Case - Covid-19 and Impact on SRISHTI

Business:
Manufacturing Bags and Stationery from eco friendly materials like Jute, Cotton,
canvas

Customer Segment:
Banks, Pharmaceuticals & Corporates, Institutions, Events & Conferences, Occasions
and celebrations

Affiliations:
Member of National Jute Board, Ministry Of Textile. MCCIA
Alumni of Goldman Sachs 10,000 women Program from ISB, Hyderabad

The sudden announcement of lockdown compelled us to shut our manufacturing

activity on 18th March 2020.

SRISHTI had 35+ employees & amongst them 60% were migrant contract laborers.
The migrant laborers used to stay in accommodation provided by SRISHTI. These
boys were desperate to go back to their families out of fear. They could not get a
booking in trains travelling to West Bengal and Bihar within 2days window & from
20th March, Sunday Railway suspended their operations. All the boys stuck up at
Pune, but we took their care as per our capabilities. They stayed in Pune till 2nd of
June . We provided them with a regular ration, basic minimum salary and their ticket
to go back to their families. These migrant labor did not get any call from the
Government (Local police / central agencies) for train travel. Scared and desperate,
these boys finally went by flights. We had to arrange their travel.

However, the financial loss was enormous for SME like SRISHTI. Most Work In
Progress orders were cancelled by customers, as a consequential effect of lockdown
orders. Cash flow cycle impacted due to non-payments even by large corporates.

We could not estimate the long lasting effects of Pandemic in advance and its huge
impact on the working capital cycle. Gradually our accruals bottomed out, while
managing fixed overheads (rents, electricity etc.), workers and staff.

On 8th June the Government allowed manufacturing operations with minimum

capacity. By then, we did not have any workers with us and neither had capability to
pay their wages. Local employees started working on construction sites, as there
was greater dearth of availability of skilled labor in other sectors too due to
migration. We went to their homes and begged them to come back to work .

Slowly, SRISHT started operation, however in the first 2-3 month there was actually
no sale. Like others, we also dabbled in masks and distribution of PPE. Gradually
orders started coming but revenues were so low that it became difficult to cover the
wages, Rent, Electricity , other essential expenses .

From the end of January we observed some inflow of orders, however there is very
less work in February and we anticipate the corporate order pipeline will be dry
until April 2021.

One time, last March 2020, we were executing large orders to the tune of 10,000
quantities of a big corporate House, another 3 orders with big no were about to
complete and ready for dispatch. All from a big corporate house. First thing we were
communicated by this companies to stop production. Many big houses whose
materials are lying with us since March 2020end and they are not ready to pick up
the orders, under the excuse that they still have not resumed the offices. We were
left high & dry with no payment of postponed/cancelled orders.

As per Government Scheme there was no interest deducted on CC by banks till

September but now we are forced to pay all accumulated interest by 31st March
2021.
There is a burden of accumulated GST and other statutory payments.

Anyways, even with no-order or minimal-order, we keep ourselves motivated

continuously. We have been working promoting & Selling, on online platforms and
increasing B2C sales.

Our conviction & confidence in our business remains solid. We believe this is a
difficult phase and there would be a solution.

We are looking forward to your suggestions on how SRISHTI can tide over this
situation and bounce back. How can we improve & sustain our revenues and also
eager to hear suggestions on keeping the operations lean. We would also like to
understand the ways to avail and manage funds.

SRISHTI welcomes you all aboard!!