Swiss Challenge: This term can be used in any sector generally | ECONOMY by VIVEK SINGH

Swiss Challenge: This term can be used in any sector generally in case of bidding. Let me explain it as it will be used to understand todays news on "Pre-Pack Resolution of MSMEs":

Suppose Govt wants to build Railway platforms by the private sector. So Govt. will finalize a business/financial model on which the private sector will be building and operating and maintaining the railway platform. But let us say Govt. is not very sure that which model will be good for the country's railway platforms. So, it asked private parties to submit/suggest different business models for the modernization of railway platform. Suppose 10 companies submitted the model and Govt selected one of the business model (let us say submitted by company XYZ based on their viability or Govt. thinks that, that could be the best model) for modernizing the platform. Now, ALL THE COMPANIES will be asked to submit their BIDS based on that business model/plan which has been finalized by the Govt. (and which was submitted by XYZ).

So, there will be ONE PARAMETER (let us say lowest cost, or highest profit sharing or revenue sharing to govt. or any other parameter) based on which all companies will submit the bid. If the company XYZ bid is the highest or lowest (depending on which parameter bidding is happening) then that company XYZ will be selected to do the project on the business model/plan which was submitted by the company XYZ.

But suppose some other company quoted the highest or lowest BID then in that case again company XYZ will be asked (given a chance) that can XYZ do the project at the price/bid submitted by the lowest/highest bidder. If company XYZ agrees then XYZ will get the project. And if company XYZ did not agree to work on the highest/lowest quote/bid/rate submitted by the other company then the OTHER company will be allowed to do the project at their quote/bid.

So, basically the company whose plan is the best and selected by the Govt., is given a chance in the bid process to match the highest/lowest bid and they get the preference to do that project. This is called "Swiss Challenge".

Operational Creditors: If IOCL has sold (Air Turbine) Fuel to Jet Airways and Jet Airways has not yet paid the money then IOCL is called the Operational Creditors. If Jet Airways has taken loan from Axis Bank then Axis Bank is the Financial Creditor.