Small units seek ‘booster doses’ from the Government

Gujarat, one of the pioneers in establishing micro, small and medium enterprises (MSMEs), now has over 5.75 lakh such units employing about 36.56 lakh people. Since 1991, memoranda of understanding worth ₹12.47 lakh crore have been signed in the State. The 2011 edition of the Gujarat’s flagship investment event, Vibrant Gujarat, was focused exclusively on the MSMEs.

According to the State’s Socio-Economic Review 2013-14, Gujarat ranked first in India in terms of the number of projects commissioned. And the MSME segment in the State comprises mainly the agriculture processing, food products, textile and chemicals processing and engineering.

Moderated by G Chandrashekhar, Editorial Consultant of The Hindu Business Line , a panel discussion on ‘MSMEs for Livelihood Security’ in Ahmedabad showcased success stories of some of the MSME units in the State.

One team, one mission Sameer Mistry, founder of Gujarat-based Supernova Engineers Ltd, makers of diesel power generation sets, stressed the need for adopting sound human resources strategies and welcomed the Gujarat Government’s policy of charging value-added tax at 5 per cent, instead of central sales tax at 12.5 per cent. “This made my business viable across India.” Mistry urged the bankers to be more flexible towards the MSMEs in terms of meeting their financial needs.

Prakash Varmora, Director, Varmora Group that makes the Varmora-branded tiles, spoke about how ceramic units in Morbi cooperated with each other over the years to make the Gujarat town the second largest such cluster in the world. He urged MSMEs to come together in a similar cooperative manner to create a global brand. “We should follow the policy of One Team, One Mission, One Nation.”

Backbone of industry Geeta Goradia, Managing Director of toothbrush maker Jewel Consumer Care Pvt Ltd, narrated how her company became a leading oral care product manufacturer. Almost 80 per cent of the company’s products are exported. “We were able to snatch even a Wal-Mart order from China four years ago. Now we have 1,100 employees on our rolls.”

She urged the banks to ease norms for the MSMEs as these industries were the backbone of India’s industrial production. Banks should also set up incubators for university students to enable them set up their own units, said Goradia, urging State Governments to frame industry-friendly labour policies.

Profitability According to Shyamal Joshi, Director (Finance), Shalby Ltd, most of the four lakh-odd MSMEs set up by technocrats in Gujarat face problems because their founders are unaware of how to run a company profitably. Banks should support such companies in their financial planning, fund their requirements and help them outsource some of the services to cut down costs and increase profitability. Gujarat alone needed 2 lakh skilled and trained ITI workers, he added.

Manoj Bhatt, Director, Specific Jet Edges Pvt Ltd, narrated how he, a former employee of a multi-national company, decided to set up his own firm that now employs 25 people. His company emerged as India’s largest waterjet technology company in a few years.

Bhatt urged the Government not to delay payments to MSMEs and ease their liquidity problems at the earliest to make them financially sustainable. The government should also subsidise land costs for MSMEs and give them booster doses like capital and interest subsidies to make them run successfully.

Sanjay Agrawal, Senior President (Business Banking), YES Bank, said a fifth of Indian population are dependent on MSMEs for livelihood.

He described how the Government, after defining MSMEs in 2006, made it easier for the banks to finance them. The reach of MSMEs could be expanded by following models such as cluster development, incubators and cooperatives in each district, Agrawal added.