CASE STUDY

CASE STUDY -I

Transitioning From Industry 2.0 To Industry 4.0

India has steadily improved its ranks in terms of industrial capability and other variables. For example, India’s standing amongst the world’s top ten production countries climbed by three places to sixth place in 2015.

By 2025, India’s industrial sector might be worth a trillion dollars. In India’s industrial sector, trading conditions have remained positive. While infrastructure and productivity are still critical, Despite these worries, India’s number of qualified workers is a significant asset. Nearly 60% of India’s youth are between the ages of 18 and 35, ensuring a demographic dividend for the country, which, if efficiently exploited, can propel India’s production to greater levels.

According to a November 2016 World Economic Forum report, India has risen 16 places in the World Economic Forum’s global competitiveness index as a consequence of shareholders’ favorable perceptions of the present govt. India is ranked 39th out of 138 nations. Israel is ranked 24th. This is thorough research with several pillars, including architecture, administration, and education, among others.

Government Initiative

The transformative path of manufacturing through Industry 4.0 has already begun in India, thanks to the country’s strength in information technology and the big workforce of IT specialists. The programs to develop 100 smart cities across India under the Government of India’s ‘Smart Cities Mission are being hailed as forerunners of the Industry 4.0 environment. The world is on the verge of a fourth industrial revolution, thanks to tremendous advancements in information technology and hardware. The notion of ‘Industry 4.0’ will revolutionize the way India manufactures, designs, and refurbishes goods. Industry 4.0 aspires to entirely digitize the manufacturing sector by harnessing the potential of big data, high computing capacity, artificial intelligence, and analytics.

The Government of India’s Department of Heavy Industry is launching a slew of initiatives aimed at fostering collaboration between industry clusters, academics, and industry, as well as supporting essential technology interventions by industry to stay ahead of the competition. The Government of India has an ambitious ambition to produce 181 products locally, according to research by the India Brand Equity Foundation (IBEF) [14]. The decision might aid infrastructure industries that require substantial capital expenditures, such as power, oil and gas, and automobile production, as well as revitalize the Rs. 1,85,000 crore (US$ 27.42 billion) Indian capital goods business. The government is focusing on establishing industrial corridors and smart cities in order to secure the country’s overall growth. The corridors would also aid in the integration, monitoring, and development of a favorable environment.

Limitations and prospects for advancing to the next manufacturing level:

(i) The most significant difficulty for Indian industry in moving up a production supply chain will be to bridge the essential technology gap. Contrary to its previous industrial strategy, India did not promote enterprises to expand in size but instead penalized them. As a corollary, the enterprise was compelled to stay small, leading to a scarcity of crucial innovations derived from accuracy, automation, and scalability. Much of these regulations are being scrutinized and altered in order to encourage industry while also improving the ease of doing business.

(ii) In India, the ecosystem for industry-academic collaboration is still in its infancy. While there are many outstanding, reputable universities that excel in academics and fundamental research, applied research and academia-industry collaboration are still in their infancy. The Indian government is launching a series of initiatives that will assist, fund, and encourage industry and research institutions to collaborate on specific projects or establish focused Centers of Excellence.

(iii) The primary focus of India’s educational system is on theory. Exceptionally gifted young individuals who graduate from Indian technical and non-technical universities take at least 6 months to a year of training before they may find work. While the content of courses is changing to include internships and direct training with industry during school, much more needs to be done to ensure that the demographic dividend reaps the benefits it can if implemented properly.

The Journey Ahead:

Because it will occur at roughly the same time all around the world, the next wave of the Industrial Revolution will be radically different from previous revolutions. Different geographies and economies will want to leapfrog to Industry 4.0, but at their own pace and skill, as a result of growing globalization, fewer borders, and increased interdependencies. This makes the transformation both exhilarating and complex at the same time. The degree of production capabilities, industry leadership, and the requirements of local markets will all be variations, while the consistent will be growing human-machine interaction, resulting in efficient and computerized production processes as well as data security.

Is The Russia-Ukraine Conflict Presenting A Chance For Investors In The Midst Of The Crisis?

The surprise Russian invasion of Ukraine shook financial markets around the world, including India, where domestic benchmarks fell 5% in one day and concluded the week with a nearly 3.5 percent drop.

The drop would have been even more severe if the Nifty and the Sensex had not rebounded on the penultimate trade day of the week, gaining 2.5 percent and 2.4 percent, respectively. The India VIX rose to its highest level since June 2020 as fears grew.

Brent crude crossed $100 a barrel for the first time since 2014 this week, owing to fears about constrained supply and surging demand, as well as new US penalties against Russia.

