The Hindu : Tamil Nadu News : “Despite economic slowdown, SMEs have opportunities”

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Thursday, Dec 25, 2008
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Tamil Nadu

Tamil Nadu

“Despite economic slowdown, SMEs have opportunities”

Special Correspondent

HOSUR: Nearly 180 representatives of small and medium enterprises participated in a conclave held here on opportunities for business in the context of the economic slowdown.

Speakers at the conclave, organised by the Madras Management Association (MMA), highlighted the opportunities available to SMEs, though the economy was going through a crisis.

Vulnerable

C. Siva Kumar, chairman of the Hosur chapter of the MMA, said SMEs were particularly vulnerable because of “the low barriers to entry.” Indian companies were reacting in three ways to the crisis: cutting costs, halting expansion and laying off workers.

Since labour accounted only for 4-5 per cent of the total cost, he said, there was not much room for cost reduction by laying off workers. “It may be easy to sack workers now, but it is difficult to sustain the business after sending them off.”

Group Captain R. Vijayakumar, Executive Director, MMA, said the economic crisis in 1991 also provided business with opportunities, especially after the liberalisation policies were implemented.

In his inaugural address, Harish Bhat, Chief Operating Officer, Titan Industries, said that despite the slowdown, the Indian economy was among the “four fastest growing economies in the world.”

Mr. Bhat suggested that SMEs “secure short-term reserves” because of the tight liquidity and they “revisit” growth plans, especially those that did not result in immediate cash flow. “Protect the sustainability of your core business,” he said.

SMEs should become “lean and mean” to compete in the difficult environment.

Mr. Bhat also suggested that SMEs offer cash to clients and parent companies to hasten cash flows.

Companies should talk to customers so that they could understand their business plans.

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