The factory runs but lacks capital, demand and workers

Posted on 13th Jun 2020 by rohit kumar

After the lockdown opened, factories in Delhi's industrial areas have started functioning, but due to a shortage of capital and lack of demand for work, entrepreneurs do not intend to produce at full capacity. The shortage of workers has lightened the wheel of production. That is why even after 10 days of the lockdown opening, factories are producing with 30 to 50 percent capacity.

 

Delhi has two and a half lakh manufacturing units. Lack of working capital is the biggest challenge facing most of them. The industry does not have capital due to payments being stuck and no demand. On which the electricity bill during the detention, workers' salary, the cost of sanitizing the factory, loan installments are killing the businessmen. Rajan Sharma, president of the Delhi Factory Owners Federation, said the business is weak after the lockdown opens, but expenses have increased. According to the number of workers, now every month 15 to 30 thousand rupees will have to be spent in sanitizing the factory, giving workers masks and gloves, installing temperature measuring machines, etc. Workers' workers have also decreased due to the following social distance, which will affect the cost. The workers will have to pay the arrears of lockdown and if they are not paid, the workers will not get it.

 

 

Many times entrepreneurs do not follow the minimum wage rule, but now this rule is also causing problems for them. An entrepreneur from the capital said that even after 10 to 12 hours of work, the work was done by paying minimum wages. But due to a shortage of workers, now minimum wages have to be paid for 8 hours of work as per rules. The minimum wage in Delhi ranges from Rs 14,800 to Rs 19,500 per month. The problem is that if the minimum wage is not given, the workers will not get it.

 

 

The reality is that it has now been a year for entrepreneurs to return to their homes during the lockdown. Prakash Chand Jain, president of Bawana Chamber of Industries, said that out of 3-4 lakh laborers working in Bawana's 16,000 factories, only 1-1.5 lakh workers are left at this time. Demand is also weak, so factories are producing only 40 percent. Only 15 out of 50 laborers are left in the factory of Sanjay Gaur, the chief patron of the Patpadganj Entrepreneur Association and the paper bag maker. They say that there are orders, but due to a shortage of laborers, they are having difficulty in fulfilling them.

 

 

Electricity bills and rents have also upset entrepreneurs. Jain said that even if the factory is closed during the lockdown, thousands of rupees of fixed charge will have to be paid for the power connection capacity. He told that a connection with a 100 kW load carries a fixed charge of more than Rs 30,000. The same is the case with rental factories, which have suffered the most.

 

20-25 percent of the factories in Delhi's industrial areas are on rent. Rent is running from Rs 40,000 to Rs 1 lakh depending on the area and factory area. Jain said that the rent of a 250-meter factory in Bawana is Rs 1 lakh. The factory remained closed for two months and the business was no longer there. But with the restart of the factory, the first time the burden of outstanding rent has come on the head of the entrepreneur. Due to all these reasons, there is such a shortage of capital that entrepreneurs are not able to withdraw even the monthly installment of debt. Mukesh Mohan Gupta, president of the Chamber of Micro, Small and Medium Enterprises, said the lockdown has resulted in capital shortage due to fears of payments being stuck, new orders getting low and their payments getting stuck.

 

 

According to entrepreneurs, Rs 2-3 lakh crore of MSMEs are stuck in arrears across the country. 10-12 thousand crore rupees are stuck by the entrepreneurs of the capital. An entrepreneur who made iron sheets used in fan motor in Bawana industrial area said that he had sold goods worth Rs 8-10 crore before the lockdown. Had the lockdown not taken place, it would have got Rs 5-7 crore, which is now stuck. Sharma of the Delhi Factory Owners' Federation said that entrepreneurs are afraid to produce at full capacity due to payment failure.

 

 

Pradeep Multani, vice president of the Ph.D. Chamber of Commerce and owner of Multani Pharmacy, said that only essential commodities factories are operating at 80-90 percent capacity. The rest of the factories are operating at 30-40 percent capacity. Factories are also being run so that the remaining workers remain and the business cycle continues otherwise the demand in the market is very less.