Kedar Anil Gadgil .


Here are some interesting facts:

  1. Total number of MSME businesses: 4.6 Crore
  2. Total people employed: 10.6 Crore
  3. Total contribution to GDP: Approximately Rs.72 lakh Crore
  4. Total contribution to exports: Approximately Rs.68,000 Crore
  5. Total pending payments stuck outside (including the government and PSUs): Rs.5 lakh Crore

It follows that the average MSME employs just over 2 people, turns over just over Rs.15 lakh and exports just under Rs.16,000 of it, while having Rs.1 lakh outstanding payments to be collected from buyers.

So, questions:

  1. How much working capital do you think they have in total? How much of it is being utlised? What is 20% of it? (Forget for a moment that the stimulus package offers a soft loan with a 12m moratorium to the extent of this 20% and that this is not a grant, a relief, or a subsidy but simply a line of credit which has to be repaid, in full, with interest)
  2. How many employ more than 20 people in permanent positions? How much PF do they pay? What is 2% of that? (Forget for a moment that this is merely for 3 months and that it will end up reducing the PF of the employee while increasing the outflow of the employer to their employee, thus impacting business cash flows)

So, I want to #AskPS: What is the exact amount you have (or intend to) gained in terms of free cash flow from this package for your business? If you want to add some other cash gain from some other scheme announced within this package, feel free, but please tell me which scheme you are counting in so I can understand your figures better.

Remember: I am not asking you to be a spokesperson for your industry or for a political party. I am not asking you about patriotism or how the country will gain or about your sacrifices or soldiers standing in Siachen or anything. That discussion is beyond the brief of this post. I am asking you a simple question as above, viz., how much is only your particular company going to gain? You may answer in an absolute figure, but I would like it if you tell me what figure is in terms of a percentage of (a) your turnover, and (b) your monthly burn.

Originally Posted Here

Shaju NairI

’m availing the PF benefit of 24% for 6 months. This is equal to 1.5 months total wages outgo.

Kedar Anil Gadgil

Great! I just wanted to know how it is for 24% and how it is for 6 months. I thought the total relief was for 2% from your side and 2% from the other, and for 3 months only starting now. What am I missing?

Shaju Nair

All companies with less than 100 employees, with 90% of the employees earning less than 15k basic salary, govt pays both employee contribution and employer contribution for 6 months.

Kedar Anil Gadgil

So, returning to the point, how has this stimulus package helped you in terms of numbers?

Shaju Nair

I save almost 1.5 months of wage expenses. Which is sizeable. Around 40% of my monthly expense are wages.

my bank is following up with me for a loan, which was not the case earlier. I have the cushion of the loan in case the lockdown extends.

Kedar Anil Gadgil

how much have you got from the stimulus package that was announced by Modiji a few days ago?

So, what is your answer to the question then? Do we have a number yet?

Shaju Nair

why do you need numbers?

Kedar Anil Gadgil

because that is what the post is about. If you don't want to, I cannot force you. Just like I didn't force you to comment. But if you do comment, let us keep it on topic please. Do you have numbers?

Shaju Nair

I’m not able to understand your question. This PF benefit is part of the package.

Kedar Anil Gadgil

But you said you have been getting it for 6 months. The FM only announced it 2 days ago

Shaju Nair

brother I can’t make my balance sheet public. If you’re smart enough, you can make out the relative size of it. I’ve given all info.

Kedar Anil Gadgil

I am not asking for your balance sheet here. I could get it from the RoF website. What I am asking you is how you are claiming benefits already accruing for 6 months on something that was announced 2 days ago? Was it with retrospective effect? Also, ifgovt is paying all the PF for you, and you claim it is 24%, now it is only 20% and your employees would actually be losing 4% after the announcement. So, where's the gain?

Shaju Nair

I Hope before making grand posts about the package, read it fully. I have availed it for 2 months already. It was initially announced for 3 months in March, extended to 3 more months now.

Kedar Anil Gadgil

You think the date difference between today and 20 April (the first package announcement) is 2 months?

Shaju Nair

Absolute amount of benefit is different for different people. Someone employing 20 people may get 2 lacs. Someone employing 100 may get 10 lacs. But relatively both get the same benefit- 1.5 months of their salary bill.

Madhuri Sen

Here is a perspective about those numbers from the practical perspective of my 4 businesses (3 of them in partnership) - all in MSME services category in diverse industry segments.

1) MSME info on employees - especially below 10 numbers are primarilybased on self reporting. After which number of employees a lot of complications kick in. Without going into details, unless there is a specific benefit from it, most MSMEs would choose to limit how many workers they have on an employee basis.
2) Only 1 of my businesses has more than 2 non director employees, but none at 10 or more. However under various worker/sub contractor/contractor/vendor categories each has an additional 5 to 30 people each who primarily subsist on payments from these companies.

So calculating working capital eligibility just based on number of employees and turnover primarily isn't such very accurate. Especially when a case can be made for growth potential from spending a higher amount than current turnover as working capital as investment for that year.

To the other part, would i avail the MSME loan offered and would be helpful. I can't really say that yet, without reading all the fine print. I guess that will take some time to be made available. But I haven't been a great fan of bank loans to bridge working capital needs. Whether it would make sense to avail or not would depend on total cost of finance vs other modes available without collateral. And that's a comparison every business of any size would or at least should make. I'd rather not share on a public forum what the working capital requirements are, nor what the amount required/eligibility might be. But if the comparison is favorable, it is definitely significant enough to consider availing - IF we do look for/need any debt at all. At this time, specific to these businesses, the chances are we won't. Would most likely be able to ride through without increasing debt burden.

Kedar Anil Gadgil

You'll only get (if you want) a loan limited to 20% of your utilised working capital and bank limits.

Madhuri Sen

understand that! But that's not the only consideration. Besides I'd rather not go into further details here about specifics, as I already said. I was only trying to point out that working capital considerations aren't just based onnumber of employees and turnover and/or exports. You are welcome to look at it differently, I was speaking only of mine. Yours may be different and we can agree to disagree. Don't really not prefer to have the discussion here that I'd rather have with my bank, partners and/or investors😊

Kedar Anil Gadgil

I agree with you 100%. I am only saying it would seem the Finance Minister doesn't agree with both of us.:-)

Arunaday Basu

With CEASAR, hum logo ka luck sorta khul gaya. Things have pretty much aligned like I thought they would:)

The government is interested in rural development. So are we.

The government wants to give loans to MSME's. We just started with our Research division as a MSME. So that's what we are looking for.

Government is more interested to invest in social enterprises right now. Humare paas 100 options hai to invest in social impact products.

I am not worrying about NOW because I know all of the above is gonna be here for us till the end of the current party's term. This is the only plan they got to win the next elections.

We are the plan. Makes sense for CEASAR at least in every way.

Any other company - No, it doesn't make sense.

Jayesh Kitukale

social enterprises is such a misnomer. We export software to the world. That doesn’t help the society? Foreign revenue, jobs, better living conditions? Just a thought!

Vijay Manjunath

You have thrown up some great data here, would have been really helpful if it was backed up with its source link like you usually did in your earlier post.

By the way very interesting data and very valid questions.

Kedar Anil Gadgil

CII+KPMG report 2016, Union minister Nitin Gadkari's recent interview, CII website, Indian export data from various sites, and the recent announcements by the Finance Minister.

Deepanshu Khandelwal

Those export numbers do not look correct to me. Have a look at the data released by RBI ( and the one presented by MSME minister in the Parliament last year ( Your average numbers would change considerably.
Also, I dont think it is logical to take an average. In such data numbers, it makes sense to take a median because average will never give you a representative picture.

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