Non-Performing Asset

(Finally, I took a week off by taking my mother to Agumbe – it gets the highest rainfall in India and moreover, it is where my mother was born and brought up. My mother’s ancestral house is more than 300 years old. Her brothers and my cousins live there. They own areca nut plantations and have amazing homestays.)

On our way to Agumbe, we stopped for breakfast that my mother had packed early in the morning.

Mother: Chinmay, I was told that many people in and around Agumbe who were working in cities like Bangalore have lost jobs because of Covid lockdown and are back in their villages and town.

Me: So?

Mother: I was thinking maybe we can check if any couple or small family would be interested to work at our new farm?

Me: Ma, at our new farm we do not need anyone full-time to take care of it as we have mainly trees.

Mother: then we can ask them to work at our old farm. We have an empty shed that they can use to stay.

Me: Ma, already we have a young couple taking care of our old farm. Having one more family means – monthly commitment in terms of salary and an increase in other utility bills.

Mother: I will get them to grow more fruits, flowers and some cash crops.

Me: all that will incur more investment.

Mother: we can sell those agri equipment’s lying in our old farm, and with that money I will invest and pay them.

Me: hmm… can you please tell me why did you buy those expensive pieces of equipment that were hardly used?

Mother: The previous family who used to take care of our farm said they will grow cash crops and flowers. So, I bought it for them thinking I can generate some extra income.

Me: And what happened?

Mother: What can I do if they had some family emergency? They left and never came back. After that, all this Covid thing started.

Me: Exactly!

In farming, there are many external factors that are not in our immediate control.

I remember one of my mentor saying, “A chain is as strong as its weakest link”. In farming, we have many weak links!

Mother: That is why I am saying, let us sell those old equipment.

Me: yes, we can look into it.

In financial management, we call those equipment’s as non-performing assets.

Performing assets are those without which a business cannot perform and generate income. (for example, in a café, a coffee machine is a performing asset)

Non-performing does not mean non-essential, they might be very essential but too many of these assets will not have a positive impact on the bottom line, and moreover, they would have consumed a lot of cash. (for example, in a café, tables and chairs are non-performing assets. The tables and chairs are essential but too many of them i.e anything in excess becomes a non-performing asset)

Mother: so how can a new family become a non-performing asset? They will be working right?

Me: hmm… smart question.

Mother: I know!

Me: Ok my genius mother, please listen, imagine a bicycle on which five people can sit and all five of them can peddle.

It will be fair if all five of them peddle (performing) right?

Mother: yes

Me: what do you think will happen if two of them stop peddling (non-performing)?

Mother: then the other three have to put more effort?

Me: Exactly, the burden on the other three will go up. In other words, whenever we have more non-performing assets then the burden on the performing assets goes up.

The worst thing is when there are non-essential assets!

The reason many people lost jobs during covid lockdown is that the company/business they were working couldn’t perform and had too many non-performing assets.

Restaurants were shut but sometimes they were given permission to do takeaways. This meant they did not need all the staff. The dine-in area became non-performing. So, the burden on the takeaways (that was only performing) became more. Some could survive for a while, however, many were forced to close doors and/or let go of their employees.

Mother: that is why I want to perform before you start considering me as a non-performing asset.

Me: Seriously? You are an overperforming asset who does not know when to stop. I think, me being a workaholic is because of your genes.

Mother: are you complaining about getting my genes?

Me: No, never, I meant, I am smart because of your genes. Hope I will become a genius like you sometime soon.

Mother: Good. For that, listen to me and be an obedient son, then God will bless you.

Me: Ok… (gave a typical Indian head nod)


If you are a business owner, do you know how many non-performing assets are in your business?

Do you know the ratio of performing assets: non-performing assets?

Is it 50:50 or 60:40 or 30:70 or not sure?

If not sure, then I am afraid the burden on the performing asset might be unreasonable!

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