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C HAMBER OF SMALL VOLUME NO X ISSUE NO. III AUGUST 2020 INDUSTRY ASSOCIATIONS PUBLISHED SINCE 1988 MANAGEMENT KALEIDOSCOPE TAX KORNER BUDGET 2020 & MEASURES TO MITIGATE COVID -19 IMPACT COVER STORY IMPACT – COVID 19 AND BEYOND -ENTREPRENEURS FORUM Even pre-Covid, from November I will lose orders only when there are 2019,we already had a general slow- down for three to four months in no orders. Not because of the engineering industries Sandeep Parikh, competition because I don't have any Proprietor, Esjay Industries here. Jimmy Pauly, 01TISA Partner , Emkay Rubber Works AUG 2020

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President’s Message We must bow our heads in prayer to all the doctors, nurses, front-line staff, policemen and all those people in essential services who kept manufacturing and supply lines moving even as we cowered inside our homes for the last several months. My heart grieves also for the deaths, tragedy and misery which beset thousands of people working in different states who set out on foot for their homes. The virus from Wuhan It will not be untrue to say that we are all passing through a very momentous period in the history of our planet, let alone India. Even as I write this, a total of 1,15,37,399 Dr. M R Khambete human beings across the world have been stricken by the Corona Virus whose name we first heard in whispers in January 2020 emanating from Wuhan, China till it turned into a shout on 24th March 2020, when India under Prime Minister Narendra Modi ordered the first of several nation-wide lockdowns. Currently there are 44,75,012 active cases across the world, 6,526,387 have recovered or been discharged and 5,36,324 deaths have occurred world-wide. No one would have believed that a superpower like America could be brought down to its knees but with a total of 29,76,662 and 1,32,539 deaths it is now heading a table of disease and death. If we thought we would escape with minimal damage because of our early action to lockdown, the picture is mixed with a total of 6,97,836 cases and 19700 deaths so far.   In an article on March 28, 2020 India Today Tech, using Gabriel Goh's online tool stated “With default data, which considers the infection rate R0 of 2.2 (it means a corona virus patient is likely to infect at least two more people) in a year the disease will infect a little over 1 million people in India. Of these, it will kill a little over 20,000 people.” While we have already hit the predicted number of deaths in 4 months, it remains to be seen what the future brings. The spectre of War Already beset with a troubled economy that was sputtering and muddling along, then struck by Covid 19 from Wuhan, a barely recovered China has seen fit to choose this time , to enter into a major border conflict with India. In an act of infinite treachery and murder, 20 of our soldiers including Colonel Bikumalla Santosh Babu were killed by marauding Chinese troops with wooden clubs wrapped in barbed wire, stones or pushed over mountain ledges to their death in the freezing cold waters of the Galvan River. What China has done is unforgivable. A wave of national anger has erupted against China, with calls from the citizenry for everything, from a military retaliation to repulse the Chinese who still remain massed on our borders, to an economic boycott of Chinese goods. It is against this background of gloom, death and aggressive Chinese actions world-wide, that MSMEs are trying to limp back to some form of normalcy and restore production and services. Even in such circumstances I tend to believe that it is a clarion call to all of us to summon all reserves of strength, not just to survive, but to purposefully produce, innovate and grow – to become an Atmanirbhar Bharat. TISA AUG 2020 03

17 Cover Story - Interview Impact – Covid 19 and Beyond -Entrepreneurs Forum- TAX KORNER Sandeep Parikh Budget 2020 & A.Y. Akolawala Measures to Mitigate Covid -19 Impact Haren Sanghavi CA . Jayaraman P. P. Jimmy Pauly 30 Advertisers Index TISA AUG 2020 04

31 VOLUME NO X ISSUE IV AUG 2020 MANAGEMENT KALEIDOSCOPE Managing Corona - Lessons from NZ - a Change Management Framework Sunit Prakash Rajendra Aphale 43 A message from Seshan Ranganathan, Executive Editor , TISA 44 05 TISA AUG 2020

TAX KORNER BUDGET 2020 & MEASURES TO MITIGATE COVID -19 IMPACT - P.P. Jayaraman C.A As a part of combating the Cognisance for period of However, income tax TDS return Corona Virus pandemic, the Limitation” by extending all the filing date was extended for the Finance Ministry was working due dates under various Acts purpose of late fees, although overtime. (both central and State) and the interest on delayed payment across all Tribunals, Courts was reduced to 9% p.a. instead The last week of March starting including the Supreme Court of 18% p.a. with 23rd was a happening INDEFINITELY. week for the Indian Tax 4.On 26.3.2020 The Finance Administration. 3.On 24.3.2020 The Finance Minister announced various Minister announced extension measures to combat the COVID 1.On 23.03.2020 The Finance of various due dates under 19 issue including free supply of Bill 2020 was passed by the Lok Income Tax, GST, MCA etc., In ration and gas cylinders to the Sabha without any discussion. Income Tax the dates were very poor and needy and direct generally extended to 30th June, transfer of money to Jan Dhan 2.On 23.03.2020 The Supreme 2020 wherever the due dates / Account holders apart from Court suomoto ( on its own limitation period was between contributing to PF (both motion) came out with “ 20thMarch and 29th June, 2020. employer and employee share TISA AUG 2020 06

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TAX KORNER for the next three months ) for buyer has not provided the PAN passed now makes it applicable certain category of or Aadhaar number to the only with effect from 1.10.2020. establishments. seller. This is a great boon for the trade as it gives time to alter the 5.On 27.3.2020 the Reserve The Trade and Industry feared software and preparedness for Bank of India gave a free hand to this would unintentionally the terms and conditions to be the bankers for deferment of EMI include even exports and incorporated in the email of all Term Loans. imports, in which case, it would negotiations. be an increase in cost for the Also, a three-month moratorium Indian trade and also a burden 2.TCS on foreign remittances-- was granted for levy of interest for compliance. --Three thresholds and three on OD/CC accounts. The Government has withdrawn situations: the same from being applicable The Indian Parliament on to exporters and importers a.Where remittance is Monday the 23rd March, 2020, (Exports are now clearly happening under Liberalised passed amendments to the excluded and the term “Buyer “is Remittance Scheme (LRS) for Finance Act, without any now meant to exclude Education for studying discussion in the Lok Sabha just a specifically an importer of abroad. day before Lock Down on goods). account of Corona was TCS is collectible @ 0.5% of the announced by the Prime It is important to note that for amount of remittance, (instead Minister. applicability of this section, the of 5%) if the remitter has taken a seller's turnover in the loan from an institution or bank They had to rush it through both immediately preceding financial as specified in section 80E of the the Houses in order to make it year must be more than Rs.10 Income Tax Act, 1961. into an Act, before the Lock crores. So small businesses will Under this there is s threshold of Down. not be hit by this amendment. Rs. 7 lacs below which no TCS is Further instead of 1-4-2020 required. A SNIPPET OF ALL THE CHANGES being the date of applicability of MADE IN THE FINANCE BILL (as this provision, the budget as passed by the Lok Sabha) on 23.3.2020. 08 WELCOME CHANGES IN THE FINANCE BILL 1.Relief in section 206 C(1H) -- Exports and imports are now excluded from the TCS ( Tax collected at source) requirements. The Finance Bill in Clause 93 had proposed as an anti-evasion measure, TCS collection of 0.1% on sale of goods over Rs 50 lakh in a year and 1 per cent if the TISA AUG 2020

