Kerala

MSMEs on the brink of a disaster

COVID-19 leaves its impact on all aspects of business

Small and medium enterprises (MSMEs) engaged in churning out products as diversified as wall putty and paper plates to iron nails and tomato ketchup are tottering on the brink of a disaster.

The trail of devastation being left by the rapid spread of COVID-19 is such that a quick survey of the industry situation said it would take time between six and nine months to achieve some semblance of order once the pandemic is brought under control.

President of Kerala State Small Industries Association (KSSIA) M. Khalid said COVID-19 was leaving its impact on all aspects of business. Employee crunch due to health fears, fall in turnover and low inventory levels give little hope of quick recovery. Supply chain management is difficult, orders are unreliable and cash flow for MSMEs is about 30% of the previous levels, he said.

While KSSIA has a membership of around 9,000 MSMEs, it is estimated that there are around 1,50,000 micro, small and medium units that provide employment to about three million people directly and indirectly.

Considering the centrality of the MSMEs to the economy, the units have appealed for more time to meet their obligations on income-tax, GST, and bank loan repayments.

Joseph Paikada in Kannur, who is in the food processing business, said there was serious shortage of employees as well as raw materials. Both the factors caused by a sudden halt in transport triggered by the pandemic.

These new troubles are brewing quickly on the heels of two years of devastating floods in 2018 and 2019 as well as government ban on plastic products early in January this year, industry sources said.

MSMEs had been resilient and risen from disasters in the past, said Mr. Khalid but he expressed fear that the COVID-19 hit was nothing like before.

The pandemic is entering its second stage and “we appreciate the tremendous efforts” being made by the government and we pray that the government and people succeed in their efforts to contain the virus,” he added.

All the units surveyed showed that sale volumes had come down by about 65% in the wake of the viral disease fears. Acute disruption in activities caused by a near end to movement of goods across the State borders had brought down inventory levels. Units face serious problems in procuring raw materials as well as packaging materials.

Cash flow to the MSMEs is at 30% of the normal levels, a frightening situation for unit owners when considering payment of wages, interest on bank loans, and cost of utilities.

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Printable version | Apr 6, 2020 12:16:13 AM | https://www.thehindu.com/news/national/kerala/msmes-on-the-brink-of-a-disaster/article31155332.ece

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