‘About 85 per cent of SMEs had declared losses last year'

Most of the Small and Medium Enterprises (SMEs), particularly those are into manufacturing activity, are virtually on the verge of closure in the State after being haunted by the unprecedented power cuts and unsupportive government policies for the last four years, functionaries of a new SME body have said.

Addressing a media conference in Hyderabad on Thursday, H.S. Sethi and Sudhir Sanghi of the Entrepreneurs Welfare Federation (EWF) said irrespective of the government claims that investors were queuing up to the State in spite of the prevailing political uncertainty, about 85 per cent of SMEs had declared losses last year.

RBI report

Quoting an RBI report, they pointed out that SMEs’ NPAs in 48 listed banks stood at a whopping Rs. 55,000 crore.

Asked why several multinational companies in different sectors had lined up their investments in the State in the recent past hailing encouraging policies and good infrastructure including efficient power supply, the EWF representatives said they were not contradicting or questioning the government but were quoting only the authentic reports of the industry and the RBI.

However, the fact remained that there were no takers for units put up for auction by the banks under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Act (SARFAESI), they noted. “Practically there are no investors/buyers who can take up those units and run them economically,” Mr. Sethi said.

The banks should examine the feasibility of debt restructuring instead of forcing closure of units as recovery measure and before taking action under the SARFAESI Act, they suggested.

They asked why the SMEs would report losses in recent years, when they had an economical run for the last two decades.