The Challenge of the 4 Cs
Real Estate

The Challenge of the 4 Cs

<span style="font-weight: bold;">K RAVI </span>elaborates upon the challenges inherent in the new reforms and strategies to overcome them. <p></p> <p> India has witnessed a steady stream of reforms in the recent past. It may not be an exaggeration to state that they have brought about a significant change in the way business is conducted. Every business house - big or small - has had to adapt itself to the change in the environment. And the challenges of transition have been inevitable in each case, be it demonetisation, digital payments, GST or RERA.</p> <p> I believe the challenges posed consisted of the four Cs: Comprehension, Communication, Crossover and Compliance. </p> <p> The magnitude of the challenge might have varied in individual instances. But they were challenges, nevertheless, for a large conglomerate or a small business alike.</p> <p> <span style="font-weight: bold;">Comprehension ß the first challenge</span><br /> Understanding the changes proposed was a slow and gradual process in case of GST. The magnitude of the reform has been enormous, as GST replaces a multitude of taxes and levies. </p> <p> One knew that the process would be wrought with complexities. <br /> But fortunately there was adequate time to prepare. Of course, at the initial stages everyone was groping. The contours of the reforms were not clear. There were no 'expert' consultants in the field. But in course of time, relative clarity emerged. Many top consulting firms saw this as a brand new avenue of service and opportunity to supplement their revenues and client base. Each was keen to develop expertise and gain the early-bird advantage. We hired one of the top consultants to help the top management gain a broad perspective of the issues involved, and chalk out a plan of action.</p> <p> <span style="font-weight: bold;">Communication</span><br /> Comprehension of the issues by the top management was only the first step. The next challenge was to ensure that the operating functionaries were equipped to effect the transition. We engaged consultants to conduct workshops and training programmes designed for personnel in the accounting, marketing and purchase functions. Close coordination was also required with the IT functionaries to suitably modify the ERP systems. New modules had to be introduced, tested, debugged and geared up to make the transition. Wherever possible, dry runs with hypothetical transactions were conducted to ensure that potential glitches were identified and the appropriate MIS reports generated were accurate.</p> <p> Internal communication and in-house preparation were only one part of the challenge. The more vital issue was communication with external agencies like suppliers and service providers. As input credit is a vital and integral part of the GST ecosystem, we had to ensure our suppliers and service providers are GST-compliant. </p> <p> With major suppliers, it was relatively simple, as they were also gearing up for the transition. However, the challenge was more pronounced with small and medium-sized suppliers and service producers. </p> <p> The attitude among them ranged from complacency to confidence. We took particular care to ensure they acquired the capabilities to comply with GST requirements in record-keeping, accounting and reporting their transactions. We are still going through the process of checking, detecting and communicating the errors in their invoicing, and even helping them achieve decent compliance levels. How far we have succeeded will be known in a couple of months. </p> <p> <span style="font-weight: bold;">Crossover</span><br /> The crossover to the new regime midway through the financial year has been a challenge with multiple dimensions. One had to be prepared to switch from the old to the new system overnight. Initially, there was some scepticism among a few that the deadline would still undergo a change. However, once it was apparent that the government meant business and the transition date was firm, everyone got ready for the change.</p> <p> The other challenge was the reluctance of dealers and distributors to lift stocks as the cut-off date approached. Everyone was keen to minimise inventories on the first day after transition. This was mainly owing to apprehensions - mostly unfounded - about difficulties in determining the credit for the tax paid on inventories held prior to the transition. The company had to give reassurances that dealers would not be subjected to any loss on this account, and undertake to compensate them in the event of such loss. This had its positive impact, and the company could ease the pressure of mounting inventories of its own finished goods.</p> <p> <span style="font-weight: bold;">Compliance</span><br /> The next major challenge is that of compliances. Thanks to the preparatory work, we feel we have been able to meet the obligations of compliance. However, the proof of efficacy of the transitions will be the effectiveness and speed of getting input credits. We shall know the results in a couple of months.</p> <p> <span style="font-weight: bold;">Slow-release medicine and shock treatment</span><br /> If GST was a slow-release drug taking effect in a gradual manner, demonetisation was a shock treatment that caught everyone unawares! We did face some initial hardship in terms of availability of cash for certain payments traditionally made in cash. The individual payments were small but the sum-total of such transactions was substantial. However, I must say that everyone concerned -particularly the recipients of small amounts - accepted the change with remarkable grace and equanimity. With many of them opting for the digital route, matters settled down as the initial shock wore off. The clutch of reforms are meant to plug leakages in tax revenue, improve compliances, and reduce, if not eliminate the parallel economy. Everyone had to make a sincere effort to cope with the initial hardship and cooperate with the efforts of the administrations. </p> <p> Indeed, there were challenges in the process of such coping and cooperation but few grudged that. One only has to wait for the results. </p> <p> If the expected objectives are fulfilled, the hardships would be worth enduring! </p> <p> <span style="font-weight: bold;">About the author: <br /> K Ravi, Managing Director, NCL Industries</span>, has a reputation for being a manager with exacting standards. He demands, recognises and rewards high performance from his executives. He also takes keen interest in welfare activities for his employees.</p>

