Steps taken by the government to help MSME Bad Loans

The pandemic came into our lives stealthily, without any forewarning. The large-scale devastation that ii caused to economies around the world is unsurpassable. One of the most badly affected sectors in the Indian economy is MSME. Micro, Small and Medium industries have taken major losses, with many faulting on their loans already and some looking at bankruptcy. The central government was quick to announce some strategic measures to provide relief to the sector. But, specifically in the case of bad loans, did the Indian government come up with any positive and encouraging measures? Let us have a closer look at the state of affairs on the ground.

The pandemic – facts about the MSME sector

·        The sector saw about 60% Non-Performing Assets (NPA) in April and May. The usual trend was between 30% to 40% during the pre-Covid times.

·        Reasons affecting the increase in NPA are labor issues, lockdown clamping transportation of goods and raw materials, and non-availability raw materials.

·        Micro-finance companies that are the usual lenders to the MSME sector have reported a decrease in collection efficiency.

·        As a result, the microfinance industry expects the arrears beyond thirty days or the PAR (Portfolio at Risk) to go up to 14% to 16% during the current period compared to 6% to 7% in March 2021.

·        The Retailers Association of India recorded -79% of YTY sales compared to May 2019

·        The Indian Hotels recorded a loss of Rs. 524 crore for FY20-21.

·        The same is the story with airlines and the automobile sector.

Relief measures by the government and the RBI

·        Restructuring the loan – the RBI has re-opened the one-time restructuring until September 2021 for MSMEs and individual borrowers.

·        MSMEs and individual borrowers that have already availed of the loan restructuring with a moratorium of fewer than two years, banks have been asked to take the moratorium up to two years.

·        Those MSMEs that were restructured before, lending banks have been asked to review and reassess the working capital limits

·        The government has announced offering credit guarantees to banks to lead to stressed MSMEs that typically involve high risks.

·        To handle the cash flow challenges, the government has offered a three-month moratorium on repayments of all kinds of loans, including retail loans, crop loans, working capital loans, and term loans.

·        Banks have been asked to defer interest recovery in the case of working capital loans.

·        Changes to the Insolvency and Bankruptcy Code. (1) Sections for initiating insolvency got suspended for the time being. (2) the threshold default amount for initiating insolvency proceedings earlier 1 lakh has been raised to 1 crore. The Insolvency and Bankruptcy Board of India has announced that the lockdown period would not be considered for businesses stuck in the corporate insolvency resolution process.

What is the MSME sector demanding from the government to tide through bad loans?

·        The government should revisit the classification of bad loans

·        Government agencies to clear outstanding payments

·        Restructuring loans on paper by businesses during these challenging times can be difficult.

Restructuring should be pushed for NPAs.

Post-Covid – Challenges for the Indian MSME Market

Impact of pandemic – COVID – 19

·        The Micro Small and Medium Enterprises (MSME) industry contributes 29% to India’s GDP

·        From 2.1 million to 2.5 million units increment, i.e., 18.5% between 2019 – 2020

·        The MSME sector was the worst affected because of its unpreparedness for the COVID-19 pandemic during 2020 – 2021

·        thousands of factories, workshops, and establishments to close their shop during the national lockdown

·        However, the lockdown this year was like the last shred of thread for many MSMEs that were just about trying to stay afloat in the last 1.5 years

·        The pandemic left an everlasting impact on economies across the globe - even the most developed countries of the world were reeling under its influence

Centre and State Government Initiatives: 

·         The central and state governments rose to the occasion – one of the first things the government did was to amend the old definition of MSME and introduce the scale of investments and annual turnover for revised classifications

·          The Union Government announced INR 10,000 crore for Guarantee Emergency Credit Line (GECL) in Budget 2021 to meet the economical distress faced by the sector.

·        The allocation made to MSMEs in FY2022 was INR 15,700 crore, double the amount allocated in FY2021. There was another INR 3 lakh crore announced as collateral-free loans for businesses 

·        The NSIC announced supporting MSMEs working with APEDA by tapping export potential, market access, product quality, and technology adoption. Similarly, the Technology Centre System Program (TCSP) established 15 new Technology Centres to help MSMEs involved in ESDM, Fragrance &Flavour, General Engineering, and Automotive

·        Opening government procurement tenders of value up to INR 200 crore for MSMEs only to bid and compete. Global players are no longer allowed to bid for these. Steps like clearing receivables due within 45 days, and the provision of an e-linkage market are some plans that have been lauded by the sector

My viewpoints – what you say?

·         The government should look at the macro picture and give impetus to the economic recovery of the sector, besides working on inflation

·         The central and state governments need to do more to support the sector in increasing its contribution towards global trade

·         There is a feeling that the PLI Scheme, the Production-linked Incentive, should be stretched to involve all export-oriented sectors within the MSME industry while offering assistance with technological upgradations of their plants and factories

·         Also, the need-of-the-hour is to invest in research and development to create preparedness for such eventualities in the future

·         Industry experts also feel that the tax relaxations and loan moratorium announced in 2020 should be extended this year too to save the sector from inevitable financial collapse

·         Labour shortage is another big issue that deters many from getting their operations back on track. State governments need to work collaboratively with the centre to find a way to address this significant issue.

