The fin-tech non-banking institution, TIHCL, already an expert in diagnostic study and curative solutions for small business sickness, supports troubled units’ revival through combined strategies, which include handholding, mentoring, counseling and restructuring. The virtual “clinic” is widening its scope of solutions so that larger number of sick manufacturing micro and small enterprises can be brought to the phase of revival, says TIHCL management.
No institution is meaningful or considered worthy until it tangibly proves what it boasts of. In an era when showmanship, spontaneous propaganda and hosting events and receiving awards determine credibility of institutions, which are supposed to be serving MSMEs, meaningful efforts for rescuing troubled business units are not visible. The reasons for troubles may be varying, but not unsolvable. The lockdown caused by the pandemic has increased the challenges. Still, where there is a will, there is a way.
Hitherto, for the rehabilitation of sick MSMEs, the most popular initiatives have been loan restructuring and moratorium on repayment. There were no lasting solutions, but only a selective and popular pain relief balms. The MSME sector needs effective mentoring and a dedicated institutional intervention with enough capabilities to rehabilitate MSMEs from troubles they are caught in. Telangana Industrial Health Clinic Ltd (TIHCL) is an ideal model that fulfills such needs. TIHCL wants to do things differently, or, exactly in a manner that brings desirable results realistically at the ground level. It is very friendly with MSMEs and addresses their needs with a special attention that brings some hopes to the troubled units.
Through a sagacious institutional architecture, it successfully bridges the gap between cups and lips. In fact, it is making things happen according to its aim of helping the sick ones to get back to their health.
Small business units usually run their business with meager means and under hostile situations. Like large institutions they also face ups and downs. While large institutions have their means and access to new resources, the small ones hardly have them. Banks expect the Balance Sheets of these small firms to always show an increasing profit to continue their limits or to seek enhancement.
An enterprise that somehow shows such profit, get their limits even while suffering in the production front. “For this reason, when you are handling the issues of MSMEs, you need to be realistic and reasonable. You should not bully them to fall in your line and expect them to run their business profitably. Ultimately, we must not forget that they are the growth engines of India’s economy.
They deserve a good care,” says Dr.Yerram Raju Behara, Advisor, Government of Telangana while dwelling on some cases in which TIHCL intervened to save handful of small Hyderabad based business units from hasty recovery proceedings initiated by a leading commercial bank.
“Looking at the size of sickness among SMEs, their inability to cope with various concerns, poor HR resources to handle legal and regulatory issues, weak financial management, etc, institution like TIHCLcan play a role of savior.”Sanjaya Maruvada. Managing Director
Reasons for industrial sickness are many, seldom classifiable. From unit to unit and from district to district the issues of small businesses are different. MSMEs are easily vulnerable to sickness owing to their poor access to latest operating technology, non-availability of appropriate skills, inadequate knowledge of engaging with customers and even if their own product market and marketing coupled with delayed realization of sales proceeds and subsidies, and above all miscalculations of revenue flow and misappropriation of borrowed funds etc., points out Sanjaya Maruvada, MD & CEO of TIHCL.
Most MSMEs say their business is hit because of delayed payments. Though there are solutions under relevant laws, things do not happen, he points out. That is what small entrepreneurs cry about. Small units are not in a position to put pressure on big enterprises and fight for the payment, fearing future business disconnect. “It is here TIHCL plays a big role, he points out adding: “Our doors are open for small business to seek help when they need it.”
In a country where millions of small business units operate and where industrial sickness is just as common as common cold, a health clinic model proves a path breaking initiative. Its inevitability is growing by the day. Geography should not limit its scope and it should be an umbrella institution to serve the entire nation with patient capital contribution from visionary equity firms and Government of India.
True to its name, TIHCL is a virtual health clinic for small enterprises under stress for any reason or when they tend to become sick. Dr. Raju says this innovative institutional intervention would not have seen the light but for the support of progressive and young Minister of Industries of Government of Telangana, K.T. Ramarao.
“When a business unit falls sick, none gains, but everyone loses. A lender cannot kill a borrower for recovery of the money”, says Dr. Raju. Once a borrower shows signs of sickness, the lender must pay a visit to the business unit. Without visiting the sick unit and making an assessment of the sickness, the lender should not serve notice under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SAFAESI Act) for recovery of loans through an auction of the mortgaged asset, he asserts. Set aside the willful defaulters and irreparable cases. “Our aim should be to help every viable manufacturing enterprise revive but not to let it die under repayment pressure,” he adds.