TAX KORNER Where remittance is paid DDT, then the dividends that the lower 120-day rule will happening for overseas tour received even in April or not apply if the Indian-sourced program package. thereafter will not be taxed. income of such persons is less than ₹15 lakh in the relevant In this case if the seller of the The TDS on dividend to a non- financial year\". package is remitting abroad and resident person or a foreign So, a Non-Resident Indian can he has already collected TCS company under section 195 has still stay in India for 182 days from the buyer of the package, been set at 20% instead of the without his world income then the authorised dealer again applicable rates as mentioned in getting taxed in India, provided need not collect TCS. Else he has the original finance Bill by his Indian income taxable is less to collect TCS @5%. amending Part-II of First than Rs. 15 lacs Schedule. 5. Amendment to reduce the TCS is applicable without any However, where dividend TDS to 2% from 10% on threshold limit at all and is at 5%. income of a non resident person technical fees including c.Where remittance is is chargeable to tax at the Royalty on sale distribution or happening for other reduced rate as per the provision exhibition of cinematographic remittances under LRS. of Double Taxation Avoidance films. Here there is a threshold of Rs. 7 Agreement (DTAA), then tax In the Finance Bill, 2020, the lacs and rate is 5% TCS. shall be deducted at a rate Government has proposed to These provisions are also provided under DTAA. reduce the rate of with holding applicable only with effect from 1st October, 2020. 4.Relaxing the provision tax to 2% from existing 10% 3.Relaxation for Dividend relating to tax residence. (NRI under section 194J in respect of income after abolition of Rule ) fees for technical services to section 115 O of Dividend The original Finance Bill had reduce the litigation as Distribution Tax (DDT) proposed to reduce the time deductors always try to bring the Indian citizens or persons of said payments within the ambit The bill has given tax relief to Indian origin needed to be in of Section 194C, whereas shareholders who receive India to qualify as Indian tax department argues to treat it as dividends. The earlier version of resident, from 182 days to 120 FTS under section 194J. the bill had abolished dividend days in the previous year. distribution tax on companies “The amended Bill now provides In the Finance Bill, 2020 (as and made dividends taxable in passed by Lok Sabha) the the hands of the recipient. 09 The amendments now clarify that dividends received by the shareholders after 1 April shall not be taxed if DDT has been paid as per the earlier law. That is if the company has declared dividends in March, 2020 and TISA AUG 2020

TAX KORNER Government has reduced the To ensure the collection of tax, a So mutual fund investors have to rate of tax deduction to 2% on new Section 194K has been factor in, that any mutual fund royalty income arising to a proposed to be introduced dividend received in excess of person by way of sale, which require the Mutual Rs. 5000/- in a financial year distribution or exhibition of Funds to deduct tax at the rate of from one mutual fund scheme cinematographic films. 10% while making payment of will suffer TDS @ 10%. income to the unit-holders. This will provide relief to the film The stakeholders had raised A HARSH MEASURE FOR distributors as currently tax is doubts about the deduction of ANTI EVASION deducted at the rate of 10% on tax from the capital gains that revenue they earn from sale, may arise on maturity or transfer 1.A Blow to the errant tax distribution or exhibition right of of mutual funds, which the payers the film which block their Central Board of Direct Taxes working capital. Henceforth the (CBDT ) vide Press release, dated Increased TDS compliance for TDS will be at the rate of 2% u/s. 04-02-2020, has clarified that cash withdrawals by those who 194 J. haven't filed income tax returns the tax under this provision is for all the last three years. 6.NO TDS UNDER SECTION required to be deducted only 194K FROM CAPITAL GAINS from the dividend payment. The government had introduced ARISING ON TRANSFER OF No tax is required to be deducted TDS u/s 194 N on cash UNITS OF MUTUAL FUNDS from the sum payable which is in withdrawal over Rs 1 crore the nature of capital gains. earlier with effect from 1-7-2020 With effect from 01-04-2020, To remove any ambiguity, on cash withdrawals in excess of the Finance Bill, 2020 proposed section 194K explicitly provides Rs. 1 Crore from a bank account. to abolish the Dividend that no tax shall be deducted Distribution Tax and move to the while making payment in Now they have specified that a traditional system of taxation respect of capital gain arising person who has not filed income wherein mutual funds do not from transfer from units. tax return for all the three (3 ) pay tax on distributed income preceding years would be liable and, the unit-holders are liable 10 for a 2 per cent TDS on cash to pay tax on such income at the withdrawal in excess of Rs 20 applicable tax rate. Lacs to Rs1 crore, and 5 per cent if the amount exceeds Rs 1 crore TISA AUG 2020 in a financial year. So, two thresholds and rates are specified: a. Those who have not filed all the last three financial year returns: TDS on the amounts above Rs. 20 lacs withdrawal upto Rs. 1 Cr @ 2%. b. For regular assessee (who have filed all the last three

TAX KORNER preceding years returns), TDS @ in turn to the Income Tax Cognisance for period of 5% on the amount exceeding Department. Limitation In re in Suo Motu Rs. 1 Cr. Writ Petition No. 3 of 2020 SUPREME COURT EXTENDS ('the Order') has taken This threshold limit is per bank DUE DATES IN ALL COURTS 'suo-moto' cognizance of the account or post office account AND TRIBUNALS dire situation arising out of the and not the person or PAN per INDEFINITELY TO COVER ALL challenge faced by the country se. STATE AND CENTRAL LAWS. on account of Covid-19 Virus and resultant difficulties that To explain in simple terms, For Income tax, the Finance may be faced by litigants across suppose you have two bank Minister ON 25TH March, 2020 the country in filing their accounts, you could withdraw initially extended almost all petitions / applications / suits/ Rs. 1 Cr each from both the the due dates to 30.6.2020. appeals / all other proceedings accounts without any TDS. within the period of limitation The Hon'ble Supreme Court prescribed under the general However please note that the through a bench presided over law of limitation or under information is anyway already by the Chief Justice S. A. Bobde, Special Laws (both Central being captured by the bankers Justice L. N. Rao and Justice and/or State). and shared with RBI and the Surya Kant vide Order dated same is available to IT March 23, 2020 in the case for This is a first of its kind Department for the cash appreciable pro-active move by deposits and withdrawal of Rs. the Hon'ble Supreme Court, 10 lakhs and above in a financial which deserves to be year from a bank account.The applauded. This will ensure provisions of Section 194 N are minimum administrative already applicable to the inconvenience and quicker payments made on or after 1st recovery post the crisis- July, 2020. situation. This perse will not be a Amidst all the Corona Virus deterrent, as the assesses can problems, the order from the always open as many accounts Supreme Court is a welcome and transact Rs. 20 lacs in each relief. account. Only issue is that it will get reported to the RBI and then The following are some of the TISA AUG 2020 11

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TAX KORNER major measures announced by March, 2020 is extended till 7.Applicability of Companies the Finance Minister on 30.9.2020. (Auditor's Report) Order, 2020 25.3.2020. shall be made applicable from 6.No additional fees shall be the financial year 2020-2021 1.The rate of interest on all dues charged for late filing during a instead of from 2019-2020 of advance tax and income tax moratorium period from 01st notified earlier. and TDS / TCS have been April to 30th September 2020, reduced to 9% from the 12% in respect of any document, This will significantly ease the and 18 % generally applicable. return, statement etc., required burden on companies & their to be filed in the MCA-21 auditors for the year 2019-20. 2.Dates for investment in PPF Registry, irrespective of its due and LIC and other instruments date, which will not only reduce CONCLUSION are extended to 31.7.2020. the compliance burden, (recently amended from including financial burden of 1.The budget was rushed 30.6.2020). companies/ LLPs at large, but through the Lok Sabha without also enable long-standing non- any discussion, but the formality However, in my opinion, PPF compliant companies/ LLPs to has been completed by the rules need to be changed to make a 'fresh start'. ruling party in time. However, include contribution in excess of stakeholders have nothing to Rs. 1.50 lacs allowed every This is a great relief for many complain since they have financial year to accommodate who were wanting to regularize amended suitably, the points or this change in rules. their records but due to the late issues that have been pointed fees, they were holding it back. out to them during discussions 3.GST due dates for March, April and suggestions sessions. One and May 2020 have been case in point is that of excluding extended beyond 30-6-2020 for exports and imports under various categories of dealers. section 206 C(1H). 4.No interest, late fee, and 2.The Supreme Court did its part penalty to be charged. For by extending till further orders others, interest will be charged (indefinitely) all the due dates @ 9% but no late fees and under various Acts for penalty will be levied. submission/ filing and hearing of appeals in all courts and 5.Date for filing GST annual tribunals. returns and GST audit reports of FY 18-19, which is due on 31st TISA AUG 2020 13

TAX KORNER 3.In terms of due dates, the 1.The Employees Provident 3.Employer and employee same have been extended Fund Organization (EPFO) has contribution reduced to 10% under various Acts like Income announced - employees who percent each, from 12% percent tax and GST, rates of interest for contribute to EPF can withdraw each currently for the period delayed payments have been upto 75 percent of the account May, June and July 2020. This reduced, another opportunity to balance or 3 months' basic will be applicable to all file all pending returns have salary and dearness allowance, employers (other than been provided to all corporates whichever is lower. government company and by MCA . companies covered in bullet 2.Establishments which emloy point no. 2 above) ATMA NIRBHAR BHARAT upto 100 employees and if 90 percent of whom earn upto Rs 4.EPFO issued the circular which Now the Finance Minister has 15,000 per month, the states that no proceedings further announced various other Government will pay the should be initiated on relief measures on during provident fund contribution, establishments covered under lockdown under Prime both of the employer and the the EPF Act for levy of penal Minister's Atmanirbhar Bharat employee (12 per cent each) for damages on account of any Abhyan, and they are as March 2020 to May 2020. This delay in the payment of any follows: Employee related support is extended for another contributions or administrative measures 3 months i.e. June to August charges due for any period 2020. during the lockdown. TISA AUG 2020 14

