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The 600-odd small and medium fabricators that supply to BHEL face closure of business due to multiple factors—mainly lack of power, finance and “intermittent periods of dried up orders.”
“The power situation in the state is crippling the units’ productivity. Some units are on the verge of shutdown due to acute power shortages,” says BHEL Small and Medium Industries Association (BHELSIA). Power from diesel gensets, it says, is way too expensive.
Unless the situation is rectified immediately on war footing, the industrial infrastructure patiently built over five decades in Tiruchi would wither away, BHELSIA says in a press release. Units are even agreeable for a two day power holiday per week, provided uninterrupted power is supplied for the balance five days, it says.
Financial pressure
The other major problem the industries face is that of funding. The slowdown in the economy, coupled with the problems specific to the power industry (such as coal linkage, environment clearances) is taking its toll on these SMEs. “In this critical period, units are facing severe pressure from banks towards their repayment obligations. This financial pressure is totally weakening the units,” BHELSIA says.
Without the support of financial institutions at this critical juncture, many units will get wiped out. BHELSIA requests banks to grant interest and principal moratorium for a period of one year for all member units. These repayment obligations can be spread over an increased repayment period. “There are a lot of instances both domestically and internationally, where banks have willingly granted moratorium and extended repayment periods thus easing cashflows and supported industry,” it says.
The association also wants NPA norms to be tweaked in view of the difficult business climate the units face. Specifically, BHELSIA wants RBI to allow not to define ‘three months overdue’ as non-performing assets.
“Otherwise, many units would be classified as NPA. This would impact their credit history and would adversely affect them in times of revival. Today, a project cycle takes at least 6 months. The NPA norms have to be separately notified for the industrial sector just as banks have notified separate NPA norms for agricultural sector based on crop cycles,” the association says.
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