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    Demonetization Impact On MSME

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    Rose martin

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    Demonetization Impact On MSME

    Uploaded by

    Rose martin
    42 views10 pages

    Original Title

    19. Demonetization Impact on MSME

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    © © All Rights Reserved

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    Copyright:

    © All Rights Reserved
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    Download as pptx, pdf, or txt
    42 views10 pages

    Demonetization Impact On MSME

    Uploaded by

    Rose martin

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    Flexible in Approach, Firm on Results

    Impact of Demonitization on MSMEs

    RedSeer Perspective

    © 2017 RedSeer Consulting Confidential and Proprietary Information www.redseerconsulting.com query@redseerconsulting.com | 1


    Demonetization had had a severe negative impact on the sector…

    Demonetization Impact: Industry & Business


    In %Respondents, N=153

    No. of units that….


    Do every 8 out of 10
    Had a negative impact from demonetization Benefited from cashless economy 1
    transactions in cash
    Yes No

    3% 55%
    93% 86% 71%

    Industry Their OWN Business


    Others include respondents who were not sure of the
    impact of cashless economy to their business

    “Our primary customer is housewife who saves money


    “Cashless economy is a nice initiative from the
    for a year and then come to these manufacturers to
    government, however the initiative was taken far too
    make a jewellery but because of demonetisation money
    early and implementation involved a lot of issues.”
    had to be deposited in bank so they are not able to
    purchase the jewellery.”
    - Respondent, Jaipur
    - Respondent, Jaipur

     MSMEs are highly cash dependant


    Highlights  Only 3% of the respondents claimed to have benefitted from cashless economy

    Source: RedSeer Analysis | 2


    …resulting in loss of employment, increased credit cycle and promoter had to lose a lot of
    business unless they took significant steps…
    Demonetization Impact: Industry & Business
    In %Respondents, N=153 25%+ 15-25%  1-15% 1-20%  20%+ 

    Impact
    11%
    Started using alternative modes of payment
    4% • Started making payments through
    ~80% cards/cheques and mobile wallets- 70%
    • Started receiving payments through cheques
    0% and mobile wallets- 45%

    Promoters increased their credit cycle


    • Gave more credit to buyers- 55%
    ~60% • Delayed payments to vendors/ employees- 30%

    Laid off employees


    ~30%

    89%
    96%

    ~16% Could not do much and suffer loss in business


    Nov-Dec’16 Jan-Feb’17

     ~96% of businesses suffered loss in sales post demonetisation


    Highlights  The loss in sales has recovered marginally in January-February from the bottom set in November-December
     ~60% Promoters had to increase the credit cycle & ~80% started using alternatives to cash

    Source: RedSeer Analysis | 3


    Annexure
    Annexure – Breakup of responses by manufacturers

    Demonetisation Impact On Industry


    N = 153 Bad impact Slight impact Did not impact

    How was the impact of demonetization on your


    industry?
    2%
    12%

    Industry was negatively impacted by


    Demonetisation with sales going down
    for ~all industries
    86%

    Source: RedSeer Analysis | 4


    Annexure
    Annexure – Breakup of responses by manufacturers

    Demonetisation Impact On Respondents’ Business


    N = 153 Bad impact Slight impact Did not impact

    What was the impact of demonetization


    on your OWN business?

    2%

    27%

    Business were also negatively


    impacted by Demonetisation like the
    Industry

    71%

    Source: RedSeer Analysis | 5


    Annexure
    Annexure – Breakup of responses by manufacturers

    40-60% 25-40% 15-25%  10-15%


    Sales impact post demonetization
    N = 153 1-10%  1-10%  10-20%  20-40%

    As per your estimate, how much was the impact on


    your business in terms of sales (in %)

    11%
    4%

    The negative impact on sales from


    0%
    demonetization has reduced and sales have
    started to recover from the lows of
    November-December

    89%

    96%

    Source: RedSeer Analysis | 6


    Annexure
    Annexure – Breakup of responses by manufacturers

    Steps taken by promoters to tackle demonetization


    N = 153
    What were the steps that you took to
    tackle demonetization?
    Delayed payments to vendors/
    47%
    employees
    Started making more payment
    41%
    through Debit/ Credit Cards
    Started making more payment
    37%
    ~ 50% had to delay payments to their through Mobile Wallets
    vendors, employees Started making more payment
    33%
    through Cheques

    Majority have started using cashless Laid off employees 27%


    alternatives

    Gave more credit to buyers 27%

    Receiving payments from customers


    24%
    through wallets
    Could not do much - just lost
    16%
    business
    Receiving payments from customers
    16%
    in cheque

    Installed PoS etc 8%

    Note: Sum could be greater than 100% as respondents could choose more than one option

    Source: RedSeer Analysis | 7


    Annexure
    Annexure – Breakup of responses by manufacturers

    Benefits From Digital Transactions


    N = 153 Disagree Don't know/Can't say Agree

    Have you benefited from digital transactions


    or see any benefit from same?
    2%

    42%

    ~98% people don’t agree that digital


    transactions benefitted their business

    56%

    Source: RedSeer Analysis | 8


    Annexure
    Annexure – Breakup of responses by manufacturers

    Cash dependence of businesses


    N = 153 100% 80% to 100% 50% to 80% Less than 50%

    How much of your business is usually done in cash?

    1%

    6%

    Business dependence on cash is ~90%


    46%

    47%

    Source: RedSeer Analysis | 9


    Annexure
    Annexure – Breakup of responses by manufacturers

    Demonetization: Impact
    N = 153

    How long do you think the effects of


    demonetization will last?

    More than 50% of


    Respondents feel than
    industry and business will
    take at least 6 months to a
    year to totally recover from 55%
    the impact of
    demonetization
    25%
    20%
    ~25% of the respondents
    said the effect will last more Less tha 6 months 6 months to 1 year More than 1 year
    than a year

    Source: RedSeer Analysis | 10

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