TAX KORNER 5.In view of the Government's subordinate-debt to promoters 5.Since all the above measures decision declaring COVID-19 as equal to 15 percent of their are specifically meant for a pandemic, the Pension Fund existing stake subject to a cap of MSMEs, their definition has Regulatory and Development Rs 75 lakh been amended by eliminating Authority (PFRDA) allowed the distinction between partial withdrawals from the 3.Rs 50,000 crore equity manufacturing and service sectors. Investment of under Rs NPS to fulfil financial needs infusion through a fund of funds 1 crore and turnover less than Rs towards treatment of the for MSMEs with a corpus of Rs 5 crore will be a micro business; COVID-19 illness of a member, 10,000 crore. The fund will investment of up to Rs 10 crore his/her spouse, children operate through a mother and a and turnover up to Rs 50 crore (including adopted child), or few daughter funds. will be categorised as a small dependent parents. business. Investment up to Rs This can help small corporates to 20 crore and turnover up to Rs Economic stimulus measures get into public issue of shares 100 crores will be defined as a through SME listing where the medium business Relief measures announced by Government will purchase Reserve Bank of India on 27 shares of these companies. Easing of regulatory March 2020 & 17 April 2020: measures Relief for MSMEs (Liquidity 4.Dues by government and measures public sector undertakings to 1. All lending institutions are 1.Collateral free automatic MSMEs will be released in 45 being permitted to allow a loans of Rs 3 lakh Crores for days. As a replacement to trade moratorium of three months on small businesses that have fairs and exhibitions, e-market repayment of instalments for outstanding loans as on linkage for MSMEs will be term loans outstanding as on 29.2.2020 at the rate of 20% of promoted. March 1, 2020 Lending outstanding amount as on that date has been announced To help MSMEs in increasing institutions permitted to allow their business, general financial deferment of 3 months on 2.Non-performing and stressed rules for procuring goods and payment of interest w.r.t all such MSMEs to get about Rs 20,000 services by the Government will working capital facilities o/s as crore liquidity as subordinate be amended to disallow global of March 1, 2020 debt. Banks to provide tender in procurement of goods and services of value below Rs 2. Moratorium period to be TISA AUG 2020 200 crore. excluded while computing 90 Day NPA norm for asset 15 downgrade.

TAX KORNER 3.Time period allowed under However, this will not apply to Those who visited India before RBI framework for resolution salary TDS for obvious reasons 22.3.2020 and could not return extended by 90 days (210 + 90 as salary TDS. to foreign country where they days) were residents, their stay in 3 The due date of all Income Tax India after 22.3.2020 till 31-3- Company Law (Ministry of returns for Assessment Year 2020 will not be considered as Corporate affairs) 2020-21 will be extended to stay in India for the calculation Nov. 30, 2020, and due date for of their residential status. 1.No fees to be charged for late tax audit report upload will be filing during moratorium period extended to Oct. 31, 2020. ( this 8.Vivad se Vishwas scheme has (01 April 2020 to 30 September is a new rule that tax audit has been extended to 31-12-2020 2020,) in respect of any to be uploaded one month prior without any further interest or document, return, statements, to filing of return of income so penalty. etc. required to be filed with that AUTO FILL capability will be 9.Facility of E-PAN can ease the MCA (Ministry of Corporate enabled therein. difficulties faced by tax payers Affairs). in procuring PAN card. 4.As for lower rate of tax This will cover the forms and deduction certificates u/s.197, Even with all these stimulus returns of earlier years also. the rates asper certificates as measures announced by the valid till 31-3-2020 will Government, many industries 2.The mandatory requirement continue to apply till 30-6-2020. like Travel, Tourism, Hotel and of holding board meeting within Airlines are not at all happy with 120 days of last meeting shall However, this rule does not the Government measures and be extended by period of 60 apply to Non-Residents feel completely left out. days. Relaxation is till 30 payments and in that case a September 2020. blanket rate of 10% plus (The author is a Practising surcharge plus cess is applicable Chartered Accountant of Thane Income Tax: pending the issue of TDS lower and can be reached at deduction certificates. [email protected]) 1.Pending income tax refunds to CA Jayaraman P. P. charitable trusts and non- 5. Extension of time limit for corporate businesses and investment in capital gains professions including bonds or in investment in proprietorship, partnership and properties u/s. 54 to section 54 LLPs, and cooperatives shall be GB now extended to 30th issued immediately. September, 2020. 2.Rs 50,000 crore liquidity 6.Extension of time for support through cutting TDS / submission of forms 15 G and TCS rates by 25 percent of 15 H to the deductors was existing rate. The cut in rates will extended to 30th June, 2020. be effective from tomorrow until The forms submitted for the March 31, 2021. previous financial year 2019-20 will be valid for the first quarter The reduced rate would be of this financial year 2020-21. applicable for payment of contract, professional fees, 7. Residency rules changed now interest, rent, dividend, to accommodate those who are commission and brokerage. overstaying in India due to Corona. TISA AUG 2020 16

COVER STORY IMPACT – COVID 19 AND BEYOND – ENTREPRENEURS FORUM- [A new platform for entrepreneurs to air their views hosted by our Executive Editor Seshan Ranganathan. This month we have with us Sandeep Parikh of Esjay Industries, Haren Sanghavi, Director of GMS Plastic Machinery, A. Y. Akolawala of Techmech Engineers and Jimmy Pauly of Emkay Rubber Works] Before Covid (BC) 2019,we already had a general A.Y. Akolawala, Sandeep Parikh, slow-down for three to four Partner, Techmech Engineers Proprietor, Esjay Industries months in engineering Ours is a partnership company industries. Business had and we manufacture special- We are into heavy fabrication dropped almost 30 to 40%, but purpose machinery for jobs, especially for defence, we had no issues of power, chemicals, fine chemicals and injection moulding machine finance or manpower. pharmaceuticals. bases and steel plant items. We When people are putting up have two units in Wagle Estate, We had a good amount of work plants our machinery is Thane in defence, but there is a time- Even pre-Covid, from November lag there, with execution required. Pre-Covid, we already starting 3 months after the had problems because of TISA AUG 2020 order and delivery after 6 to 8 restricted flow of credit to months. But demand in the industries due to Bank NPAs. other areas was going down. Whatever orders we had, we were executing. But we had to As far as I am concerned really struggle as competition payments have never been a was very high. problem. We could easily get raw material because of the Because all the companies I deal slackened demand. with, follow the MSMED Act and I get my payment in 45 days, whether it is L & T or other companies. 17

COVER STORY Power was not a problem nor suffer, we too suffer. So, it was The problem with finance was labour availability. Nor was our plastic recycling business due to delays in delivery by 3 to payment a problem, since we which kind of came to our 6 months. There were supplier manufacture special purpose rescue. issues, as well. There was machinery and get payment In general, plastic machinery severe shortage of steel in against delivery. manufacturers have been in between due to the import really bad shape for more than a crisis, price and tax increase etc Finally, even the trickle of orders year because of the ban on which kept on hurting us we had, came to a grinding halt single use plastics. causing delays in production. with the lockdown. We concentrated a lot on exports with our JV partners, so We could still manage, mainly Haren Sanghavi, Director, we could do good but otherwise because we used to keep a fair GMS Plastic Machinery Pvt. Ltd. it was a bad year altogether. stock of some parts also. Last year we did around 70 . We have a joint venture with an percent exports, with only 30 When it comes to labour, we Italian company in India, where percent supplied locally, have no problems. Our system we manufacture extrusion whereas normally it is the other of working is somewhat machines. way around with 70 percent in different. We have a lot of India and 30 percent exports. automation, with very little Our main area is plastic The financial situation was none labour involved. waste recycling. We also too good but it was not due to manufacture equipment poor payments. When Most of our people are highly- for the pipe industry. equipment leaves our factory, qualified technicians. We try to payment is always clear, except maintain the same staff because As far as pre-Covid in the case of a very limited of the service warranty, after conditions are concerned, number of customers where sales etc . plastic industry had a lot of there is 10% retention for 6 issues because of various months to 1 year. Every equipment is bans all over India. manufactured by one particular 18 staff member and maintained by Most companies were not him till end-of-cycle.So, in production. With the installation is done by him, plastic film industry down, we were not able to sell machines. When they TISA AUG 2020

