Turmoil Turbulence

On July 9, suspension of mobile and internet services proved fatal for businesses who couldn’t reach their clients and vice-versa. A number of deals got cancelled forcing small start-ups in to relocate or windup.  Saima Bhat reports

Every year online shopping portals, or simply e-commerce sites, deliver orders worth Rs 2000 crores in Kashmir valley.

And Bilal Ahamd Bhat, 33, who heads ECom services, a private enterprise responsible for safe delivery of goods, is a key player in the sector. Before July 8, the day Hizb commander Burhan Wani was killed in an encounter in south Kashmir; Bhat would command a team of 300 employees. “We used to deliver orders at 14 locations across Kashmir,” said Bhat.

A day later state government suspended mobile telephone services including internet on all networks except BSNL.

It created panic among those businesses who rely on internet for communicating with their clients in India or abroad.

In 2014, Dr Fayaz Ganaie started TrueVet, a venture to export animal feed additives to clients in Eupore, Africa and Asia.

As Burhan’s death triggered a cycle of killings and curfew, Dr Ganaie had export orders worth US dollar 7 lakh from six countries in his kitty. “I have already lost 60 percent of the business.” Dr Ganaie is skeptical about the rest 40 percent as well.

In July, recalls Dr Ganaie, a consignment sent by him had reached its destination, but because of non availability of documents, shipment was not cleared. “We were not even aware about it,” said Dr Ganaie. “I had another order worth US dollar 1 lakh from Sudan. That too got cancelled as I couldn’t communicate with them.”

Dr fayaz Ganaie

Dr fayaz Ganaie

Besides, says Dr Ganaie, the production of his company was affected, as he couldn’t get raw material, which he used to manage through his cash credit (CC) account or export credit.

“I have my raw material stuck in Gujrat, how can I pay the bank without selling anything,” said Dr Ganaie. Dr Ganaie says, he had received at least three notices from a private bank asking him to clear his credit card bills. “They are calling me every single day. How am I supposed to pay them?”

Dr Ganaie says, he had received at least three notices from a private bank asking him to clear his credit card bills. “They are calling me every single day. How am I supposed to pay them?”

Dr Ganaie missed a major contract from Italy based company as he couldn’t send samples on time. “We also had contracts ready with seven European countries. It is all gone now.”

As a fallout six out of ten employees working with Dr Ganaie left in last five months. “They shifted their base to other countries.”

Before the turmoil, TrueVet had convinced an investor from Uttarakhand to purchase 8 percent (equity) for Rs 50 lakh on a long term basis. The investor has changed the contract with a reduced term period which decreased the equity value as well.

“It was always difficult to get investors for Kashmir, but now the situation is really alarming,” feels Dr Ganaie.

“Foreign customers don’t care about our local issues. They need things to be done within the given time. We have lost their trust.”

Dr Ganaie feels, it will take his company at least ten years to get back to pre-July 2016 position. In order to avoid future loses TrueVet has shifted its corporate office to Roorkee (Uttarakhand).

In 2012, two friends: Umer Jan Mattoo, 29, and Amir Mustafa Bhat, approached Entrepreneur Development Institute (EDI), to start desire – a branded readymade garment manufacturing unit. The total cost of the project was Rs 18 lakhs. “We have summer garments worth Rs 12 lakh lying unsold,” said Mattoo.

It took Mattoo and Bhat a year’s hard-work to establish market in rural areas, schools, and among local women. “We were doing good till floods (2014) happened,” said Mattoo. “But we were back on track within a few months.”

Umer Matto

Umer Matto

However, feels Mattoo, summer of 2016 was entirely different and devastating too, in terms of business. “We have unsold summer stock but no money to buy raw material for producing winter clothing.”

Mattoo had 14 employees before July 8, but as situation turned bad in Kashmir, six non-Kashmiri workers left in a single day. “We have no money to pay salaries to even remaining employees,” said Mattoo. “We never missed a loan installment since 2012. Now we are not able to pay our electricity bill or rent,” says Matoo. “It is embarrassing when banks deduct installments from our loan guarantors.”

Matoo is hopeful that RBI will approve restructuring of stressed loans; it will help many entrepreneurs get back on their feet.

At present, more than two lakh bank accounts are stressed, or in other words, about to be declared Non-Performing Assets (NPA), says Ajaz Ahmad Kachroo, chairman, Jammu Kashmir Entrepreneur Development Association (JKEDA).An account is declared NPA when a borrower fails to pay interest or principal amount for 90 days.A bank executive, who wishes not to be named, said, in last five months around Rs 5000 crore has turned into ‘stressed loans’.

An account is declared NPA when a borrower fails to pay interest or principal amount for 90 days.A bank executive, who wishes not to be named, said, in last five months around Rs 5000 crore has turned into ‘stressed loans’.

A bank executive, who wishes not to be named, said, in last five months around Rs 5000 crore has turned into ‘stressed loans’.

Aijaz Ahmad Kachroo

Kachroo, a struggling entrepreneur, who runs ventures like laying of optic fiber, sale of surgical items and loan recovery for a private bank in Jammu. “I lost around Rs 1 crore in all these ventures,” claims Kachroo. “I don’t think about my losses, else I might commit suicide.”

Post July 2016, out of 25 employees, Kachroo’s company shrunk to just half its strength. “I am currently running my business from Jammu and Ladakh at just 15 percent capacity,” said Kachroo.

“We are not willful defaulters. We are just asking for time so that we can get back on our feet again.” In 2013, Haris Ahmad Duloo, 24, and his friend started City Signs Technology – a

 

Harris Dullo

Harris Dullo

In 2013, Haris Ahmad Duloo, 24, and his friend started City Signs Technology – a Srinagar based ad designing and marketing firm. “We have mostly corporate clients based in mainland India. Given the situation here they rolled back their ad budgets for Kashmir, a direct loss to our business,” said Duloo.

Till July 8, Duloo used to pay his installments in advance, an achievement of sorts he used to boost about. “Not even the survival is impossible,” said Duloo.

Duloo started his venture with the help of EDI, after an initial capital of Rs 17 lakh was approved for his project. “We were doing good business. But not we have to start from the scratch. We have lost both our clients and contacts in last five months.”

Duloo, who has more than twenty employees, had ordered new machines when he saw business growing at a smooth pace. “We spent all our savings on expansion. But then everything came to a standstill,” said Duloo.

 

 

 

 

 

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