New Delhi, July 25 (KNN) Infrastructure company IVRCL  whose tagline is “ Engi – visioning a new world” seems to be engineering the future of its MSME suppliers quite bleak.

Several MSMEs have approached KNN alleging excessive delays in payments towards supplies made to IVRCL. 

Though most MSME suppliers are afraid of disclosing their names, a Meerut based Cemex Concretes has come forward and told KNN that IVRCL is holding  more than Rs. 10 lakhs in principal alone for 10 years.

Under the Delayed Payment section of the MSME Development Act, notified by the Government of India in 2006, MSME dues are to paid by the principals within the appointed date which is generally 45 days after acceptance of the supply.

For any delay beyond the above the receiving Company has to pay interest to the MSME supplier at a rate three times the Bank rate.

So the interest amount due to Cemex  must  have equalled the original amount due.

The latest available annual report of IVRCL shows it has overdue payment of more than 1.6 crore to the MSMEs on which the accrued interest only,  is about Rs. 1.1 crore.

Now a very pertinent question may arise why a financial adviser worth his salt would advise a Company to go for such costly defaults!

The answer probably is, in most cases the defaulting Company  skip the interest payment by little cajoling and arm twisting of the poor MSME supplier, who may often depend on the large Company for further order and survival.

The more astonishing part is why a Company with nearly 4000 crore turnover will seat on such a paltry sum.

Again the answer may be a ’Couldn’t care less’ attitude to the MSMEs and the MSME Development Act provisions.

To enforce the above directives of the Act on delayed payments, Government has constituted State Facilitation Councils.

But again defaulting Companies prefer to adopt  all delaying legal processes rather than pay to the hapless MSME supplier.

Interestingly, in a recent statement RBI Governor Dr. Raghuram Rajan himself has agreed that delay in corporate payment is the main  reason of sickness among the MSMEs.

But the corporate sector is showing a thumbs down to his  mission of  MSME Bill  Trading Exchange, which could have provide much succour to the MSME suppliers survival.

And like the proverbial ‘Blind Justice’, Banks are putting all sorts of throttle to the defaulting MSMEs without going into the reasons which in most cases may be default in payment by large customers!