COVER STORY testing is done by him and after power, water treatment, other, by-products of oil. sales, if there are any issues, chemical, food and that is also handled by him. Since we started the business Unless he leaves the job, he pharmaceutical industries. It's more than four decades ago, it handles everything from got various applications and has been very good and our assembling the equipment to there's something called anti- domestic sale was always much delivery. abrasive coating. Again, rubber- more than export orders. But in Jimmy Pauly, based. So, just as Harenji is in the last five years there is a huge Partner , Emkay Rubber Works plastics, I am in rubber. decrease in the domestic Actually, the first half of what If you want to study, it's called requirements. Harenji said, I can say that the rubber and plastic technology story is almost the same, but our because they are linked to each Out of desperation we started troubles started much before searching around for business the Corona crisis. 19 and finally struck something in We have two companies, one in the international market. If you Thane and the other in Navi look at last year, 70% of our Mumbai. We are into rubber turnover was from exports and lining, which is basically coating just 30% local sales. We were given to equipment so that they basically able to sustain don't corrode. It is basically like ourselves because of our painting, but a more expensive exports. form of coating which is in sheets and is applied on the Though I did get a couple of metal surfaces. It's used in good orders locally the overall trend was lower demand and TISA AUG 2020 fewer orders. Sandeep Parikh Okay, if you see all four of us, even six months before Covid- 19 we were all in bad shape. A.Y. Akolawala I want to add that in one sense my experience was the opposite. We were exporting to South East Asia, particularly Malaysia and exports were almost 50% of our turnover. Now that has dropped precipitously, due to some bilateral issues. We are now not so favoured in Malaysia. So now export have ground to a halt.

COVER STORY Post Lockdown & how to make it, considering my 2% it will be wiped out by the reactions to FM's jobs are huge and space was Bank Charges. announcements less. Production and sales were, of course, zero during the What happens to those who do Sandeep Parikh lockdown. Fortunately, our not avail Bank credit? And those re-starting coincided with our who are banking with co- When the first lockdown came, customers, so other problems of operative Banks? What about end-of-March, it was absolutely production /supply mis-match those who essentially have sudden, right? It was totally were avoided higher limits but whose unplanned. A sudden closure of outstanding as on February 29th business where no one knew But demand destruction is pretty low? how many days one would be has already set in at the under lockdown. One mistake customer's end. The main issue which we have Government made, was not been fighting in the Supreme giving 4 to 5 days' notice for Regarding the schemes Court is the MHA order which everyone to get prepared and announced by the Finance made it compulsory for one to maybe allow the migrant Minister, the whole thing was pay salaries & wages during the workers to go back. lockdown period. It was a total hogwash. The only thing As a result, those who could not which has percolated down is political move. Whether right or leave then, left a couple of that the Banks are approaching wrong, the fact is, many workers months later on foot or by lorry the customers to take that ECLG collected the payment and went or by train, irrespective of Scheme where you are given back to their villages. If you whether they were paid or pre-approved sanction of 20% thought that by making unpaid, out of sheer fear, if not of your loan outstanding as on payment, they would stick for anything else. 29th February at between 7.5 to around that simply did not 8.5% for a period of 4 years. work. By the time we restarted, 50 to 60 percent of our people had But my outstanding was very One good decision which has left. Fortunately, all the staff low on 29th February, so 20% of come from the Supreme Court, is who were local were available that comes to some Rs 7 to 8 that you can negotiate on the but the workers who were lakhs. But the Bank Charges are payment with your employees. migrants on contract, left. In some Rs. 10000 -Rs. 15000 to That has worked very well with fact, 2 or 3 workers left as get this. So, while I save about the employees. For March, with recently as the first week of July. lockdown for a week, most of 20 That is the scenario during the lockdown. Fortunately, I got my payments which were due. Inventory grew very high during the lockdown, as March end is normally when we hit a high in sales which unfortunately stopped completely. As a result, there was a shortage of space in the company. Even if we got orders the question was TISA AUG 2020

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COVER STORY the employers made full quarantined for another 14 days liability. And MSMEs will be in payment. In subsequent months when they come back. trouble once the moratorium they paid around 50% of wages They don't want that. They are period ends, with interest on & salaries during the period of asking whether they will be interest. It would have been lockdown. helpful, if the lockdown had taken back as soon as they reach been for a short period but the A.Y. Akolawala here. I have told them that is not lockdown has been repeatedly possible. extended. In such a situation, a After the initial voluntary one- moratorium is like a band aid day curfew on 22nd March, when They will be travelling all the when the wound requires the lockdown for 21 days was way from U.P and Bihar. So, this intensive care. suddenly declared on March is a kind of tricky situation 24th it was a shock to industry. where we want them back but A.Y. Akolawala Everything went haywire. cannot accept them March being the year-ending is straightaway at work as they Actually, instead of the always crucial. have to be quarantined. moratorium which is hardly of any use, there should have been Equipment which was half-way As for the Schemes announced a concession in the interest. in the manufacturing process by the Finance Minister, I don't Criterion for Classification of with the full complement of think any MSME has really got NPAs should also have been labour has yet to be completed great benefit. Take the Bank's extended from 90 days to 180 with depleted labour till today. readiness to finance 20% of the days. [Editor’s note: The outstanding on 29th February Government plans to suspend This, I think, is the condition of 2020.At a time when there is no laws which classify corporates all industries. We paid 50 to business, what is the point in as non-performing assets (NPA) 60% salary in April based on giving me a loan. for six months amid coronavirus slabs. But they were literally outbreak. Business Today, waiting to get the money to go Sandeep Parikh Monday July 13] to their native places. I am still in touch with them. They want to Basically, only moratorium has Haren Sanghavi come back. been given, no waivers or concessions in interest etc. The During the Covid period we But they were quarantined for moratorium is no rescue were shut down but we were 14 days when they went home package. It only postpones your also having the essential and now, they will be commodity permission so our 22 plant basically was running. TISA AUG 2020 There were many companies which were shut down. If we talk about the total plastic industry only the film industry was running because they were required for food packaging applications etc. Of course, those catering to the medical industry were running at twice normal capacity because there was a lot of

COVER STORY medical packaging required, as Government may be giving to to bank credit, I do not have the well as, for medical products like lend without fear, they are all exact figure with me. but bank temperature measurement very afraid. Forget any public credit, will by no means be guns, pulse oximeters and other sector banks. I have tried even insignificant. such devices and equipment. private banks like HDFC and Axis Bank. They are also not ready to Most MSMEs crucially depend The key problem was the finance. on it. We have a joint venture, shortage of labour. What we with most of our funding found particularly shocking was As for the ECLG Scheme people coming from our Italian partners that in Daman, Silvassa and in almost traditionally initiate who get their funds at four per Bhiwandi, police were going action for recoveries of cent interest against the twelve house-to-house and forcing outstanding before the year per cent we pay here. But most people, many of whom were end. The net result is low MSMEs would be depending on putting up more than 5 to a outstanding for the very period bank finance. room, to leave for their home which is used as the criteria for Sandeep Parikh towns. lending. 20% on such The requirement of bank finance diminished outstanding loans by MSMEs is also because of the Overall, the plastics industry would almost, not be worth bottlenecks in trade finance. Not was doing better-than-normal taking as a result. production. The principal receiving payment for 6 to 9 problem was the availability of So those schemes of the Finance months and so on inevitably labour and secondly bank Minister simply did not work in pushes you to bank finance. finance. Orders were in hand but practice. In the initial two could not be fulfilled because months we were pre-occupied 97% of MSMEs are Micro Banks were unwilling to provide with the labour issues. Many of Industries, 2% are Small Scale additional working capital. the workers left even though and1% Medium Industries. they were paid. That was the Shortage of funds remains a general situation. In my own All these micro industries are major crisis even today. I have company, none left, except for mainly doing job-work for a applied for working capital. one person. Another guy who bigger entity such as a PSU, was in his hometown wants to large private or public limited We were not using bank finance come back. But he is worried company etc. earlier and today when we go to about this 14-day quarantine The micro industries are stuck apply, after two and a half issue, so he can't. because of the payment crisis months of paper-work we have brought on by large companies. still to get it. And regarding your question of the relative share of trade credit They are delaying it by asking us to bring one thing and the other. 23 They are even asking what is not required at all. For example, they are asking my partners who are in Italy to provide Aadhaar and PAN Cards. They neither have it nor do they need it! Despite whatever directions TISA AUG 2020