As a result of the huge correction in stock markets, many analysts and professionals believe that this could be a blessing in disguise and that investors can use it to construct a strong portfolio by taking holdings in fundamentally excellent stocks. Some of them also advocated for a ‘wait and see attitude until more clarification on the Russia-Ukraine situation emerges.

What are the options for investors?

In addition to the Russia-Ukraine situation, the Indian stock market has taken a beating in recent weeks due to a probable tightening of policy measures.

Since November 2021, when the government gave customers a break by lowering the duty on diesel by Rs 10 and petrol by Rs 5, OMCs have not raised fuel rates. However, many believe that a hike in fuel prices is imminent. In the current environment, global central banks, including the Reserve Bank of India, would be forced to reconsider their policy stance.

What's heading on in the world's financial markets?

Brent oil surpassed the $100 mark as the Ukraine conflict worsened, and Asia-Pacific stocks slumped on fears of supply disruptions and penalties. Even as Russian President Vladimir Putin announced in a public speech that he has authorized a military operation in Ukraine and NBC News reported explosions in Kyiv, gold, a safe-haven asset in times of uncertainty, climbed 1% to $1,932. Japan’s, Hong Kong’s, South Korea’s, and Australia’s stock markets all fell by up to 3%. On the 23rd of February 2022, the Dow Jones slid 1.38 percent and the Nasdaq fell 2.6 percent. “The geopolitical kettle is on the boil. As if that wasn’t enough, the Fed’s hawkish stance on rate hikes has market players on alert.

What are the dangers that lie ahead?

If the Ukraine conflict worsens, the stock market is likely to suffer significant losses, as oil prices are predicted to remain high. While the US Federal Reserve will meet next month to decide whether to raise interest rates and tighten liquidity, there are expectations that the Fed would not do so aggressively. Another source of concern is the impact of rising crude oil prices on the Indian economy, which is occurring at a time when inflation is near 6%, well above the RBI’s upper range.

Developed economies such as Germany, Japan, and the United States, for example, are well on their way to combining digital technologies with sustainable manufacturing processes and gaining a competitive advantage. China has a strategy in place and is making great progress. To stimulate their development, rising economies such As India will need to focus very explicitly on competitiveness, essential technology, and intrinsic strength. How well-emerging nations manage the issues of growing the manufacturing ecosystem, adopting the current technological production trends, and upgrading their human resources to reskill and realign themselves will determine how well they perform on the global market.

Digital Transformation in Finance

COVID-19 has had a significant impact on our social and professional life in a short period of time, compelling us to quickly accept new social standards and substantive improvements. In likely the most typical example, according to a recent survey by Gordon Hackett, one in three Americans purchased groceries online during the epidemic, with 41% of this group making their first online food purchase. Companies that invested in digital transformation have benefited from their capacity to digitize end-to-end operations like customer orders, supply-chain management, and finance as a result of these changing behaviors, allowing them to capitalize in this uncertain time.

While 70% of organizations have or were embarking on digitalization, it appears that the majority are not very far enough advanced to make COVID-19 a non-issue.

Organizations must embrace digitalization in order to survive and develop beyond COVID-19, and a continuing focus on adopting the technology will allow them to thrive after COVID-19. Finance has emerged as a driving force in this conversion, and CFOs are frequently at the helm of the digital transformation strategy, serving as early adopters of technological solutions and collaborating with workable leads to accurately gauge benefits and demonstrate potential cost savings or efficiency gains. Finance may also have the best grasp of what amount of digitization would perform effectively with the industry’s existing operational model, or whether the current operating model has to be adjusted to maximize technology utilization.

What’s evident is that digital transformation is important for businesses that are fighting to stay afloat as well as those that are doing well financially. Four finance-driven case studies from various industries highlight this concept.

Across industries, digital transformation is a commercial necessity:

COVID-19 has faced enterprises with unparalleled difficulties, prompting a few to expedite their adoption of digital solutions and others to reconsider how digital solutions may help them streamline operations, boost employee productivity and performance, and improve customer satisfaction. Companies are discovering that a well-defined digital strategy routinely outperforms traditional operational methods among industries.

COVID-19 gives a chance for CFOs and finance leaders to use digital capabilities to alleviate the pandemic’s negative economic effects. CFOs can use the methodology below to implement digital financial solutions and present real-world case studies to demonstrate how these techniques operate.

Framework for Digital Finance:

Business weaknesses are highlighted and amplified during periods of disruption. CFOs and finance executives must protect the company while predicting new trends, dealing with market volatility, and building long-term operational and financial stability.

