Workshop on SMEs by AIMA-NMA

Mr. Rajeev Karwal Giving His Key Note Address at the One Day Workshop For SMEs
 on

Management Skills To Source Financing and Management of Technologies

Date: 10th May 2008

Venue: Jaipuria Institute of Management, NOIDA

Organizers: All India Management Association (AIMA) and NOIDA Management Association (NMA)

Time: 1200hrs

The occasion of “One Day Workshop For SMEs on Management Skills To Source Financing and Management of Technologies” organized jointly by All India Management Association (AIMA) and NOIDA Management Association (NMA) at the Jaipuria Institute of Management saw eminent personalities like Mr Kamal Singh Director-CMD, AIMA, Dr. J S Juneja Chairman, SME Committee and Dr H P Kumar CMD NSIC, in attendance. In his address as key note speaker, Mr Rajeev Karwal stated on how being invited to the workshop he agreed readily because as his own journey through this field has grown many folds. Prior to working as a professional in various MNCs like Reliance, LG, Electrolux etc, Mr Karwal’s early days of employment had their beginnings in a company which operated in a 750 sq ft shed having 37 employees in Okhla. This he claims was a significant point in his life, for the learning he acquired from that post has equipped him to relate better with businesses in the SME Space.

He went on to say that all massive buildings look impressive and imposing from a distance. But when we approach them, we find that in the end all of them are built from small blocks. There is a message here for MSMEs. At an initial stage MSMEs start to face problems of taking their idea to the right man. It also becomes difficult to address technology, finance and other issues affecting them. Their first problem might appear to be Marketing or Financial in nature but that may not be the true reason.

Milagrow has conducted a cluster study in 5 states and 11 clusters. It appears that in our business environment all the focus is on the big organizations.

The Chief Minister of a state is ready to wait an hour just so that he can meet the promoter of such an organization. The study also revealed that only one out of a hundred of the MSMEs are members of organizations like FICCI, ASSOCHAM etc. Therefore it would appear that these organizations are not the true voice of the MSMEs. Their problems can’t be understood by them. By the time their voice reaches the Government it has lost its tru essence.

Mr Karwal said that the problem begins when we try to combine the entire SME sector into one. The sector is too diverse for a common solution. And it is a rapidly growing sector. The problems of the various Ministries are that they don’t truly understand the MSME space. It is important to understand that the agenda of MSMEs in India shouldn’t be specific to the Ministry of MSME, Various Associations or Institutions but agreed across all Ministries, Associations, Institutions and the MSMEs themselves. The role of all Ministries operating in the MSME space should be to empower the MSMEs.

He also said that whatever we do or discuss about the MSME environment in India through various literature, forums etc, when we get to execution, there is a lack of understanding. Also the spirit and the nuances are missing. We miss out somewhere or another. Instead in its place we should develop a common value system that binds all these organizations together.

This value system should focus primarily on two things. Firstly to serve MSMEs we should think like them. We need to close that gap between MSMEs and us who wish to serve them. Secondly there is an urgent need for succession planning in MSMEs. Usually the exit of the person whose idea was behind the company leads to its demise. This is because the environment is not inviting enough for people with excellent skills and knowledge to seek employment in this space. All the companies in the MSME space are suffering from these problems.

“We must learn to respect the system”, Mr Karwal continues, “For the system is experienced. Build a strong Ecosystem, build an ethical ecosystem. Build your balance sheet then finance will not be an issue. It is the balance sheets which will in the end create value and create wealth. For where does it all commence? What does a bank need to help finance you? A good balance sheet and a robust business plan.”

“It is possible to do Business in an ethical way.” he states. “We at Milagrow have built a $2 Million company in just one year. There are no problems if you choose to follow this path, what is required is that you start thinking the right way.”

Venture Capitalists are thriving today. Business plans are made without understanding them in detail, without an effort made in understanding their core essence. “VCs, Mr Karwal says, “only operate on success basis. Their goal is the end financial gain. The spirit of right investment is missing. The terms VCs offer are worse than nationalized banks which are still better than Private Banks who offer just lip service. VCs kill the joy of entrepreneurship.”

“Most VC firms have only 5 to 6 employees.” He adds, “They may be fantastic at what they do but how many of them can provide “Management Capital”? How many of them can call themselves Venture Catalysts? MSMEs don’t only require financing but nurturing. VCs focus on nurturing of big organizations and not MSMEs.”

But Mr. Karwal is not all negative about the present scenario. “A lot of progress has occurred over the last year” He states. Mr Karwal has left the big companies so that he can work with MSMEs. He further added that Milagrow has a lot of people associated and working from IITs, IIMs, Symbiosis etc. Young and senior people who want to work with MSMEs.

Mr Karwal ended his address by informing the audience that Milagrow among other activities is presently conducting an SME policies study across the top 5 global economies of the world. Milagrow wants to focus on MSME Best Practices in these nations and other places where MSMEs have had remarkable success. And present these practices to the Government of India so as to duplicate the success of these economies. In the end Milagrow will become an authority on MSMEs.