COVER STORY Haren Sanghavi Jimmy Paully announced by the FM are Today if you go to the large concerned it is all a lot of companies for business, say I'd like to add one thing. In the hogwash. Reliance or Larsen & Toubro you case of my industry I am the will have to accept payment sole representative in the whole What does the Scheme amount terms of 3 months and in actual of Thane District and so I am in a to? When the business practice you will be paid after 6 sense a barometer of general environment is as bad and months. industrial conditions. uncertain as it is, who will want A.Y. Akolawala to borrow and end up paying I have a suggestion on this, I will lose orders only when interest on interest. Government should issue strict there are no orders. Not guidelines to public sector or because of the competition It is my individual view that in corporate structure for payment because I don't have any here. the spate of announcements in 45 days to MSMEs which will made by the FM there was solve a lot of problems. So, it's pretty easy for me to virtually nothing which truly understand when the market is benefitted MSMEs. Haren Sanghavi doing badly. I'd like to rewind We already have the MSME Act back to 2012. Haren Sanghavi and Government guidelines and they ask you to file on GST There used to be complaints Take PF for instance. It was site a list of your outstanding about corruption, electricity or decided to pay the provident but who is going to follow-up water but you did not hear fund contributions of any on that? people talking about credit company for 3 months which Sandeep Parikh issues or payment issues. has since been extended. The MSME Act has no teeth in it. I just spoke to the Times of India What is now happening is that However, none of the benefits on the subject. Without teeth demand is so down, that it is granted are applicable to any the Act is obeyed more in the affecting everyone's liquidity. industry, since they put a breach. condition of 90% of staff being It's too much that a company paid less than fifteen thousand TISA AUG 2020 like mine, which has a virtual rupees. monopoly, has to resort to overdraft for the first time in 45 In a way its saying that you years. have given something, when in reality you are not giving And as far as measures anything at all. 24 [The panel was unanimous that there was little or nothing for MSMEs in the FM's announcements] Single -biggest problem at this point of time Haren Sanghavi First would be labour and the second finance. The flow of

COVER STORY credit to MSMEs is barely 15% of I incurred losses because the Jimmy Pauly total bank credit. materials were taken away at less than my cost. Going back to the labour issue, Sandeep Parikh I'd like to say from personal I, not only lost my profits but experience that it is just not First labour and second demand even today I can't take up the about jobs. constriction. Post-covid I can tell order because I do not have my you one of my problems. workers. The kind of jobs we are providing and the wages we We supply to Larsen & Toubro Not just that, I have lost future pay are not matching up to radar positioning systems. I orders which would have run expectations. started the work pre-covid. I into crores of rupees because bought the material, and the now they will be manufacturing Apart from the fear of Corona, I materials were semi-processed it in-house. think the reluctance to return when the lockdown happened. may also be that there is nothing After the lockdown customer What would be an ideal much to attract them. says “I want this job within one interest rate? month.” But all my workers who Rentals and all other costs are were assigned to that job, and shooting up for them and in have qualified with the recessionary conditions we are customer for that job, have just unable to pay the kind of happily marched off to their wages which would make it villages. attractive for them to remain. To complete their job, as DRDO My own costs of electricity and the end-customer was water have shot up. Electricity pressurizing them, they lifted all has increased from Rs. 8 to the material whether semi- Rs.13 approximately per unit in processed or whichever stage the last 6 years. and took it to their own plant in Hazira to complete the job. As for the preferred interest rate, I would say interest is not the biggest issue. If business is good even 15% is not bad. But if TISA AUG 2020 25

COVER STORY business is down to zero, even recruit 6 people and if after 3 laws in the world. ESIC and seven per cent may not help us days several of them leave, they Provident Fund is fine. out. have still to be registered under Provident Fund and payments But procedures and processes Four to five per cent interest made. What was a sensible 60 need to be simplified. And the would be good but the days for PF to kick in, is now insistence should be on Medical reduction will only help highly applicable from Day 1. Insurance as is the case abroad leveraged companies. Again, Medical Insurance where one is free to get treated Otherwise in general, interest is should be there but ESIC should in any hospital, and not on an not such a major component of not be compulsory. At the end of inefficient ESIS Hospital costs. the day whether PF or ESIC it everyone wants to avoid. should be optional for the Now SIDBI is giving loan up to employee to choose. One of my people who was Rs. 1 crore at 5% interest for earning Rs. 15000, a decade new MSMEs. The percentage of Haren Sanghavi ago and registered under EPFO, loans given to MSMEs is a very What is needed is to remove all small percentage of the loans labour laws like what the UP is now earning Rs.70,000, given to large corporates. government or to a lesser extent but has to continue Chhattisgarh Government did, membership. He should be Banks should be able to knock for period of a couple of years to allowed to quit if he wants off a couple of percent through deal with the current crisis to. Today to exit he has to better efficiency and absorb it in situation due to Covid. It can be leave the job. the larger spread they now brought back when things enjoy. stabilise and come back to A Y Akolawala normal. Today what is happening ICICI Even when they bring it back Apply uniform labour laws Bank is giving loan to Reliance after 2 years, it should across the country. It should at 4% and MSMEs are charged incorporate the most not be one thing in UP and 5% above that. competitive and rational labour another in Maharashtra. As far as workers are concerned, Top of your bucket list of 26 they are more interested in reforms….. what they get in hand. I feel Provident Fund should not be Sandeep Parikh compulsory but optional. We have waited for a long time Also, the ESIS Hospitals are of no to change the labour laws which use because in case of accident have restricted and stunted or illness, the facilities there are MSMEs. so poor, we are compelled to spend out of our pockets to help Make labour laws inapplicable our employees get medical care for 1000 days. in private hospitals. What can be retained are laws Jimmy Pauly relating to a) Minimum Wages I have a different view on this. b) Safety of the workers. ESIC / ESIS cannot simply be substituted with private medical In the current situation, if you insurance. TISA AUG 2020

COVER STORY ESIC / ESIS takes care of combined in many cases was exporting a lot of equipment to employees' medical treatment around 8%. China; I have received an order expenses to any limit. Suppose it from China and sent them a is cancer, medical expenses can What of the future & proforma invoice. But for the go as high as Rs. 15 or Rs 20 China…. last one month, there is no reply lakhs. from them. One reason could be Sandeep Parikh that they are running short of If he gets injured and is unable Lastly, I have three things to say. money. to attend work, he gets paid 2020 is washed off. 2021 is 50% of his wages. going to be slow. Only from Haren Sanghavi 2022 can we be hopeful. As for No private company will ever GDP growth, there are three In the plastics industry we are offer such a package, and if it factors. Public investment anticipating some 30% of units does so, the premium will be should come in strongly. Private becoming NPAs. exorbitant and unaffordable. investment should be incentivised and there should be As for China, they are in a I am also for a 30-day cooling an overall thrust on financial crisis. It could also be period before registration employment which will create because of confrontation on the becomes mandatory for PF and consumer demand. borders between India and ESIC, to avoid unnecessary A.Y. Akolawala China. They are refraining from hassle in case the new recruit I say 2020 we have to write-off. sending money till things settle does not continue for any If we survive till December down. reason. 2020, we can then think about 2021 & 2022. USA has stopped pick-up from A.Y. Akolawala Another bit of news for you. I am China. So has Australia, Canada, Europe has cut down by 30%, I have one more suggestion. 27 Italy, France and Germany have The GST should be reduced. stopped procurements from When 18% GST is added to China. product cost it definitely has an impact on demand. If the GST is reduced the market will again pick up. The large industries are not going for any new projects because of poor demand and the overall uncertainty. In a similar situation in the past the reduction in Excise Duty down to 8% really helped to pep up demand. Haresh Sanghavi To say that GST is as it is lower than the previous Excise Duty + VAT is not always true. In the plastic industry ED and VAT TISA AUG 2020

