Lack of orders, shortage of raw materials big worries for MSMEs

G Naga Sridhar Hyderabad | Updated on May 17, 2020

“We are back to work but things look gloomy as we neither have fresh orders nor raw materials.”

This is how T Ashok, who runs Vijay Engineering Works in the Industrial Estate at Charlapalli near here, sums up the challenges before him.

The story is the same for owners of over two dozen MSMEs with whom BusinessLine interacted in the industrial estates at Charalapalli, Nacharam and Pashmylaram after they were permitted to work after nearly 45 days of lockdown.

Another problem for Ashok is payment of salaries to the 30-odd workers. “We make a business of ₹1 crore per month by manufacturing tractor trolleys and water tanks. As on today, I have incurred a loss of nearly ₹2 crore,” he said.

He is now pinning hopes on Government’s order as part of Palle Pragathi scheme for providing tractors and water tankers for villages.

There are diverse issues for the nearly 1,000 units in Charalapalli cluster alone engaged in engineering works, pharma packaging, laser cutting and plastic works, leather and fibreglass.

“In some segments like laser cutting there are no orders at all and we can’t pay salaries to the workers,” M Ramesh, who owns a workshop said.

Even those who cater to defence sector as some pending orders could not be executed.

“Shortage of labour and truck transport have hit supply chain at various levels. Unless there is an unbroken supply chain full small businesses cannot start work,’’ said V Bhimraj who supplies intermediaries to defence equipment manufacturers.

When asked on how the stimulus package announced by the Centre last week will help them, some are not sure of the implications.

“The We are facing problems accumulated over the past and lack of new business. If you make me to take more loans now, how do I repay even after a moratorium of one year,” questions Ashok.

‘Waive interest’

According to Jalender Reddy, President, Association of Charalapalli Industries, waiver of interest on working capital as well as EMIs that are allowed to be deferred will be of good help.

Some concrete mechanism where government will ensure work orders to MSMEs will also be of help in the long term, he said adding: “For the last few years, the State government is not paying incentives due to industries. All dues are paid now, it will be a good support.”

According to Yerram Raju, Economist and Advisor, Telangana State Industrial Health Clinic Ltd, the immediate challenges for MSMEs are lack of cash on hand, pending receivables from private players, possible escalation in the cost of raw materials due to difficulties in logistics.

As only 33 per cent of workers and capacity utilisation is allowed, it is not possible for any unit to achieve viability.

“It will be a long haul to recovery for MSMEs. They may have to struggle for over a year to get back to pre-Covid-19 situation,” Raju said.

Published on May 17, 2020

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