Finance, efficiency and leadership are the key factors for small enterprises to grow

Financial management, operational efficiency and leadership traits are the key factors to sustain small and medium enterprises in the current competitive market scenario and tight financial situation.

Experts at the 4th edition of SME CEO Knowledge Forum 2014 – an event sponsored by UTI Mutual Funds in association with Business Line , made deliberations on the challenges faced by the small businesses and how to address them for a better future.

The event, organised at Ahmedabad on February 12, witnessed robust participation from Gujarat-based entrepreneurs engaged in different sectors. The State, being a hub of small businesses engaged mainly in the fields of chemicals, plastics, engineering and agro-processing, has witnessed maximum growth of small and medium enterprises (SMEs) in the country during past few years. The industry data showed SME growth in Gujarat to be one of the maximum in the country at around 84 per cent on year-on-year basis.

The 4th edition of SME CEO Knowledge Forum began with an exclusive one-to-one mentoring sessions on four key subjects including finance, taxation, human resource (HR) and marketing. Around 65-70 individual entrepreneurs, SME owners and CEOs participated in the mentoring, which was given by experts in the respective fields.

The event was presented by the leading Fund house, UTI Mutual Funds and powered by Gujarat-based Symphony Ltd, the world’s largest air-cooler manufacturer.

The forum provided a platform to the small business owners to engage with the industry leaders and interact on how to resolve the issues surfacing from the increasing global competition.

Gujarat Government’s Industries Commissioner Kamal Dayani addressed the gathering on the offerings by State Government to the small industries.

“The SMEs could take benefit of the schemes announced by both the Central and State Governments. The State Government provides schemes such as technological upgradation fund, energy audit costs reimbursements, and energy saving expenses on equipment up to ₹10 lakh.”

As the previous industrial policy of the State Government has already expired, Dayani hinted that in a few weeks from now the State Government would announce its new industrial policy.

Even during the State Government’s industrial promotional event, Vibrant Gujarat Summits the small industries have remained in focus. In the Vibrant Gujarat Summit-2013, around 13,000 investment intentions were registered from the SMEs, of which 45 per cent projects are on ground and others under implementation stage. “We expect 70-80 per cent success rate in the next Vibrant Gujarat 2015,” Dayani told the gathering.

Dayani further maintained that in order to encourage small businesses and make them sustainable, the State Government pays 5-7 per cent interest subsidy on loans to SMEs to keep their costs low and reimburses about ₹300 crore a year this way.

“Besides, under an incentivisation scheme, the State Government also pays ₹2 lakh per SME, apart from footing their other bills for participating in global exhibition,” he added.

Similarly, senior officials from the Small Industries Development Bank of India (SIDBI) exhibited how the small businesses can take advantage of the schemes, especially designed for small units. Ajit Nath Jha, Deputy General Manager, SIDBI, described in detail the schemes offered by the bank and ways to finance the sustainable growth of a small unit. The SIDBI official told, equity funding, or quasi equity finance — a category of debt taken on by a company that has some traits of equity, such as having flexible repayment options were some of the options a unit may look for.

In order to channalise idle funds lying in the current accounts of the small enterprises, the UTI Mutual Funds, main sponsor of the event, suggested them to utilise the “investible surplus” by investing them in short-term mutual funds and earn interest on it.

“There are several myths among SMEs about investing in MFs. But investment in MFs for a shorter period would not only give interest earnings but would also help SMEs manage their cashflow cycle,” said Vikram Kapoor, channel head SME, UTI MF.

“If there are extra surplus in current account, put it in liquid fund of the Mutual Fund for daily interest advantage. Many SMEs are not aware of such facility and therefore are deprived of it,” Mr Kapoor said in his address.

The Forum, held at The Pride Hotels in Ahmedabad, was supported by trade body, The Associated Chambers of Commerce and Industry (Assocham). LinguaNext was the associate partner of the event, while SIDBI and KPMG were the knowledge partners. Apart from the financial aspects, experts from the industry deliberated on operational and leadership aspects of the functioning of an SME.

“SMEs need to address issues of comfort at workplace. Discomfort leads to loss in production, this has been established by a study conducted by NASA,” said Rajesh Mishra, AVP – marketing, Symphony Ltd.

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