COVER STORY Italy has decided no more links high. Temperature guns which whatever happens abroad your with China. All garment were sold at Rs.400 a piece is business remains intact. But that industries with Chinese now sold at Rs. 1200 per piece. has actually gone for a toss and ownership are gradually being They are now trying to create a we were forced to look for shut down. They will be nest egg for the future. export markets to sustain sourcing from elsewhere. ourselves. Sandeep Parikh Bulk drugs which are coming are This domestic business is very strictly not coming from China. We are today tremendously important for us. If the times Because their pollution norms dependent on China. Take the were good, just two or three are not stringent, they are able case of steel. We are not months of Covid would not have to process them. Similarly, they producing certain brought us down. It is the long are buying the highest quantity specifications. It is not just a period of slow-down that of scrap in the world, re- question of cost. We are simply MSMEs underwent, that has left processing and selling world- not producing certain us in such bad shape, with a wide. specifications. It will take company like ours required a industry some amount of time to bank overdraft for the first time In bulk drugs, Europe will put produce and meet the shortfall. in 45 years. up huge plants and procure That won't be easy material from Iran, Israel etc Haren Sanghavi who were earlier supplying to Jimmy Pauly China and process it and sell it to In a way the problems started the world. The most important advantage with demonetisation and the that we have is a large domestic whittling down of the alternate It is going to change, but it is market and we never actually economy. The ability to sustain going to take time. In a year depended on export. Most of it any downturn in business has down the line, you will find was always domestic sales. I gone down sharply because everything getting streamlined. always understood that people who used to have hard potential. cash in their pockets no longer China will be hit for sure. That's have buying power in today's the reason why most products Of course, there were profits to economy. In many ways it was now produced cost twice as be made in exports but when cash that fuelled the economy you are insulated from it, and kept it lubricated in times of crisis. Sandeep Parikh By the way, there is a new site in Maharashtra which has opened called “Mahajobs”. You have to register https:// mahajobs.maharashtra. gov.in/ on that for any labour that you may require and people looking for jobs can also register likewise. Maybe other States should follow suit. TISA AUG 2020 28

TISA AUG 2020 29

COVER STORY A.Y. Akolawala that is apparently coming from unless physically the Bank RBI to IBA. Guarantee is received by the One last and very important IBA has circulated this to all bank. point for MSMEs., before we banks saying that this has to be wind up. for two years, and if it is a It is almost standard operating Government guarantee, it is for procedure that the Bank This is particularly for people like 30 years!! Guarantee is lost or misplaced us who manufacture machinery. and you have to get an official This is with regard to When I give a performance bank guarantee. I have guarantee to my customer now, letter testifying to that with already sent a letter to I have a really big headache all the bureaucratic and the Indian Banks getting it back. mind-numbing delays. Association (IBA) The rule for bank guarantee is through TSSIA. that it cannot be discharged Am sure all MSMEs must be going through this hell one When you ask for a Bank time or the other. Guarantee for one year you get it by default for [Editor'sNote: two years. Would appreciate your responses to the free- When we ask for a guarantee wheeling panel discussion at that is a contract between the [email protected]. buyer and the supplier. It is only for one year that we want the All opinions are of the guarantee, but the bank gives it participants themselves] for two years according to a rule by Indian Banks Association, EMPIRE INDUSTRIES LTD ADVERTISERS INDEX 29 Karandikar & Associates 2 SIDBI 12 RK Dutt Concerns 40 SpectralabInstruments(P)Ltd. 35 S S Natu Plastics and Metals 7 TJSBBANK 21 ShreeEnterprises 45 ToolIndia 35 TISA AUG 2020 30

MANAGEMENT MANAGEMENT KALEIDOSCOPE Managing Corona - Lessons from NZ - A Change Management Framework- Authors: Raj Aphale & Sunit Prakash Introduction most others. Population 5 spectacular. The success of New million, positive cases 1,176 Zealand can be summarized in While the world is struggling to and deaths 22 till date. Cases the following Chart. control the pandemic and between 22 May to 16 June, mostly without a clue how to go that is for 24 continuous days, Fig 1 -New Zealand about managing it, one tiny were nil. This clean run was Comparative data on Corona country from down under seems broken by international arrivals. control. This chart from John to have managed it better than By any comparison this is Burn-Murdoch for the Financial TISA AUG 2020 31

MANAGEMENT Times shows numbers of daily Tphis article tries to understand works for one, may not cases on a 7-day rolling average what New Zealand did, develop necessarily translate into (vertical axis) by the number of a change management something which can be applied days since 30 daily cases were framework, if any; and see if any to another. Green top swinging first recorded (horizontal axis). of these can potentially be pitches and turning bare The stars show where national applied to India. As everyone is wickets. But that is a different lockdowns kicked in. Source: aware, there are vast differences story! Financial Times. between the two – and so what It is also a straightforward lesson in Management, in a crisis or during normal times, all of us can learn from. This article is organised in 2 sections: The New Zealand Way; and the possible application to India. The New Zealand Way 1. Vision One of the first things New Zealand's Prime Minister Jacinda Ardern did, was to outline her vision. This was not the only thing she did, but it was certainly one of the first things she did. John F Kennedy's vision was to put a Man on the Moon. PM Jacinda Ardern's vision was to “squash the virus”.Not flatten the curve, no, that would be too easy, but to squash it. Then, every time she spoke, she made a reference back to it. It was easy for everyone to understand the vision, what it looked like, and for lack of a better phrase,what success looked like, and easy for everyone to understand how they contributed to it. This, we found remarkable. TISA AUG 2020 32

MANAGEMENT 2. Strategy when tough decisions are to be put in place quickly. made, and not when populist To achieve the vision, there announcements are to be made. The Ministry of Health was needs to be a path. Or a strategy. The Government went ahead logically the first to be In a typical Kiwi understated with cancelling the anniversary mobilised. And then the way, the strategy was to “go of Christchurch event. Ministry of Foreign Affairs and hard, go early”. It may not have been very Trade. And then Ministry of popular with many, but the Business, Innovation & Perhaps it would have been decision had to be taken, Employment. The Inland better to quantify the triggers of considering the Corona Revenue Department. The various risk levels, but it would situation. Ministry of Education. Not to have been mere guessing at the forget Police.And the list stage. Subsequent declaration The leadership showed the continued. of risk stages was made, based courage to make the decision on the framework with and to enforce it. This in an Over the weeks, as the corresponding action plans. election year! situation developed, 4. Organise initiatives, programs of work Like many other countries, a lot Vision without execution is were rolled out to support the of data was collected, to hallucination. government to support its classify the Corona incidents And even though Jacinda execution of strategy, to ensure by various parameters like Ardern at one memorable press that not only was the virus gender, age, location, ethnicity conference, repeatedly asked squashed, but that health, and other parameters. the nation to “stay spaced out” education, income, safety, This data would be obviously (source: https: // twitter.com supply of essential goods - did used to shape policies and take /Joe_Ray_Me/status/12597 not suffer. actions at micro level. 04844996100102); it certainly demanded teams to be The programs of work that NZ being a small country, were announced and executed, regional classification was not 33 is at a scale which in pre-Covid too significant at this stage. times would have taken a With literacy rate near 100%, decade, if not generations to and single language, achieve. A crisis brings action. communication of policies was not difficult. For checks and balances, a Select Committee was under the Once the strategy was clear, leadership of Simon Bridges, subsequent actions could be Leader of the Opposition with executed with less confusion. representation of 5 MPs from the ruling party and 5 from the 3. Lead Courageously opposition. Take charge of the situation and Imagine this in an election year! lead from the front - Jacinda Ardern was clearly leading from An emergency was declared, the front with organising the and the Parliament was necessary committees, directing suspended. In order to keep the necessary ministries and scrutiny on government making decisions on the go. performance, a Select Committee was constituted. The real test of leadership is TISA AUG 2020