CFOs can help protect their organizations from change and allow the finance function to operate at a high level, even in a remote setting, by adopting digital technologies and capacity building. Operations, insights and analytics, systems and architecture, and stakeholders’ experience are all part of the digital finance framework.

Conclusion

Many sectors have been thrown into disarray as a result of COVID-19 and the resulting economic dislocation. The ability to transform utilizing digital technologies will assist businesses in many industries, notably in banking, not only survive the crisis but also offer long-term, sustainable value.

For CFOs and finance leaders, using innovations such as automation and machine learning can assist their finance businesses in quickly adjusting to turbulence and support development post-COVID-19.

Furthermore, CFOs of businesses that are already undergoing transformational change should use technological accelerators to design and streamline the enterprise’s operating model in order to increase the profit of their digital initiatives.

CASE STUDY -II

Covid-19 Impact On Start-Ups & MSME

Start-ups are young businesses that are just getting started. They are small businesses that are originally sponsored and managed by fellow founders or, in some cases, by a single person. Start-ups develop products and services that are not available anyplace else in the industry or market. They tend to outperform anticipated revenue in the early phases when they begin competing, developing, and testing their company concepts. The availability of India’s ideal demographics is a major opportunity for any corporation seeking to dominate the international market. India has the world’s third-largest start-up ecosystem, according to Startup Blink, a global comprehensive start-up ecosystem map and research center.

Start-ups provide vital employment opportunities. 187,004 were contributed by 16,105 start-ups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). When start-ups succeed, the people of the country benefit. Because the wealth created within the country is shared with society.

In 2018, India had over 50,000 start-ups, with around 8,900–9,300 of those being technology-driven. In 2019, 1300 new tech start-ups were established, implying that two to three new tech start-ups are founded every day. It is possible to produce more income domestically by promoting and encouraging more start-ups, and consumer capital will also circulate around the Indian economy.

As the coronavirus wreaks havoc on the country’s economy, the government’s revenue and income growth are expected to plummet for at least two quarters. Privatization plans, government, and industry are all affected by a drop in investor sentiment.

The government has shut down public transportation, closed all public and private offices, factories, and restricted mobilization due to an increase in coronavirus cases. According to recent studies, the country is losing 40 million jobs (MRD report), the majority of which are in the unorganized sector.

In this scenario, they forecast that India will enter a recession, with unorganized sector workers and semi-skilled workers losing their jobs. According to recent events and data, the unorganized sector is anticipated to experience a significant decline in the next few days, as job creation is declining at an astonishing rate due to the protracted lockout and low GDP.

COVID-19 has a negative influence on the investment industry. COVID 19 has an impact on businesses across all sectors, but start-ups are highly susceptible and face hurdles in terms of the operating models. The start-up industry has been working hard to adjust as quickly as possible to the current scenario, focusing on the need to innovate and diversify its business tactics and operations.

In the last few years, India’s start-up industry has become a formidable force, thanks in large part to the efforts of investors and government initiatives aimed at facilitating the establishment of start-ups. Starting-up investments have increased dramatically from $550 million in 2010 to $14.5 billion in 2019.

The worth of investments in India is estimated to have dropped to $0.33 billion in March 2020 from $1.73 billion in March 2019, a drop of roughly 81.1 percent. There has been a 50 percent decrease in the number of companies supported, with 69 enterprises in March 2020 compared to 136 in March 2019. Several investors have also held back from finalizing existing investment rounds, according to sources, sometime between mid-February and the end of March 2020. As a consequence, one of the primary hurdles for start-ups is currently obtaining funding, which has resulted in cash flow problems for many.

The lockdown has had an impact on not only daily business operations but has also pushed several start-ups to prepare contingency plans to reduce their headcount and employee compensation. Several start-up founders have also made pay cutbacks in order to minimize their losses.

∙ In April, Nasscom launched an e-survey has over 250 start-ups to measure the effects of Covid-19 Epidemic Lockdown on Indian start-ups.

∙ With about 9300 tech start-ups, India is the third in the world tech start-up environment, according to the report. In 2019, about 1300 new businesses were added.

∙ After the Covid-19 Pandemic shutdown, about 92% of respondents indicated their revenue has decreased. About 62 percent predicted a top-line reduction of more than 40 percent, while 34 percent predicted a drop of more than 80 percent.

∙ Around 40% of start-ups were temporarily halting operations or closing their doors, and 60% of B2C businesses were risking closure.

∙ There are some encouraging signs, with 14percentage points of Ed-tech, fin-tech, and health-tech start-ups predicting revenue growth.

∙ Client payment delays and a staffing shortage are affecting companies, with three out of four low-revenue firms cutting marketing expenditure and three out of four low-revenue start-ups cutting compensation.