·         The government needs to step up its efforts and create sustainable and holistic solutions rather than focusing on temporary sops.

The vision and beliefs of Rohit Kakkar

As a man of his words, Rohit Kakkar has taken his food processing business to exponential heights with his skills and expertise. However, he believes that no man can succeed without a team and he is committed to take every individual with him on the ladder of success. He believes to run a successful business it requires teamwork of experts, integrity, transparency, timelines and quality delivery..

Rohit Kakkar aims to bring all the segments of the society together and to make his products available to everyone in the country at affordable price... Most of his -products are manufactured inhouse and they are appropriately priced.. He aspires to connect every citizen to their roots and wants to see a change in the health and wellbeing of those who choose high quality food products for daily consumption.

Rohit aims to promote GenZ talent and he is keen on listening about their ideas and views regarding high quality products. He believes that GenZ has the potential and the power to make a difference to the lives of others. When one person chooses high quality food products over others, it makes a difference to the entire family.

To become a part of the organization, Rohit  looks for high ethics and integrity. He maintains complete transparency throughout the process and expects the same from his employees. The business will only soar to new heights when new talent is committed towards making a difference to the society. Hence, whether you are an investor, a customer or a farmer producing raw materials, you are important and you can also be part of this journey. Focusing on hand-picked & farm fresh raw food products for hygiene processing, Rohit aims to bring only the best to the market. All the products are thoroughly checked for quality and there is no compromise on the same. They are priced keeping the consumers at the forefront.

A business that is for the people and by the people

A  renowned personality in the food processing business world, Rohit Kakkar is a man of ethics. He strives to take his business to new heights along with his expert team. Rohit has a dream to reach out to every section of the society and every citizen in the country.. With an extensive experience in food processing, Rohit Kakkar aims to bring a change in food industry by delivering high quality standard food to the citizen of the country at affordable price.

Quality of food and its nutritional value are the focus areas of Rohit Kakkar. But sadly, not everyone is able to afford quality food and this is where he aims to make a difference. He wants to reach out to people and ensure that high quality products are easily available to every segment of the society.. Hence to fulfil his dream, Rohit is open and welcoming each & everyone who can contribute to this journey whether you are a buyer, investor, employee, or retailer / distributor, logistics expert etc. He wants to ensure that your business grows as  we together walk the same path and objective. Rohit Kakkar has tremendous knowledge about the industry and is known for his honesty and integrity. He is someone who will always consider the needs and requirements of others before his.

Mr. Rohit Kakkar - A True Entrepreneur

Mr. Rohit Kakkar  has stepped forward to change the face of beverage industry . He determines to not just become a true entrepreneur but a true spirit with morals and values.

1. So, why did you setup this organisation? What was your idea behind it?

The one thing I have learnt from my father is to keep believing in what you want to achieve. After so many years of experience, I wanted to start of my own venture and change the beverage industry with easy and valuable products. The simple intention behind this venture was to bring out sustainability and reach out to the world as the most trusted brand of fruit pulps and purees.

2. How was your journey so far? Professionally?

Well, my professional journey is almost 25 yearlong now. After completing my MBA from one of the most prestigious college, I work in Amex for 17 years. I think there only, I knew I wanted to do something bigger and better. I have had to deal with a team set in different areas of the country and manage sales across. I learnt a lot before reaching where I am today.

3. How did you build up an entrepreneurial spirit, do you believe you were born with it or you developed it?

I’ve always been entrepreneurial. I’ve always liked doing things differently from the people around me. For instance, in school, instead of joining existing organizations, I would create my own. I have always loved the idea of doing something on my own, and preferred working in an “open” setting. Starting my own projects and being entrepreneurial allowed me to do this.

4. How did you come up with the idea of Real Roots?

I have always been fond of healthy fruits. When I was young, I have seen my mother using several fruits to make delicious recipes. I did my share of research and found that fruits can have large benefits when used in our day to day meals. But, the products available in the market were not budget friendly. Thus, I got the idea of savouring the tradition with health benefits and manufacture these beverages at a low cost.

5. Why did you choose to rebuild an old company into real roots? Why not brand a new one from scratch?

Well for me everything I have done till date holds a lot of importance to me. I wanted to carry forward my own legacy in the form of Real Roots. The values and principles SMGK had, is the root of VSRC. I used the learnings of my old company to build something better here. Most importantly, what inspired me to take this decision were the people, bank, VS, investors of SMGK. So, I wanted to take everything forward and step into a new milestone.

6. How do you want to change the industry with the help of your company?

In Real Roots we take of care of every aspect of manufacturing. From farm fresh fruit to packaging and deliveries, we have a number of quality checks from assured analysers. Our focus on quality and hygiene is what makes us different from others. We want our countrymen to experience the best products available. We are now bringing in new technology to India to achieve the best production and promote organic market.

7. Well, this question might sound funny, do you think it is easy to

be an entrepreneur?

It depends on how you define “easy.” It’s definitely more complex and intense, but at the same time very rewarding and enjoyable.

8. So, is it safe to say that you are satisfied to be here today?

Of course, it could not have been better.