Treatment of ailing industrial units in Northeast – the need of the hour

The progress of an economy is very largely dependent on government policies. Such policies must be pragmatic and their results must be periodically reviewed, otherwise, the main purposes of those policies are defeated.

At this critical juncture of the prevalence of recession in the country, revamping including rebooting of the beaten-down industrial units is of very urgent necessity.

In Northeast, for the very simple reason that the region is in dearth of large-scale industrial units in the private sector, and the MSME units, for not being very capital intensive but being a great avenue for alleviating the pain of the growing unemployment problem, the suffering MSME units require special attention for being such an important role player in employment creation.

The most underlying feature of most of the MSMEs in the Northeastern states is that they are plagued with various perennial problems inhibiting their progress.

In course of time, while a number of them met the fate of closure, a number of surviving ones have been limping for numbers of years and if they are not properly remedied, they are likely to increase the length of the list of closed industrial concerns in the region.

On the one hand, the government policies are falling far short of being satisfactorily pragmatic and on the other hand, most of those industrial concerns are having their own internal problems in management and being a victim of them, those MSME units have been sustaining loss year after year for various numbers of years.

All along I have been advocating for pragmatic steps for level-playing grounds for the MSME units considering that even easy loans, such as collateral-free loans, and ease in the disbursement of loans, etc. will not be of very much help for their health.

The main reason of the economic suffering of the region is sluggishness in industrialization and consequent rapid growth of unemployment because I believe that in the current styles and forms of agriculture neither agriculture nor the government initiative for industrialization is a satisfactory route for ameliorating the trend of unemployment very remarkably.

Notably, for the last many years, the central government has been taking great interest in government disinvestment in the PSUs with a red carpet to the private sector instead of improving the efficiency of the PSUs.

But for that, the people must take the challenge and in forming a clear concept of industrial psychology, first of all, our enterprising youths must be well acquainted with the procedures of starting business concerns like registration of a company, preparation of a memorandum of association and articles of association, determination of capital needs, and procedure of raising capital, etc. and for that expeditious strategies to train our youths, according to me, is very imperative.

Strength and weaknesses and opportunities and threats analysis (SWOT analysis) must be done keeping in view the long-term sustainability of any such setup.

It will simply be a repetition of mine if I again mention that even though this region is opulently blessed by nature, yet government actions for attracting more and more numbers of tourists are very pathetic.

Consequently, in respect of revenue for the governments, creation of further employment and further avenues for doing business like hotel business, and transport business by the people, the entire region is suffering tremendously.

The next most salient feature which I have observed with great dismay is that proper manpower planning including orientation for smooth mobility-based need is mostly unsatisfactory in most of the industrial concerns.

Moreover, I am sure most government enterprises are not having a scientific determination of manpower requirement. At the same time in view of economic relief to a large number of people by their establishment of partnership firms and sole trading concerns even though I do not downplay their role but they cannot contribute substantially to an economy.

In partnership and sole trading businesses, manpower planning may not be that necessary because of very few manpower requirements.

But in the case of a company business where there are several disciplines like personnel and industrial relations department, accounts department, marketing department, quality control department, and shop floor, etc., there the most challenging problems of manpower planning and control require very efficient handling.

Proper and timely orientation programmes must be arranged for the employees for keeping them updated about various developments with the acquaintance of practical knowledge to ease their intra as well as interdepartmental mobility as much as possible.

The managements must keep in mind that viability of concern is most substantially dependent upon the human resources. Human resources may take a concern to any extent of prosperity and at the same time maybe the most pivotal reason for its downfall also.

Regular evaluation of manpower production and productivity most feasibly in comparison with budgetary figures must be ensured with remedial measures for control as and when required during periodical reviews.

I am of the firm opinion that compensation package must include as much performance-based incentive as possible.

Most of our industrial concerns suffer from the financial crunch. There are two types of expenditure i.e. capital expenditure and revenue expenditure. Generally, but not absolutely, capital expenditures are bulk in amount.

The prime focus of an industrial unit should be to become self-sufficient of providing revenue expenditure from its working capital management.  However, a trend of sustained profit is a major relief towards capital expenditure also and that is a very giant step towards the well-being of the industrial unit so performs.

But for that, the most imperative step is to make a thorough and ongoing evaluation of the potential market taking into consideration the likes and dislikes of the people, price reasonableness, and sustained quality assurance, etc.

Our industrial concerns must realize the growing importance of marketing in the context of financial inflow and must always look forward to expanding markets.

For example, it is not out of context to mention that the products of APOL Mill were qualitatively very good and prices were also very reasonable, but as an observer, I strongly believe that the marketing of the products should have been expanded far beyond.

Similarly, the world-famous mulberry silk products of Sualkuchi are yet to make any satisfactory presence in the markets globally even though they are stunningly beautiful and their global reputation is quite unique.

When my wife last visited Australia, I was really ecstatic having come to know the admiration of the mulberry silk items that she was taking with her during that visit, got there.

Working capital, which is the difference between current assets and current liabilities, to upkeep the financial liquidity, even though is the most important factor for serious consideration, but it has been noticed that a number of our industrial concerns show a lackadaisical approach towards that.

Besides selecting proper channels of distribution, for augmenting flow of liquidity – trade discounts and/or cash discounts may sometimes be very fruitful instead of heaping up inventories of output in the market blocking fund flow on one hand and impacting the production process very detrimentally on the other hand consequentially making the unit suffer financially.

Rationalization in utilization of the premises of the industrial units also contributes to financial health. I am too sure if the organizations make further studies into inventory planning and control, they will, in addition, find numbers of articles lying in their stores unutilized for various periods of time, which can be procured within very negligible lead time i.e. time taken from placing an order till delivering the item. Also, the numbers of disposable articles for them being no longer in use, can be disposed of in time for some cash-inflows.

Changes in technology are another very vital aspect for our industrial units in the region and that every management must be well accustomed to. Machinery whichwas installed hardly a few years ago may lose the option of the management now because of its replacement with more efficient machinery.

However, replacement cost is a matter which invariably requires its thorough examination vis-à-vis benefits derivable to arrive at a rational conclusion.

But for the sake of satisfactory growth trend, very often adaptability to such changes becomes almost imperative and in that respect, as I have observed, most of the industrial concerns of the northeastern region more particularly in the MSME sector, are trailing compared to the industrial concerns in other regions.

These are only a few of the problems most of the managements in the industrial units in the northeastern region experience as very common problems.

But irrespective of whether the problems are commonly prevalent or unit-specific, the managements must be able to overcome such problems successfully.