Funding is not an issue, compliance burden is: Panelists at Surge SME Conclave

Once the topic of discussion at any debate about MSMEs, funding has today made way for “concerns over the compliance burden”.

The sector appears fearful of being prosecuted over non-compliance issues, with promoters and owners of small units saying “the proposed streamlining of 44 labour laws into four major codes — wages, industrial safety and welfare, social security and industrial relations — is a welcome move, but “Compliance under Companies Act” is becoming difficult.

The panellists, during a discussion on ‘how to keep your business well funded’, unanimously agreed that funding is available, but an entrepreneur lacks the ability to tap the right type. The need for mentoring was felt. The panel discussion was part of Surge SME Conclave Organised by Hindu BusinessLine in association with Aditya Birla Sun Life Mutual Fund, in Coimbatore on Friday.

The panellists also agreed that though the government’s intentions are good, the processes and implementation made things “complex” for the MSMEs.

“The government’s aspiration to make India a $5-trillion economy in five years is commendable, but we need an action plan and a free-path to unleash our potential. We want the government to simplify the rules and make ease of doing business a reality,” said K Ilango, Managing Director, RSM Autokast.

G Karthikeyan, Chartered Accountant and Startup Strategist, averred that any step towards compliance is an opportunity and every MSME should look at this. MSMEs should be taught these tools. “Because, the cost of non-compliance will be much more,” he added. He further said that while funding was available, access to the right kind of funding for SMEs was lacking.

Ramesh Muthuramalingam, Managing Director, Alpha Craft said that the cost of funds, particularly for the SMEs, is really high and collateral is a major issue. Getting non-conventional funds is a bigger story, he said and added that while private equity seems an option, it has become next to impossible because of exit conditions and expectations on unimaginable returns.

K Sivaramakrishnan, Zonal Sales Manager, Aditya Birla Finance Ltd urged entrepreneurs to approach banks and NBFCs directly instead of routing their application through intermediaries.

“Funding is not an issue, but if the same file comes from 5-6 intermediaries, the reputation of the borrower damaged. Instead of seeking a restructure, the borrower could consider refinancing,” he said.

N Madhavan, Associate Editor, The Hindu BusinessLine moderated the discussion.