Gujarat govt plans 'biz for sale' website for 'sick' MSME units

State has highest number of sick MSMEs after UP & Maharashtra, 42,500 being reported in 2016 alone

While the eight edition of the Vibrant Gujarat Global Summit is likely to witness the signing of over 16,000 memorandums of understanding (MoUs) by the micro-small and medium enterprises (MSME), it is ironical, that Gujarat has the highest number of sick MSMEs after Uttar Pradesh and Maharashtra. 

The state government, is, however, now planning practical steps to help these units, apart from simple hand-holding initiatives, like developing a website where these sick MSME units can list themselves up for sale.

In 2016 alone, around 42,500 MSME units reported sick in the state. This comes next to Uttar Pradesh (95,989 units) and Maharashtra (52,576 units) according to the Reserve Bank of India (RBI) figures shared in the Lok Sabha during the winter session of the Parliament.

The state government is planning to develop a website along with a private partner, where these sick units can put them up for sale. "We are working on the plan to set up a website, where these MSME units can list themselves, having got done their asset evaluation etc from professional agencies. Venture Capitalists and other interested entrepreneurs can then access the data, and if anyone is interested a deal could work out. It is like a 'business for sale' kind of a website," informed D Thara, vice chairman and managing director of the Gujarat Industrial Development Corporation (GIDC).

She added that the MSMEs can pay a fee to the agency that would be responsible for maintenance of the website. The project is likely to take off in the next couple of months.

The problem with this, however, is that not many sick MSMEs would qualify for revival, lest raise interest amongst investors. Of the 42,500 sick MSMEs as on March 2016, only over 6,000 units were identified as potentially viable enterprises.

As such, the state government is already trying to handhold the units and counsel them on how to build a sound financial health, and also focus on quality, so that they can tap export markets when domestic demand is muted.

The Vibrant Summit, however, has been drawing MSMEs in huge numbers, who are at least expressing intentions to invest in Gujarat. Of the total 21,300 MoUs signed in Vibrant Summit of 2015, around 17,000 were by MSMEs.

A cause of concern for the state government would be that despite all efforts, the number of units reporting sick has been growing. As per RBI figures, from 20,452 units in 2013, this number rose to 48,000 units in 2014, and peaked at 49,003 units in 2015.

The state government's New Industrial Policy announced in 2015 has provisions for incentives to MSMEs, including financial assistance on the term loans provided by banks etc.