NOT A SMALL SHIFT
Business Today|May 31, 2020
NOT A SMALL SHIFT
MSME guide to survival has several drastic measures such as lower leverage and diversification into newer areas
NIRBHAY KUMAR

In January this year, US forces killed top Iranian general Qasem Soleimani in an airstrike. The incident roiled global markets, but for Jaipur-based Adarsh Mahipal Gupta, who sells auto components under the Autopal brand, it came as a shock. Gupta had appointed a local agent in Iran to sell auto components there and shipped the consignment. The episode led to his payment getting stuck.

Just as the situation was improving in Iran came news about coronavirus outbreak in China. Gupta, who is Director (Finance and Marketing) in the family-run AutopalMPG Group, recalled two of the company’s Indian staffers and laid off two out of four local employees in his Shanghai office. The group, which imports components worth ₹15 crore annually from China, has suspended trade. The lockdown has resulted in almost all its payments getting stuck. It is struggling to pay salaries to 1,100 employees.

Gupta has made up his mind to get into essential items and emerging areas – medical equipment and artificial intelligence – so that cash continues to flow even during a tough business environment. “We plan to enter artificial intelligence and medical equipment. We already have a software firm. We are talking to possible joint venture partners. Regarding making medical equipment, it is easier for us, given that we are already into auto component manufacturing,” he says.

There are thousands of micro, small and business enterprises (MSMEs) like Gupta’s which are thinking about de-risking their business and making their organisations leaner to tide over both current and future economic crises. “Many MSMEs are looking at optimising existing facilities to maximise revenue. While they will stick to their core business, they are planning to add some products that can be supported by existing facilities,” says K. Vinod Narayanan, Managing Director, PVN Industries. Kerala-based PVN is exploring the possibility of making hospital equipment and furniture.

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May 31, 2020