Corporatization for MSMEs - msme-mentor.in

Corporatization for MSMEsIntroductionSME Financing and Development Project [SMEFDP] had commissioned a study(based on secondary information) through Deloitte Haskins and Sells- a reputedconsultancy outfit to outline the possible benefits of Corporatization, various costand compliances by MSME [both pre and post conversion], broad time frame , forcompletion of the entire process etc. The output of the study could act as a tool tounderstand the nuances of Corporatization in a simplistic manner and enablesmooth drive for Corporatization of MSMEs. The study is also supported by aquick feedback from a few MSMEs who have gone through the process ofCorporatization.Experiential LearningThe Project Management Division [PMD] SIDBI, by sharing a questionnairewith those who have undergone the process of corporatization in the last twoyears had obtained feedback from MSMEs (12 locations, 19 MSMEs). A brief ofthe feedback which offered multiple response options to respondents, is asunderReason for conversion- Majority (74%) indicated raising of the capital in thefuture while 68% indicated enhancing the market outreach as the key reasonsfor conversion.Benefits derived- 79% mentioned that they could have easier access tobanks/FIs while 68% felt the advantage of flexibility in operations. Over 63%could also raise additional capital, 42% MSMEs indicated control by regulatoryauthority and some indicated good market reputation as benefits derived out ofconversion to a company.Brief FeedbackREASON FORCONVERSIONBENEFITSDERIVEDRaising of CapitalMarket OutreachTransfer ofOwnership74% 68% 32%Easy AccessFlexible OperationRaise AdditionalCapital79% 68% 63%MSMEs - TheNursery ofEntrepreneurshipMSMEs are inherentlyf l e x i b l e i n o p e r a t i o na n d o f f e r g r e a t e rr e s p o n s i v e n e s s t oc o n s t a n t l y c h a n g i n gcustomer needs. In a highlycompetitive & integratedworld economy, mostMSMEs operate in ad y n a m i c b u s i n e s senvironment and theimportance of size/scalec a n n o t b e o v e remphasized. SustainedGrowth is an essential traitfor survival and stability.M S M E s h a v e t ocontinuously offer value totheir customers. The growthstrategy largely depends onconstant product andm a r k e t d e v e l o p m e n t ,product expansion &diversification, qualityimprovement and so on.This requires infusion offinancial resources. InIndia, majority of MSMEshave shown dynamism andresilience. However, almost73% of Indian MSMEs arenon corporate entities.During their upward growthjourney, they generally findthemselves handicappedand look for the right kind ofsupport – both financial andnon financial. Presentendeavour is a step in thedirection of meeting theinformation gap.Walk-In Kit13