MANAGEMENT The committee had authority to 6. Minimise Adverse Impact to talk to the citizens on TV every summon civil servants to Adverse impact on the day to communicate the status, understand and critically economy was sought to be actions, and strategy. analyse policy, decisions, minimised by keeping the frontline staff. money moving. The This helped citizens gain government announced a confidence and built trust in the 5. Execute significant economic package Government. Execution without fear or favour to help citizens survive This really was a national - was perhaps made easy by low during the pandemic. daily stand-up meeting, like population, high respect for law. Economies globally have scrum in agile. Complete with NZ is at Rank 7 in World Justice suffered and about 400 million statistics, status update, Project Rule of Law Index; by people worldwide have lost work planned and blockers. jobs. comparison India ranks 62, This constant communication below Nepal and Sri Lanka; and With lock-down, the gave the citizens the China ranks 75. Nepal and Sri opportunities to run business confidence that the Lanka; and China ranks 75. become extremely limited, and government was doing what even if some people did find it was supposed to and was It is particularly important to new jobs or became self- on top of the situation and execute and implement rules employed; it is possible that went a long way in without any consideration to their incomes fell significantly. reassuring people. any other factor. Most countries are already talking about negative GDP 8. Celebrate NZ did it very successfully and it growth. Such situations can has been an important factor in cause grave difficulties to many Success was celebrated step by containing the disease. NZ has people in meeting their daily life step, credit was shared. Jacinda high literacy (near 100%) and an needs. Ardern made it a point to call out exceedingly high respect for 7. Communicate hard working workers for the law. These two factors helped Jacinda Ardern made it a point essential work they were doing. immensely in this execution. Ofcourse, it included health 34 professionals and frontline staff. TISA AUG 2020 More importantly it included usually un-sung heroes, most of whom we generally take for granted, such as cleaners, supermarket workers, shelf stackers and others. While the nation remained in lockdown, these were the ones who kept the nation going and were deemed essential workers and allowed to go to work. Actually, it was essential that they went to work.

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MANAGEMENT 9. Anchor the Change FINANCE testing regime, and their contact tracing were in shambles. After a Sustaining the change and not 1: Low rate of incidence 1176 and period of zero Covid cases, new allow it to fall back to old ways. low rate of death22, for a cases arrived from overseas. This Sustenance is always the most population of 5 million. operation was handed to the difficult stage, and there is a armed forces to take charge of. tendency to lapse into the old 2. NZ could bring down the daily ways of doing things. reported cases to zero in about 30 Early in the period, when the days from the time 30 cases were international borders were re- Luckily for New Zealand, it first reported. opened, there was a single high- achieved its vision of “squashing profile case of arrivals from the the virus” with zero community 3. On the economic front, many UK who left quarantine without transmission. Had this not been vital stats are back almost to the testing and drove from Auckland the case, there would have been pre-Covid numbers, including to Wellington. the danger of a further consumer spending index, lengthening of the lock down, electricity generation, traffic Since then there have been and with it fatigue, and with-it density is catching up. The most several cases of Covid with carelessness. critical activity therefore is getting arrivals from several countries back to normalcy. including Pakistan and India. And While some international flights with that an MP from Dunedin are now allowed, the NZ Criticism, Retrospective has decided to go on a racist It may or may not have been a government insists that there is perfect model. It may or may not rant.Source: https: // no room for complacency. have been a perfect response. It www.stuff.co.nz/national/poli was certainly not perfect in tics/122029198/ national- How far the NZ will succeed execution. leader-todd-muller in continuing this winning reprimands-hamish-walker- streak, only time can tell, but Despite the Government having over-racist-press-statement. for now they are the most an 88% approval rating from the likely candidate to win the public, New Zealand recently lost There has been criticism from race. its Health Minister for not keeping business and the opposition that to the standards required by the the shutdown was too severe, Results Prime Minister and losing the too long, and the cost to business public's and his Prime Minister's is cripplingly high. Many pointing The outcome of the vision, confidence. to Australia with their (then) strategy and execution has relatively low rates of infection resulted in: International border controls, and a shut down that was compulsory quarantine, the TISA AUG 2020 36

MANAGEMENT moderate in comparison to New and population mix and we only Given the large size of India, it Zealand. start getting an idea of the would help to create local complexities in India. visions, by states or by risk In a country which prides itself zones as well.In addition, given in its privacy laws, in the last few Would New Zealand's model the longer time zone, visions days there has been a leak of work for India? May be yes, that are defined in a milestone private information of those in may be no. Fully cognisant of manner, at times actionable quarantine. criticism of NRIs sitting manner can help. outside India and proposing Indian Takeaways solutions for India; this section For instance: by Rajendra Aphale India is a complicated country in ·“Reduce rate of positives to x % more than a million ways. 1. Vision of those tested, in specific zones of Mumbai, by date ...”, or ·“Test The population of whole NZ is While addressing issues like minimum of y numbers per day about 25% of Mumbai or Delhi. pandemic, at first glance, the in specified zones in Delhi by India has much lower literacy, vision can be as obvious and date ….”, or ·“Create z number much less respect for law. The as stated as “defeating of beds facility in specified zone society is highly heterogeneous corona”. This may sound good in … area, with the specified and political unity, even in crisis keeping with the Indian minimum infrastructure by is a distant dream. emotional appeal, it is not date....” something easy and concrete to Whereas New Zealand has only understand. Obviously, a region will need a central Government, and then multiple such moving targets as city or district councils; India has A vision needs to be vision statements. a Government at the centre, at a measurable. state level and at a city A national vision, municipal level. Some of the In the absence of which, people understandable and relatable. states are ruled by parties in would wonder whether it has opposition to the Government in been achieved, or declare 2. Strategy the centre. victory too soon. NZ vision is “squash the virus” and that can Strategy needs a simple Throw in religion into politics fulfil the criteria of roadmap as to how the nation is measurability. going to get there. No complexity, no bureaucracy. Execution by the armed forces, if needed, in certain critical zones. India requires its own framework. Whether it should be 3, 4 or 5 steps, and what steps it should include, what should be the criteria for risk levels; needs to be defined by health experts, experts from law enforcement, and business experts. TISA AUG 2020 37

MANAGEMENT Responsibilities and authorities Government has a direction and based on continuous research, of law enforcement and other is making the right decisions and awareness campaigns. people need to be defined under the circumstances. carefully. There will need to be While the confidence in the organisation around law and In absence of this framework, central Government went up order, providing support to we have possibility of lack of from 83% to 93% from March to citizens, and guiding them. The control in certain areas and April, the confidence in various business wing needs to help run excessive controls in some. states and various local bodies the essential services smoothly, has been varying widely. keep the supply chain busy, If strategy is confusing, while simultaneously working execution will be arbitrary, and 4. Organise on economic package, creating the country will not get the roadmap for unlocking ASAP. desired results. The organisation may have to be at various levels, in various Their reporting in terms of 3. Lead areas. Given the three-tier matrix will have to be to local governance structure, it may body, state and the centre, Leaders must lead from the front have to be a matrix structure depending on the role. Certain with the highest degree of comprising central, state and wings may end up reporting all honesty, transparency and municipal matrixed by verticals empathy. three. such as health, law & order, The tasks may be business Advisory difficult in India as committees may the leadership The vertical may be specific have to be cannot be too action areas, like health formed, based on centralised, owing management – certain wings expertise the size of the working on creating and required. There country. improving facilities of may have to be admissions, daily testing, separate The Prime Minister, deployment of healthcare staff; handling of rural each Chief Minister certain wings working on issues and urban areas, and each Municipal like research,developing as the country Commissioner vaccines, providing advice seems to have need to stand up different and take charge, 38 challenges in lead from the front & be seen these two area. leading from the front. If some of them do not seem to At a central and state level, we be delivering it, and the state need monitoring agencies that and central leadership can will perform unbiased analysis determine this based on the of data, identify success and progress on achievement of the failure stories and provide vision, tough decisions may direction to all. have to be made. 5. Execute Leadership needs to inspire confidence among the people, Execution is the key to success. that we are in safe hands, the TISA AUG 2020