Telangana Industrial Health Clinic Ltd (TIHCL) is a unique institutional model in the crowd of those institutions, which claim to provide support to SMEs. TIHCL helps revive and rehabilitate sick and incipient sick micro and small manufacturing enterprises, after a thorough diagnostic study. Based on its understanding of the issue from the study, it provides the entrepreneur with a specific revival and rehabilitation till package. It handholds the stressed unit it turns around.
Size and time really do not matter, when the objective is realised. Most MSMEs think that their problems are solved once they have big money in their hands or when banks release working capital to the extent they think right. The fact of the matter is that they do not know where they have erred in their journey.
When the TIHCL executives dwell deep into their minds, they find out where exactly the entrepreneurs committed mistakes in their journey that resulted finally in financial stress, and notice that in majority of the cases, it is managerial mistakes, partnership misunderstanding, product acceptance in market, or chasing wrong markets, over confidence in realisation of dues to them that landed them in problems and finance comes the last. Therefore, what they need is the whole correction mechanism that enables the enterprise to be sustainable and long lasting when they revive.
Naturally, they require responsible consulting and mentoring on a continuing basis at affordable cost that makes them look at themselves for solution to the problems rather than looking to outsiders for help. TIHCL being an institution set up by Government, enjoys credibility and acceptance among other lending institutions and government bodies.
That makes its mediation and negotiating power stronger. Moreover, at the decision-making level and in advisory roles TIHCL has on its board, retired commercial and central bankers well-versed with knowledge of MSME business. They understand the concerns of MSMEs and are capable of designing quick solutions. Expert doctor to a sinking patient at affordable cost is anybody’s wish and for the small enterprises, TIHCL fulfills such need with an alacrity.
Objectives behind the formation of TIHCL are to ensure healthy micro and small manufacturing enterprises through a responsive counseling and responsible consulting, besides an all encompassing mentoring service. It also aims to engage the small business units with a strong and consistent financial performance through a consent-based ERP architecture enabling them to achieve a better compliance standard. This process helps MSMEs become more professional with better operational comfort. It works for creating a sustainable working environment within the business unit that attracts, retains and develops committed team sharing common values.
TIHCL also extends its service to ensure that the MSMEs realize their sale proceeds on time, doing away with one of the most plaguing issues faced by MSMEs from their vendees. Once MSMEs manage to get their dues on time, they regain their confidence.
A unique business model by every matrix, TIHCL, has an excellent management in place, thanks to the combination of central banking, commercial banking and financial management intellect. More importantly, it has persons with heart for small business and sense for reading the core issues that trouble MSMEs under the changing atmosphere.
We would not like any viable manufacturing MSME unit in Telangana or elsewhere, for that matter, to down its shutters just because it is unable to raise resources. We help MSMEs introspect and strategise for growth. We believe that scaling up is critical for growth and, in the process, they should build equity more than debt. We should be able to transform their work culture and, understanding of the ecosystem around them.Dr. Yerram Raju
Government of Telangana
A performing enterprise can find its way into equity market. TIHCL encourages them to move towards listing once they become eligible for it, making them capable of accessing cheaper capital and discovering better enterprise valuation. That way, TICHL helps small business units not only to come out of their troubles but also to enter the next level of growth. It is a lean institution with committed team of employees, who do not keep anything for the next day.
It is structured precisely for running its mission with high level of commitment. Starting with a single product – margin money support to those that get revival at the hands of the enterprise banker, it has multiple products to resolve–different medicine for different ailments–and delivers them timely.
Telangana, the youngest State in the country, has an estimated 2.3 million MSMEs. The State government is deeply concerned and serious about caring every business unit from the challenges they face in the undercurrent of structural changes and changes under micro and macro-economic atmosphere.
TIHCL can play highly resourceful interventional role. Upholding five values viz., Dharma (righteousness), Lok Sangraha (public good), Kaushalyam (craftsmanship), VaiVidhyatha (innovation), Jignasa(curiosity to learning), the institution thinks out of the box and endeavors to solve the problems faced by the MSMEs. After completing the diagnosis, the team finalises the revival plans. There are multiple solutions under various names that characterise the plans, which include overdue bill purchase, critical amount funding, stressed asset financing, NARI (rehabilitation of sick enterprises promoted by women), Swashakthi ( help for women entrepreneurs), WE ( support for new ventures by women of the State), bridge finance, etc.
It is fin-tech non-banking finance company. Last year, TIHCL launched iHealth, a digital platform, to support the revival of sick manufacturing MSMEs. This has made Telangana the first Indian State to partner with Microsoft to build a digital platform for MSMEs. MSMEs, which face stress, can register themselves on the platform to receive support from TIHCL.
TIHCL would like to scale up their operations once they succeed in their efforts to raise more capital from patient funding institutions, venture capitals, commercial banks and financial institutions, of course with the support of the State government.