New Delhi, September 14, 2024 – SMEStreet recently concluded its insightful and forward-looking webinar titled “Revival Roadmap for Struggling or Sick MSMEs – Trends, Data, and Strategic Interventions.” This event, moderated by Mr. Faiz Askari, Founder and Chief Editor of SMEStreet, brought together industry experts, policymakers, and consultants to discuss actionable strategies for reviving MSMEs struggling in today’s volatile economic environment.

MSME Sector: A Pillar of India’s Economy

The importance of MSMEs (Micro, Small, and Medium Enterprises) to India’s economic framework cannot be overstated. Contributing around 30% to the nation’s GDP, 45% to manufacturing output, and 40% to exports, MSMEs are essential for driving growth and creating jobs. Yet, this sector has faced severe challenges in recent years due to economic disruptions caused by the COVID-19 pandemic, supply chain disruptions, and inflationary pressures.

Six Key Takeaways from the Webinar:

The Extent of the MSME Crisis:
The webinar shed light on the ongoing struggles faced by MSMEs, with data indicating that 30-35% of MSMEs are financially distressed and 12% have downsized or ceased operations since 2020. The panel emphasized the need for urgent interventions to avoid further closures.

Identifying Early Warning Signs:
Mrs. K Krishnaveni, Managing Director of Mahalearning Education Pvt Ltd, highlighted key indicators such as declining revenues, rising debt, and cash flow constraints as critical red flags for businesses. She urged MSMEs to act promptly when these signs appear to prevent worsening financial instability.

Mrs K Krishnaveni also emphasized, “Businesses must act as soon as these warning signs are observed. Procrastination in addressing these issues often results in the situation worsening and leads to severe consequences like insolvency or bankruptcy.”

Mrs K Krishnaveni, also highlighted several key indicators:

Declining Revenue & Profit Margins: A consistent drop in sales and narrowing profit margins indicate that a business is losing its competitive edge or failing to meet market demand.

Cash Flow Constraints: The inability to meet short-term obligations, delayed payments from clients, or an over-reliance on credit are common signs of financial strain.

Rising Debt Levels: Over-leveraging, especially without a corresponding increase in revenue, makes businesses more vulnerable to market fluctuations.

Operational Inefficiencies: Wasteful processes, outdated technologies, or mismanagement of resources can erode productivity and profitability over time.

Financial Restructuring Trends:
Shri Subir Paul, National President of ICCSTWE, discussed emerging trends in debt management, including One-Time Settlement (OTS) programs and debt restructuring, which offer a lifeline to struggling MSMEs. He also emphasized the role of equity infusion to help reduce debt dependency.

Banker’s Behaviour and Perspective Towards Tribal Entrepreneurs

Mr Paul pointed out that there is also a need to realign our thoughts and practices towards the banking experience of tribal entrepreneurs. “MSMEs from remote parts, mostly owned by tribal origin entrepreneurs often complaints for their banking experience. The branch level experience of business owners who visits the bank for MSME loan etc often quoted that their banking needs are unnderserved as the bank manager is not so welcoming. This situation must change. Bankers must consider that their behaviour towards MSMEs can motivate or demotivate them to do business. This is a major hurdle for economic upliftment of tribal economy. I urge top evel bankers to look into it and ensure that the bank managers should also be motivated food supporting the MSMEs who are coming from tough backgrounds such as tribal.”

Government Support Schemes:
Dr. Raj V Siddiqui, Chairperson of Uday Khanij Industrial Cooperative Society Ltd, elaborated on government initiatives like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and the Emergency Credit Line Guarantee Scheme (ECLGS). These schemes have been pivotal in providing liquidity and collateral-free credit to MSMEs.

Turnaround Strategies by Specialists:
Case studies presented by Dr. Raj V Siddiqui illustrated how expert interventions, including digital transformation and operational audits, have helped MSMEs regain profitability and realign with market demands.

A Strategic Path Forward for MSMEs:
The webinar concluded with a comprehensive roadmap for MSME revival, stressing the importance of strategic evolution over mere financial relief. Faiz Askari noted, “The revival of MSMEs hinges on their ability to adapt and innovate. By leveraging the right tools and strategies, MSMEs can thrive despite challenging circumstances.”

A Successful Initiative for MSME Empowerment

The “Revival Roadmap for Struggling or Sick MSMEs” webinar aligns with SMEStreet’s mission to empower MSMEs with the knowledge and resources needed for long-term success. The interactive Q&A session further enhanced the value of the event, allowing MSMEs to engage directly with experts and find tailored solutions to their challenges.