legal provision.
Let me inform, India has got 5cr MSME Units, growing at 12 to 15% year on year. Now the author is talking about MSME whose money gets blocked in corporate cases referred to NCLT.
But 78000 cr are blocked in all MSME sick units but at least 1cr jobs are at stake and as I am working for the revival of sick units for last 36 months, I found middle and lower management in banks are always in fear of 3C and delay decision making thus harming MSME’s fate.
Even some financial innovations like what we are doing, in our limited way, where we need time to increase operational efficiency by removing bottlenecks, they keep the entrepreneur on tenterhooks and use the law to block DRT and high courts.
Can their attitude be changed?
Let me inform that advances in MSME are generally 150 to 200% secure
……………Happy Ganesh Chaturthi……………
Regards,

N.P. Desai