MANAGEMENT A great strategy may be created, problems of challenges in losses. Failure of this will not but if implementation is poor, it economy, higher insolvency, only see many insolvency cases, will not achieve any significant social issues like possible higher but also hurt the banking and results and the vision will crime rates, and suicides going such businesses in the long remain a distant dream. forward. term. Execution will have to be Businesses will also lose in a Business losses will have long monitored, both at central and major way with loss of income, term impact on employment state level, providing feedback employee related issues due to and therefore economy. What for corrective action. Most poorer health and lack of social will be the policy on annual important part of execution in contact with colleagues. taxes (time based, like property such matters is that the law tax) is unknown at the moment. must apply to all. India's track 6. Minimise Adverse Impact record on this count is not According to an estimate particularly good. Most businesses and many (Source: https:// www. individuals have lost their indiatoday.in/education-today / India ranks 66th in the Rule of income for no fault of theirs. latest-studies /story / india-to-lose- There are external situations. 130-million-jobs-due-to-covid-19- Law Index as stated above and pandemic-report-1689590-2020-06- Surprisingly, those businesses given the that make income on time basis, 16), India is set to however, are sitting tight. lose 130 million heterogeneity in India, jobs due to Corona Businesses like banks, where pandemic. About the track record in the interest is charged on time 40% of them are basis, whether borrower makes expected to be blue individual states may money or not, insurance collar jobs. premiums, electricity demand This will have long vary widely. charges, people who provide term impact on annual services, like Annual economy – lower While this cannot be Maintenance Contract, seem to income generates changed as a culture in be partners in profit only, and lower demand. the short term, the nor partners in true sense. Business output Centre must take goes down, and charge wherever The government needs to due to operations and supply execution is found to seriously consider sharing of chain constraints the costs have be lacking. A good been going up. alignment between 39 Centre and States, and between This can lead to precarious States and Local bodies must be situation. The new business seen. start-ups, survival of businesses will be at stake, and can have This will require concrete steps. disastrous consequences. Government does not have to do it alone. They can invite This can also lead to social private parties like businesses issues. Due to job losses, we and individuals to pitch in, not could have higher crime rates, just in terms of money, but also and higher suicide rates. in terms of action. Socialisation has disappeared due to lock down and that has The cost of not doing this is going to be paid by ordinary citizens, in terms of loss of income, lower standard of living and India could have major TISA AUG 2020

MANAGEMENT possible consequence Media also need to play their yesterday. This may be only of reduced social role. They seem to be very partially true; and must be buffer. enthusiastic in trying to give us a seen in the proper context. sensational view of the India does not have situation. If we conducted 100 tests good track record in yesterday and 150 today, social welfare. We Regularly we hear media telling we are likely to receive depend on our family us about highest ever number of more positive cases. This and community back cases were found to be positive ratio or such important up. When this is parameters are rarely disturbed, the talked about, raising psychological questions. consequences, when the lock downs extend for too long a At the time of crisis, it is time can be bad. important for leaders to be Governments – both central and visible and to be on top of the state, must come up with a situation. This will also have to reasonable solution in be at three levels of governance. consultation with all the stakeholders. 8. Celebrate This needs to be done on urgent basis as the lock down of over three months is already causing frustrations. 7. Communicate Continuous and credible communication is necessary from all the concerned parties. This may have to be done through data dissemination and authorities talking to people periodically. The objective is to keep people informed and to let them know what the government is doing and what people should be doing. There already are accusations (Source : https://rsf.org/en/ news/how-indias- government - tries-suppress - all-covid-19-reporting) if the government is sharing all data and if the data is accurate. TISA AUG 2020 40

MANAGEMENT Celebrating milestone victories Healthcare professionals may enforcement of rules and norms. are important in long battles, in then come up with realistic Parallelly there will have to be order to raise the morale of the guidelines to prevent second campaigns like “Clean India troops and further building the wave or its avatars. Campaigns”. trust between government and This surely was not the first people. virus, and this will not be the Finally, this will have to be last. taught at the sensitive age in They need to be realistic, not We must draw lessons, develop schools, with practice. celebration to claim fake SOPs in respect of dos and victory, and little more than don'ts; clear steps of when to Success of any change symbolic in nature. stop or start travel, - management will depend on the sustenance. If habits have There was a program to shower international, domestic or local; changed, the change has been flowers on top norms on social distances may of hospitals to have to be developed. successful. If the next felicitate calamity is handled in healthcare These sustaining steps also a more mature workers. need to be drilled down in the manner, the earlier While this is a minds of the people. It is good to change management great gesture, see people queuing up at shops exercise was the ground (except, perhaps for the “spirit” successful. reality of lack products shops !!) but this of even basic should not remain only for Conclusion: protective corona. equipment in It is never fair, not some cases Traffic habits are still bad as ever, easy to compare two leads to cleanliness habits have not countries. Particularly negativity changed much. Sustaining will when they are so far instead. need many of these habits to apart on the change. spectrum of so many, many Celebration is best done at local measures. levels, and where real success This will have to be done at As a nation, New Zealand has been achieved. ground level in terms of applied the model which suspiciously looked like Kotter's 9. Anchor the Change 41 Change Model, and we fitted it into what we call a Sunit Raj India may be away from this Framework. step in many parts. But some parts of the country may be Kotter's ChangeModel: close to containing the virus. https://online.visual- paradigm.com/fr/diagrams/ And in any case the preparation templates/kotters-8-step- for sustaining the change needs change-model/8- to be done now. stepchange-model-template/ It is quite easy to fall back on old 1. Vision habits and back to “business as 2. Strategy usual”. 3. Lead Courageously 4. Organise TISA AUG 2020

MANAGEMENT 5. Execute 7.Public – Private partnership to Sunit Prakash (once a Mumbaikar, 6. Minimise Adverse Impact execute always a Mumbaikar) is a New 7. Communicate Zealand based IT professional. 8. Celebrate 8.An economic package to reduce 9. Anchor the Change negative social impact He often writes on Lean, and Customer Satisfaction, but more Are there some takeaways for 9.A responsible and mature often than not his reflections and India? Perhaps. We believe so. A media observations have to do with crisis provides impetus for India and its prolific uptake of change and this is what they look 10.Visible leadership technology. When not working, like this: he is busy polishing his Royal 11.Celebrations at local levels Enfield Bullet ! 1.A coherent national strategy 12.Sustained change and better 2.The Prime Minister, Chief all-round habits at all levels Ministers of each state, and Municipal Commissioner of each About the Authors city leading from the front This article is the outcome of a 3.An organisation comprising collaboration between two central, state and municipal B-School Classmates, Sunit matrixed by vertical such as Prakash based in Wellington, NZ health, law & order, business and and Raj Aphale from Mumbai. others Their common career focus is on organisational change and Lean. 4. Advisory committees based on expertise and separate handling The divergence is that NZ's of rural and urban areas approach struck Sunit as a classic textbook case for corporate 5.Implementation with vision execution while Rajendra Aphale and organisation in place was left wrestling with the humungous complexities in 6.Alignment between centre and India. states, and between states and local bodies must be seen TISA AUG 2020 42

The Last Word Crises Year 2020 – Corona Virus It is doubtful, if over the last six decades, post-partition India has witnessed a problem of such magnitude. We have not lacked for crises. There was the 1962 war with China, followed by the 1965 war with Pakistan, the liberation of Bangladesh in 1971, the Emergency in 1975 and Kargil in 1999. · Yet it is difficult to remember any year in which so Seshan Ranganathan much has happened and is continuing to happen. Events that are not only shaking us but which have the capacity to change the world and the way we live. · We are right now living in the middle of the largest pandemic the world has known. In the speed of its spread, its lethality for people with co-morbidities and its ability to overwhelm the medical facilities of the most advanced nations the world has seen nothing like it. · The drug Remdesivir manufactured by Hetero has just been approved for restricted emergency use in India. · In the meantime the Indian Council of Medical Research has directed clinical trial sites of Covaxin – India's first coronavirus vaccine candidate – to fast-track approvals. The Ministry of Science &Technology on 5th July, clarified that none of the coronavirus vaccine candidates, including India's Covaxin and ZyCov-D, are likely to be ready for public use before 2021. The remaking of an old enemy China Even as we struggle with the Corona Virus, China has become aggressive with incursions at Galvan Valley and Pangong Tso. The Indian and Chinese Armies stand in mirror deployment. Even though re-assuring sounds are being made by China and from the Indian side, one thing is for sure, the Chinese have made 1380 million enemies over the ghastly killing of 20 of our soldiers and damaged relations with India carefully re-built since the 1962 war. It is now clear to most Indians that to fight the Chinese Dragon one needs more than mere words. One needs economic muscle. What we need to do · We need to unite all Indians to a common purpose · The common purpose is massive economic development in the coming decade. · To unleash the entrepreneurial and innovative capacities of our people we need to double or triple our investment in education, health and infrastructure. · We need to create a level playing field for Indian Entrepreneurs by bringing down interest rates, logistic and transaction costs. · Considering that we start from negative GDP growth this year, a dramatic boost such as elimination of Income Tax as suggested by Subramaniam Swamy may be considered. What should be crystal clear is that a country of India's massive size cannot exist at the sufferance of aggressive powers like China. The Indian elephant needs to add strength to take on the Dragon. TISA AUG 2020 43

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