[model-t]

I own a HR startup which we started in May 2018. It is completely bootstrapped and we have not taken outside help (Read : Loans/funding). We deal with providing IT consultants to big MNC on projects in India and US. Almost 20 of my employees working on client locations across India have salaries in excess of 15 LPA. With the lock-down, the employees are stuck at home with WFH not accepted due to the secure environment they were working in. So I have 20 billable consultants bringing no revenue + 10 employees who are working in HR/Accounts/Recruiting. The clients who were always late to pay from begin with (Min 90 days to pay an invoice from the day of billing) now have a new excuse to delay the payments for another 20 days.

This makes it 110 days (Minimum as per the current lockdown) plus no billing for almost a month.

But I have to pay for the following :

1)Rent of the office
2)Salaries of the entire staff
3)TDS (Delayed but payable)
4)GST on invoices raised (Delayed but payable)
5)Electricity Bill
6)Lease Line Bill
7)Telephone Bills
8)Employee bills

I cannot imagine what will happen if this is extended beyond 20 days without government help.

The government has to support MSME sector. I know of so many startups which will go bust because of cashflow issues. Even relaxation on TDS and GST can be a big help.
Profit and Loss is a lesser problem. Cashflow is the elephant in the room.

[Malyaj]

Originally Posted by am1m

This is leadership sir, I salute you.

On another thread we were discussing the tax breaks for SEZs, I'd rather the tax breaks end for well-pampered established IT companies like the one I work for and that funding go to small businesses who are quietly providing employment. Especially during this tough period.

Most business owners are being considerate. As someone rightly mentioned, MSME owners have more bonding with their staff compared to bigger companies. Even my landlord has asked me to share some kind of a restructuring plan in order to avoid business closure. He might be willing to waive off rent too.

I heard some relief package is being discussed. Let's see what it brings. The so called 'relief steps' announced by the FM 2 days back were just procedural relaxations and will help to the extent one is not able to file various returns and avoid penalties.

I don't grudge the IT industry any sops. They provide customers to businesses like mine and hope they are not too badly affected.

I am also willing to cut some slack to the government in terms of announcing stimulus packages. Better to take a few more days than come up with a half baked plan and inflict further pain on the junta like demonetization. Chances of leakages are also high when such welfare measures are being implemented. I am sure they are also worried about the optics of it all. The opposition which is sitting quiet right now will pounce at the first opportunity once things start getting better.

[efgritesh]

Originally Posted by m8002?

That should be the last of your worries. What use is Re at a good value if everything is broken internally. We will be back to the 70s and 80s where the Re was at an artificially inflated value.

I am afraid it will erode years of savings for large section of population, will increase our import bill, can lead to hyperinflation, isn't it?

[alpha1]

Originally Posted by V.Narayan

The world of MSMEs, those employment and GDP generators that are most ignored by Govt and Banks, is little understood by employees, or large corporations or I daresay the Govt bureaucrats. They are least understood by our Banks, PSUs and Private alike, evidenced by how little real MSMEs get as debt finance or working capital from these Banks.

So what is the difference. In the world of MBAs, MNC, and Private Equity they measure EBITDA or EBIT as the focus areas or in the new world companies Revenue and GMV {Gross Marchandise Value...<emoji shuddering>}. These measures have meaning when someone else is with far vaster resources is funding your business. When you are the owner of an MSME the only, I repeat only, metric that matters is net cash generated after tax. A well run MSME would have a net cash generation after bad debts & tax of say 6% to 12% of revenues. Which means this 3 week lock down {and here I am not debating merits or reasons for the lock down} equals to one half to one third of the years cash earnings wiped out -- in some cases tow thirds.

Salaried employees may view this as 3 weeks loss of revenue. The correct metric is that the revenue cash lost in those three weeks {if none of your expenses are shut down too} is ballpark like wiping out about a third of your annual income in one go. For many who are on the margin this becomes too much to pick up back from.

-Retired SME owner.

Hypothetically, will the situation (FCF loss) change if everyone in the food chain top-down from the Govt's, to enterprises, to public consumers, to workers etc - just forget this period of 4 weeks of "no-business activity" and hence don't charge any cost associated with it.

I am not counting in the reduced business for the remaining year because of weak sentiments, that is a different story.

[V.Narayan]

Originally Posted by alpha1

Hypothetically, will the situation (FCF loss) change if everyone in the food chain top-down from the Govt's, to enterprises, to public consumers, to workers etc - just forget this period of 4 weeks of "no-business activity" and hence don't charge any cost associated with it.

