Small and medium scale enterprises (SMEs) within the district are onerous at work for working capital even because the workflow turns into routine for them. In the absence of working capital and mounting debt, round 35 per cent of the models in Pimpri, Chinchwad and Chakan areas could change into sick models and be pressured to shut down.
Abhay Bhor, president of Forum for Small Scale Industries Association, defined how the sector is dealing with scarcity of manpower and uncooked materials within the final three months.
Unlike the lockdown final 12 months, the sector didn’t see large-scale exodus of employees, however about 20-25 per cent of the 4-5 lakh employees had moved out of the state initially of the lockdown. Most firms had been allowed to function throughout the lockdown.
Availability of uncooked supplies and lack of labor put up April had seen SMEs taking a pinch for money stream. The value of metal doubled and as soon as the Covid circumstances began rising, the massive improve in demand for oxygen additional affected the business.
In April, the state banned the usage of oxygen for industrial objective and as a substitute diverted it for medical use. Oxygen is used for welding and in auto ancillary-related SMEs that thrive within the vehicle hub of Pune for his or her day-to-day operations. Thus, lots of these models needed to stay closed for lack of oxygen.
After May, because the demand for oxygen eased, the state authorities allowed diversion of 20 per cent oxygen for industrial functions. Also, leisure in working hours and store timings has come as a aid to many. But Bhor mentioned the troubles for the sector had been removed from over. “The biggest concern for us now is the difficulty in raising working capital,” he mentioned.
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The money stream of the sector had fully stopped within the final three months as vehicle gross sales declined. Due to scarcity of uncooked materials and workforce, orders within the pipeline additionally did not ship. The minimal working capital required to run a unit is round Rs 15 lakh, which the models will not be ready to extend.
“Dead investments include government outstanding salaries and servicing of existing loans. For small units, these work out to around Rs 2-3 lakh, and without any income, the units are left to fend for themselves,” he mentioned.
About 35 per cent of the 11,000-15,000 models within the sector, Bhor mentioned, are susceptible to being declared defaulters by banks, which is able to cease all sources of institutional finance for them.
Bhor mentioned, the SMEs have requested the state authorities for a brief interval of depart from paying authorities dues like electrical energy expenses and company expenses.
“What is essential for this sector to survive is access to finance. At present, most of the banks are refusing to lend to this sector. The government should intervene in this,” he mentioned.
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With inputs from TheIndianEXPRESS