<span style="font-weight: bold;">K RAVI </span>elaborates upon the challenges inherent in the new reforms and strategies to overcome them. <p></p> <p> India has witnessed a steady stream of reforms in the recent past. It may not be an exaggeration to state that they have brought about a significant change in the way business is conducted. Every business house - big or small - has had to adapt itself to the change in the environment. And the challenges of transition have been inevitable in each case, be it demonetisation, digital payments, GST or RERA.</p> <p> I believe the challenges posed consisted of the four Cs: Comprehension, Communication, Crossover and Compliance. </p> <p> The magnitude of the challenge might have varied in individual instances. But they were challenges, nevertheless, for a large conglomerate or a small business alike.</p> <p> <span style="font-weight: bold;">Comprehension ß the first challenge</span><br /> Understanding the changes proposed was a slow and gradual process in case of GST. The magnitude of the reform has been enormous, as GST replaces a multitude of taxes and levies. </p> <p> One knew that the process would be wrought with complexities. <br /> But fortunately there was adequate time to prepare. Of course, at the initial stages everyone was groping. The contours of the reforms were not clear. There were no 'expert' consultants in the field. But in course of time, relative clarity emerged. Many top consulting firms saw this as a brand new avenue of service and opportunity to supplement their revenues and client base. Each was keen to develop expertise and gain the early-bird advantage. We hired one of the top consultants to help the top management gain a broad perspective of the issues involved, and chalk out a plan of action.</p> <p> <span style="font-weight: bold;">Communication</span><br /> Comprehension of the issues by the top management was only the first step. The next challenge was to ensure that the operating functionaries were equipped to effect the transition. We engaged consultants to conduct workshops and training programmes designed for personnel in the accounting, marketing and purchase functions. Close coordination was also required with the IT functionaries to suitably modify the ERP systems. New modules had to be introduced, tested, debugged and geared up to make the transition. Wherever possible, dry runs with hypothetical transactions were conducted to ensure that potential glitches were identified and the appropriate MIS reports generated were accurate.</p> <p> Internal communication and in-house preparation were only one part of the challenge. The more vital issue was communication with external agencies like suppliers and service providers. As input credit is a vital and integral part of the GST ecosystem, we had to ensure our suppliers and service providers are GST-compliant. </p> <p> With major suppliers, it was relatively simple, as they were also gearing up for the transition. However, the challenge was more pronounced with small and medium-sized suppliers and service producers. </p> <p> The attitude among them ranged from complacency to confidence. We took particular care to ensure they acquired the capabilities to comply with GST requirements in record-keeping, accounting and reporting their transactions. We are still going through the process of checking, detecting and communicating the errors in their invoicing, and even helping them achieve decent compliance levels. How far we have succeeded will be known in a couple of months. </p> <p> <span style="font-weight: bold;">Crossover</span><br /> The crossover to the new regime midway through the financial year has been a challenge with multiple dimensions. One had to be prepared to switch from the old to the new system overnight. Initially, there was some scepticism among a few that the deadline would still undergo a change. However, once it was apparent that the government meant business and the transition date was firm, everyone got ready for the change.</p> <p> The other challenge was the reluctance of dealers and distributors to lift stocks as the cut-off date approached. Everyone was keen to minimise inventories on the first day after transition. This was mainly owing to apprehensions - mostly unfounded - about difficulties in determining the credit for the tax paid on inventories held prior to the transition. The company had to give reassurances that dealers would not be subjected to any loss on this account, and undertake to compensate them in the event of such loss. This had its positive impact, and the company could ease the pressure of mounting inventories of its own finished goods.</p> <p> <span style="font-weight: bold;">Compliance</span><br /> The next major challenge is that of compliances. Thanks to the preparatory work, we feel we have been able to meet the obligations of compliance. However, the proof of efficacy of the transitions will be the effectiveness and speed of getting input credits. We shall know the results in a couple of months.</p> <p> <span style="font-weight: bold;">Slow-release medicine and shock treatment</span><br /> If GST was a slow-release drug taking effect in a gradual manner, demonetisation was a shock treatment that caught everyone unawares! We did face some initial hardship in terms of availability of cash for certain payments traditionally made in cash. The individual payments were small but the sum-total of such transactions was substantial. However, I must say that everyone concerned -particularly the recipients of small amounts - accepted the change with remarkable grace and equanimity. With many of them opting for the digital route, matters settled down as the initial shock wore off. The clutch of reforms are meant to plug leakages in tax revenue, improve compliances, and reduce, if not eliminate the parallel economy. Everyone had to make a sincere effort to cope with the initial hardship and cooperate with the efforts of the administrations. </p> <p> Indeed, there were challenges in the process of such coping and cooperation but few grudged that. One only has to wait for the results. </p> <p> If the expected objectives are fulfilled, the hardships would be worth enduring! </p> <p> <span style="font-weight: bold;">About the author: <br /> K Ravi, Managing Director, NCL Industries</span>, has a reputation for being a manager with exacting standards. He demands, recognises and rewards high performance from his executives. He also takes keen interest in welfare activities for his employees.</p>

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