I am not counting in the reduced business for the remaining year because of weak sentiments, that is a different story.

I am no economist and others better informed could opine. Ultimately the last member of the chain will lose everything. Many are the last members depending on the product or service in question. Every employee is a last link in the chain. Every farmer is. Every electricity producer is etc. That would be like trying to save a sick man by draining out all the blood in his body.

[Samurai]

Here is a big one.

Lending institutions to allow 3 month moratorium on all term loans This would mean that individuals EMI repayments of loans taken would not be deducted from their bank accounts until the above mentioned time. The loan EMI payments will restart only once the time period expires.


Read more at:
https://economictimes.indiatimes.com...campaign=cppst

[alpha1]

Originally Posted by V.Narayan

I am no economist and others better informed could opine. Ultimately the last member of the chain will lose everything. Many are the last members depending on the product or service in question. Every employee is a last link in the chain. Every farmer is. Every electricity producer is etc. That would be like trying to save a sick man by draining out all the blood in his body.

Originally Posted by V.Narayan

Salaried employees may view this as 3 weeks loss of revenue. The correct metric is that the revenue cash lost in those three weeks {if none of your expenses are shut down too} is ballpark like wiping out about a third of your annual income in one go. For many who are on the margin this becomes too much to pick up back from.

Economically what would be better off? 3 weeks loss of pay for everyone throughout the food-chain vs 3 weeks loss of business. (Imagine Donald Trump trying to take decision)

[V.Narayan]

Originally Posted by alpha1

Economically what would be better off? 3 weeks loss of pay vs 3 weeks loss of business. (Imagine Donald Trump trying to take decision)

Try and implement it through 400 million employees, self employed, businesses, corporations. Please go ahead.

[PPS]

A reputed law firm in Delhi has announced a cut in salary for their lawyers.

AOR giant Agarwal Law temporarily cuts fee-earner salaries after COVID ‘crippled the work’, with ‘no visibility’ on return of normal

Top advocate-on-record (AOR) and Supreme Court powerhouse Agarwal Law Associates (ALA), which has around 50 lawyers, has announced a cut in fee-earner salaries of 30% on those earning more than Rs 40,000 per month at least until 14 April, after closure of the courts and social distancing measures have caused court work to fall off a cliff.

We understand that all ALA fee-earners are currently working from home but since the firm primarily does litigation work, and the Delhi courts having begun effectively shutting their doors to most hearings since 13 March, there is currently very little billing.

[m8002?]

There goes the 'suggestion' to not cut salaries or layoff people. They already lost all control on poor and migrant workers. Now even established companies are violating the 'suggestions'.

[KMT]

No private enterprise is going to continue to pay workers and hold wages under these circumstances unless the Govt gives tax cuts or lets them offset the expense in some other way.
If individual companies do that it is the good luck of employees.

[sdp1975]

Even the state governments are resorting to salary cuts for their staff. TS has announced cuts and KA may announce cuts next month.

How can the centre expect businesses to keep paying salaries in this environment without any support ?

[sunishsamuel]

Disclaimer: At the time of writing this post, the specific news article seems to be available online only on www.rediff.com
The accuracy of the information provided is not verified at this time.

Just happened to read this news. Govt seems to be thinking about slashing pensions too. Read here

I am not sure if the reduction in pension is applicable only to ex-parliament members and staff or the entire govt. sector. And something that struck me from the article

Also, the thinking is to scrap pension for former employees above 80 years of age.

I understand we cannot compare india with US/UK/Spain or Australia considering the population and income support that we may have to provide. But removing pension for people above 80 years will be cruel, especially when they are at an age where they will need as much money for monthly medicine bills, domestic support etc.

Originally Posted by JayKis

How reliable is this news? Why is this news only on rediff.com?

Added a disclaimer. You are right, yet to see this info on other news sites.

[JayKis]

Originally Posted by sunishsamuel

Just happened to read this news. Govt seems to be thinking about slashing pensions too. Read here

How reliable is this news? Why is this news only on rediff.com?

[nagr22]

I work for the airline manufacturing sector which is one of the most severely affected industries due to the ongoing crisis. All our manufacturing activities in Bangalore have been stopped since the last 3 weeks. Since I work for engineering design, I am able to work from home. As an interim measure to cut down the losses, management has announced that we will not be getting any salary hikes nor promotions for this year until further notice. This is definitely better than salary cuts or layoffs but if the situation worsens, we may expect the worse.