The percentage of start-ups and SMEs who are out of money has increased from April to June 2020.

These organizations are slashing or defaulting marketing and human resource costs to sustain their business.
MSME has been cleared for an Rs.3 lakh crore emergency credit line by the cabinet. Even if they are registered as MSMEs, a huge percentage of start-ups might not have been able to take advantage of such incentives under the Atairbhar Bharat Scheme. That was because, in order to be qualified, a start-up must have a debt or loan on its records, however, most companies choose to venture capital backing, which renders them unsuitable for a government scheme.

Start-up Benefit Programs in COVID-19

Since acknowledging the innumerable financial and operational problems presented by start-ups, the Small Industries Development Bank of India (“SIDBI”), which also serves as an executive agency for the “Fund of Funds” for start-ups, has endorsed the “COVID-19 Start-up Associated With increased levels” (hereinafter “the Scheme”), which is designed to assist specifically qualified start-ups that already have consistently developed the capacity to enact imaginative steps to ensure business continuity. SIDBI, India’s Small and Medium enterprises development Banks, recognized the operational and financial issues that entrepreneurs face across the country. It has been working to support impacted entrepreneurs by introducing a program called COVID-19 Start-ups Assistance Scheme (CSAS). This program will assist innovative firms who have demonstrated their capacity to modify the economic effects of Covid-19 while also ensuring the security and income stability of their workers. CSAS helps start-ups that will directly benefit from the scheme. This program intends to provide start-ups with designated work cash in the following 45 to 90 days. An Advisory Committee of five members (three from SIDBI and its nominees, and two from the Venture Capital industry) will be formed to expedite the process. The system allowed start-ups to get a loan of up to INR 2 crore.

The Ministry of Corporate Affairs (“MCA”) has also granted all corporations momentary respite from compliance with the Companies Act of 2013.

(i)Which include, among other things, I waivers of delayed legal fees with the MCA;

(ii) relaxations on the holding of board meetings with the physical presence of directors;

(iii) an outgrowth of the recommended duration time frame among meetings of the board; and

(iv) relaxation of a director’s ‘minimum residency’ requirement.

In addition, the Ministry upped the default threshold for commencing corporate insolvency to INR 1 crore in a notification dated March 24, 2020. (from INR 1 Lakh). The Reserve Bank of India (“RBI”) has also drafted a “COVID-19 compliance kit” aimed at alleviating working-capital requirements and lowering borrowing burdens, within which financing organizations would be allowed to confer a three-month complete ban on payouts of installments on loans that are exceptional as of March 1, 2020. Moreover, numerous deadlines have been extended, including those for filing certain income tax and GST forms.

COVID-19 is a finance scheme run by SBI. The State Bank of India, one of India’s top lenders, has created a financing scheme to help small and medium businesses maintain their operations. According to a Business Standard report, SBI will make additional credits accessible to existing debtors on an ad-hoc basis through the Covid-19 Emergency Credit Line (CECL). CECL is in effect till June 30th. With current fund-based working capital, CECL will issue loans of up to 10% or a maximum of INR 200 crores (FBWC). When applicable, a fixed interest rate of 7.25 percent will be levied.

Many businesses are either closing or laying off employees because they are unable to pay their wages under the Atal Bimit Vyakti Kalyan Yojana scheme. This idea is something you might recommend to your employees if your company is having trouble paying their staff. Although it is not specifically created for Covid-19, an individual can benefit from TheAtal Bimit Vyakti Kalyan Yojana. People who already have lost their jobs will be compensated in the form of wages put in their bank accounts for three months from the date of unemployment under this scheme. Only those who have enrolled in the Employees State Insurance (ESI) plan are eligible.

MSME Ideas Portal was founded by Mr. Nitin Gadkari with the goal of making it easier for venture capitalists to interact with entrepreneurs. During these times of pandemics, this web will also serve as a comprehensive resource for exploring the schemes offered by the federal and state governments to expand MSMEs. The portal’s primary goal is to serve and promote MSMEs in rural and semi-rural areas. A copyrighted business idea is required for MSMEs to participate in this program.

CONCLUSION

In this fiscal year, the country is in for a very difficult time. India must find a means to soften demand-side shocks resulting from probable lockdowns and other continuing control measures. Developing countries, such as India, have a more brittle social and economic fabric, and the current scenario will exacerbate hardship in the informal sector and among migrant workers. A worldwide recession now appears to be unavoidable. However, the severity and duration of the slump will be determined by the effectiveness of steps implemented to prevent the spread of COVID-19, as well as the consequences of government programs aimed at alleviating liquidity issues in start-ups and support for families in financial distress.

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